HARRISBURG, Pa. — An energy company is seeking federal approval to allow exports of liquefied natural gas from the booming Appalachian drilling industry, saying that the nation’s natural gas supply is outpacing demand.
Richmond, Va.-based Dominion Resources Inc. announced last week that it has applied to the Department of Energy to allow 1 billion cubic feet per day to be exported through a terminal it owns in Maryland. The application, filed Sept. 1, seeks permission for the exports of liquefied natural gas to any country with which the United States does not prohibit trade, the company said.
The terminal, Dominion Cove Point on the Chesapeake Bay in Lusby, Md., is well-situated to export gas from the prolific Marcellus Shale and the promising Utica Shale formations, Dominion’s chairman and CEO, Thomas Farrell II, said in a statement.
“It is in our nation’s best interests to develop our natural resources responsibly and reliably,” Farrell said. “In the process, we will be able to improve the nation’s balance of trade.”
In addition to owning power plants, Dominion is a major operator of natural gas pipelines and storage facilities. It would not actually own or directly export the liquefied natural gas, or LNG. Its customers would be responsible for supplying the gas to the terminal and then shipping and selling it, Dominion said.
Dominion spokesman Daniel Donovan told the News-Register of Wheeling, W.Va., that the company is seeking approval for the shipments because the nation’s natural gas supply is surging while domestic demand is lacking.
“But the main reason is the increased supply. Not only from Marcellus Shale, but several shale plays in other parts of the country. Our supply study only includes a small amount of Utica Shale, but increasing supplies from other shales,” he told the newspaper.
The Marcellus Shale formation is considered the nation’s largest-known natural gas reservoir and lies more than a mile underground, primarily beneath Pennsylvania, New York, West Virginia and Ohio. Pennsylvania is the center of activity, with more than 3,000 wells drilled in the past three years and thousands more planned in the coming years.
Environmental groups have expressed concern that the process of extracting the gas from deep underground could contaminate the water supply. That process, called hydraulic fracturing, or fracking, forces water mixed with sand and chemicals, some of them toxic, into the wells at high pressure, shattering the underground shale and releasing trapped gas. Gas companies say the procedure has been used safely for decades.
Geologists believe the Marcellus Shale formation contains enough recoverable natural gas to supply the East Coast for decades. The Utica Shale, which is below the Marcellus Shale, has not been explored or studied to the same extent, but many in the industry say it could also be a prolific source of natural gas.
Donovan said many of the new jobs necessary for the project would be in the Marcellus Shale region of West Virginia and Pennsylvania.
LNG is natural gas that has been supercooled to -260 degrees to turn it into a liquid and reduce it in volume by 600 times, Dominion said.
To export LNG, Dominion said it would have to add liquefaction facilities to the existing Dominion Cove Point terminal. Construction could potentially begin in 2014 and service could begin by the end of 2016, it said.