The massive Cove Point, Md., terminal hunkers against the western shore of the Chesapeake Bay, nearly empty and almost useless since more than two years ago when shipments of liquefied natural gas from Algeria ceased.

A victim of changes in the natural gas market that made LNG seem suddenly less critical to long-term American interests and of the Algerian government's decision to hold out for higher prices, the ghost terminal sits waiting for either a new source of supply or a development in negotiations with the Algerian-owned gas supplier Sonatrach.

Last weekend tankers pulled up to a port in Arzew, Algeria, to begin taking on LNG for Panhandle Eastern Corp., the result of negotiations between that company and the Algerians that may have long-run significance for Columbia Gas Corp., which operates the Maryland terminal.

In still another recent development, the U.S. Court of Appeals for the District of Columbia ruled that federal agencies had erred in allowing Columbia and others to pay higher prices for LNG during a brief period in 1980 and sent the issue back to the agencies involved. The court raised the question -- apparently to be decided by the agencies -- of whether customers should receive refunds of "excessive charges," but refunds appear unlikely.

Panhandle, which had confronted some of the same problems as the owners of Cove Point, agreed to increase the rate at which LNG prices may rise under a contract that had been in dispute. While the renegotiated contract must be approved by U.S. agencies -- approval which faces serious opposition by distributors, members of Congress and others and is by no means certain -- Algeria has agreed to ship LNG under the contract's old terms.

"We're going to have to watch and observe with interest what the position of the Department of Energy is toward LNG" and how regularly Sonatrach makes deliveries, said Bruce Quayle, a spokesman for Columbia.

Panhandle's terminal in Lake Charles, La., was completed last year. The most recently built LNG facility in the United States, it has never been used. Panhandle had a contract with Sonatrach, signed in 1975 and approved by the United States and Algeria in 1977, but Sonatrach had failed to make deliveries.

In contrast, Cove Point did function briefly. The first supertanker full of Algerian LNG arrived in 1978, the result of negotiations that had begun in the early 1970s. The $400 million terminal was developed by subsidiaries of the Columbia Gas System -- which sells gas to Washington Gas Light, Baltimore Gas & Electric Co. and other distribution companies -- and by Consolidated Natural Gas Companies. Columbia had expected to receive 300 million cubic feet of gas a day from El Paso Co., the importer, which shipped the supercooled gas in specially built tanker ships.

In 1979, Algeria began pressing for renegotiations to set higher prices. An amended contract was worked out and approved by DOE's Economic Regulatory Administration in late 1979 and a few more LNG deliveries were made. But on April 1, 1980, the Algerian government suspended deliveries, seeking additional price increases. Negotiations are still under way.

In the meantime, El Paso has gotten out of the LNG business and written off its losses. The work force at the Cove Point terminal, once 125, was reduced at the end of August from the 97 workers who remained to 37. Cove Point's owners have continued maintenance of the facility, while former deputy secretary of state Warren Christopher is negotiating with the Algerians in an effort to get the shipments resumed.

But the natural gas shortage that made the prospect of a long-term source of LNG so initially attractive has disappeared.

Even before shipments ceased, then-DOE secretary James R. Schlesinger was disparaging LNG because of its high costs and uncertain supplies.

Columbia is able to recover maintenance costs and the cost of its debt through the so-called "minimum bill" provisions of U.S. energy regulations. But the company is unable to get a return on the money that it pumped into building the terminal. If the Cove Point venture had been successful, sharepayers would have received an additional 36 cents a share in return on equity in 1981, according to Columbia.

"It's an opportunity cost," said Dean Witter Reynolds analyst Foster Corwith.

Corwith said that market analysts long ago had factored the shutdown of Cove Point into assessments of Columbia Gas, and that the shutdown no longer has much impact on the marketability of the company's stock. In the long run, he said, it could be a bonus.

"We're in a period now which will probably last a couple of years more, but once we get past 1985, every indication is that we're going to be into a natural gas shortage," he said. The Cove Point terminal "is in great shape and it's extremely cheap compared to the Panhandle terminal or any new faclity. It has the benefit of early construction," he noted.

Columbia Gas is exploring other potential sources of LNG. Such LNG exporters as Argentina, Nigeria and Trinidad may one day ship the gas to the United States, but LNG still has the disadvantage of being a relatively expensive fuel in a market that increasingly belongs to the buyers.

In the meantime, the court of appeals' decision throws a cloud on the horizon, Corwith said. The court found that the Economic Regulatory Administration's factual conclusions, particularly the agency's conclusion that there was a national need for Algerian natural gas, were not supported by the evidence.

Columbia, which takes the position that there will be no refunds of the disallowed charges, would not say how much the company paid the Algerians for LNG during the brief period of importation under higher prices. Other sources place the figure at approximately $18 million to $20 million. Even if refunds were ordered by ERA or the Federal Energy Regulatory Commission, by the time they trickled down to residential gas customers they would amount to little.

"The nice thing about screwing the consumer is that just the price of a pack of cigarettes a day can make billions for a corporation," said Morton L. Simons, who represented the Consumer Federation of America in the case.

Corwith said he expects that no refund will be ordered since Columbia and others who sold the higher-priced gas would have no way of recovering the money they paid for it to the Algerians.