Dominion’s Gas Export Plan
Divides Maryland Town

by Justine McDaniel
Capital News Service

To some in the town of Lusby, Dominion Resources is a good neighbor that provides jobs, revenue and community support.

To others, Dominion is a Goliath whose plan to export natural gas from its Cove Point facility on the Chesapeake Bay could bring environmental and safety hazards.

Dominion’s proposal to begin exporting liquefied natural gas (LNG) from its import facility has put the company and the tiny town at the forefront of a national debate about natural gas, a booming commodity that some say could alter the global energy landscape.

The issue has created a sharp divide in Calvert County and across the state. The debate has been gathering steam since early last year, and as the wait for an oversight assessment from the Federal Energy Regulatory Commission (FERC) drags on, the controversy is only intensifying amid a swirl of misinformation and frustration.

“I’m terrified,” said Mary Ward, who lives down the street from Cove Point. “It’s going to change a lot of things around here.”

Ward and others worry about the facility’s proximity to homes and are dubious about Dominion’s safety claims. But some residents aren’t concerned.

“I don’t really see a threat in it. I mean, gas has been coming in; now gas is going to come in and go out. So what’s the change?” said John Miller, a military contractor who lives off Cove Point Road.

A National Debate...

This scene could soon become familiar across the U.S., where LNG export projects are underway in Louisiana, Texas, Oregon, Georgia and Mississippi, according to the American Petroleum Institute. Cove Point’s application to export to non-free trade agreement countries is one of seven approved by the Energy Department, with 23 more under review.

If Virginia-based Dominion gets final approval, it would be the second such U.S. facility in operation by the time it began exporting in late 2017. (Sabine Pass LNG Terminal in Louisiana, slated to start operating in 2015, will be the first.)

Proponents of exporting say natural gas could lower carbon emissions worldwide while increasing U.S. energy independence. It would allow other countries to avoid buying fuel from less stable countries, be profitable for some U.S. businesses and provide clean-burning energy, said Steven Gabriel, a University of Maryland professor in energy modeling and energy policy.

In the wake of the crisis in Ukraine, the U.S. could be well positioned to cut into Russian exports of natural gas to Western Europe.

But environmentalists say natural gas is just as bad as coal when the entire process, including drilling, compressing and shipping, is taken into account, especially given methane leaks that often occur during the process. They also argue that natural gas competes with renewable energy sources like wind power.

The Dominion project, they say, would hurt the climate and change Maryland’s status as a progressive energy leader.

“Maryland, with its moratorium on hydrofracking... is on everyone’s mind. And I think this decision will really show whether or not we’re serious about that,” said Josh Tulkin, director of the Sierra Club Maryland chapter.

Gov. Martin O’Malley issued a moratorium on hydraulic fracturing, or “fracking,” the controversial process of fracturing shale rocks to release natural gas, in 2011, pending a study of the practice. A commission’s findings are due in Annapolis in August.

Environmentalists fear the export business will provide incentive for fracking.

For the time being, the gas shipped to Cove Point for export is expected to come from other states.

...with a Local Impact

In Calvert County, Dominion executives say the more-than $3 billion project will supply the area with an estimated 75 full-time jobs, more than 3,000 construction jobs and an additional $40 million in annual tax revenue -- a prospect that has aroused enthusiasm.

“Right now we’re paying $700 billion a year to countries that hate us to bring in their fuels, and now we’re going to be making our own,” said Drew Greenblatt, president of Baltimore-based Marlin Steel Wire Products at a Feb. 19 Dominion press briefing.

The Calvert County commissioners unanimously support the project.

“Them switching into an export role will not only create a lot of employment locally (but will) help the tax base,” said Calvert County Commissioner Evan Slaughenhoupt. “Everyone’s going to benefit from the standpoint of having less burden going forward on their own taxes.”

Opponents say the county is focused on financial benefits.

“It’s an easy revenue answer for them,” said Dale Allison, who can see Dominion’s storage tanks from his kitchen window. “Ignorance is bliss when it comes to the safety aspects.”

At the heart of many residents’ concerns is potential harm from pollution, vapors or explosions.

The facility will have multiple safety systems and will have been reviewed by the Department of Transportation Pipeline and Hazardous Materials Safety Administration and FERC, said Mike Frederick, Dominion’s vice president of LNG operations.

