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Dominion gets fed OK to export natural gas to India, Japan

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By Lou Kilzer
Wednesday, Sept. 11, 2013, 4:03 p.m.
 

The Department of Energy on Wednesday approved a plan to export 770 million cubic feet a day of natural gas from Pennsylvania's Marcellus shale and other formations to sell to customers in India and Japan.

Dominion Resources, a Virginia-based company operating in the Northeast, applied for permission in late 2011 to export American natural gas — which the industry touted as “America's energy future” — from a Chesapeake Bay facility in Maryland to countries that do not have free trade agreements with the United States.

Dominion spokesman Dan Donovan said exports of Marcellus gas will “help stabilize the industry” and benefit royalty owners by providing an outlet for the sale of gas.

The government approval will last for 20 years. It is all subscribed for by Japan's Sumitomo Corp. and India's GAIL (India) Ltd. Each firm has a 50 percent interest in Dominion gas for export from the Cove Point LNG facility in Lusby, Md.

It is the fourth export contract approved by the Energy Department. The other facilities are along the Gulf of Mexico.

The department received at least 26 applications to export approximately 30 billion cubic feet daily of natural gas. Companies can sell it overseas for much higher prices because of the glut of available gas here.

The department forecast that the United States produces nearly 70 billion cubic feet a day of gas.

The issue of exports pitted certain American manufacturers and environmental groups against U.S. energy interests. Some manufacturers argued that exports will raise domestic costs and make American-made goods less competitive.

Donovan said the Energy Department “carefully studied the issue and had decided that exports would be beneficial.”

As gas production in the United States surged after the adoption of hydraulic fracturing and other advances, the nation found itself with a surplus of gas and low prices. Gas in Japan, China and India sells for up to five times the amount here, making it profitable to ship to those countries despite costs of liquefaction and transport.

The Cove Point facility was built to receive, not export, natural gas. It was one of several facilities built when the United States was a major importer.

That changed. Dominion said Wednesday it will begin constructing export facilities next year, with completion scheduled for 2017. It expects construction costs to be between $3.4 billion to $3.8 billion.

Lou Kilzer is a Trib Total Media staff writer. Reach him at 412-380-5628 or lkilzer@tribweb.com.

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