The effects of an unlikely disaster, he said, would not spill into the community.

“We design it so that even in a catastrophic situation, the impact … remains on our property,” Frederick said.

Dominion has conducted drills with Calvert County emergency response teams, who would activate a siren and evacuate residents in an accident, he said.

Opponents have a slew of environmental concerns as well, including noise, pollution, ship traffic, ballast water and construction traffic.

One controversial element is a 60-foot noise barrier Dominion will build along the road and adjacent park to ensure that noise from the plant stays within regulations. The company says the area is surrounded by trees, so the wall won’t be visible from the outside.

To compensate for local air pollutants, the company will purchase offsets through the federally mandated cap-and-trade program.

“We’re operating within the laws, which are quite stringent about what you have to do,” Frederick said.

Pollutants from construction and operations include mono-nitrogen oxides, sulfur dioxide and volatile organic compounds (VOCs), according to a report from the Maryland Department of Natural Resources.

“What is that going to do to the air quality here for us locally?” said resident Kathy Mazur. “Their reply is, ‘We will meet federal standards.’ Okay, that’s great, and I’m glad you’re meeting them, but… what is the effect here?”

Waiting for Answers

The permitting process has moved to the center of the controversy.

FERC, rather than any state agency, will provide the most comprehensive oversight.

After the agency decided to do an environmental assessment rather than a more rigorous environmental impact statement, residents became nervous about the thoroughness of the oversight.

The two types of reports cover the same issues, said FERC spokeswoman Tamara Young-Allen. An environmental assessment is used for projects that have already been constructed, while impact statements are for brand-new projects, she said.

If FERC finds evidence of a significant environmental impact in the assessment, it will recommend an environmental impact statement, Young-Allen said.

FERC will release its environmental assessment May 15, the agency said. A final federal decision is due Aug. 13, after a public comment period.

In response to community concerns and at the request of Rep. Steny Hoyer, the Maryland Democrat who represents Calvert County, FERC will hold a public meeting to discuss the draft, something usually reserved for impact statements.

Some opponents blame FERC for what they say has been a lack of transparency and information about the affair.

“I think there should be more local input into these decision-making procedures,” said Sen. Ben Cardin, a Maryland Democrat. “I have reservations on how these regulatory decisions are made at FERC.”

FERC is not Dominion’s only obstacle. The company needs dozens of permits from federal, state and local agencies. Many have already been issued, but some have attracted public attention.

On Feb. 20, when the Maryland Public Service Commission began a hearing on a permit it must issue for the generation facility, protesters marched through downtown Baltimore, wrapping around several city blocks.

The Chesapeake Climate Action Network, the Sierra Club and Earthjustice, a nonprofit environmental law organization, have been some of the most active groups in protesting the project.

On Feb. 28, the Maryland Court of Special Appeals affirmed a lower court ruling, saying that an existing agreement between the Sierra Club and Dominion allows for LNG export.

The environmental organization has shared stewardship of the Cove Point Natural Heritage Trust since 1972, when it formed a settlement with then-owner Columbia Gas to protect the land and set environmental restrictions for the facility, Tulkin said.

The Sierra Club said exporting is not allowed, as that wasn’t an option in 2005 when the agreement was last updated. Dominion and the Sierra Club filed motions against each other in May 2012.

The organization is reviewing the case to determine whether it will appeal the latest ruling, Tulkin said.

Two Camps, One Chasm

Some are anxious for the project to start.

“Calvert is a very rural community still, and to have the largest expansion happening in our backyard, with the types of jobs that we need from a proven business partner that’s been here the whole time in our community, we couldn’t have asked for a better opportunity,” said Carolyn Hart, president/CEO of the Calvert County Chamber of Commerce.

Hart, who lives near the facility, said she encourages citizens to do research and contact Dominion.

But others say they’ve done just that with little result.

“What we’ve been pushing for is that Dominion would just be more open with their answers and accurate with their information and have more of a public hearing where we can engage them more,” said Lusby resident Holly Herzog.

Like many, she has attended meetings where Dominion representatives were present but said she is concerned, based on her own research, that the company isn’t telling the whole truth.

Dominion representatives have appeared at public hearings, held two open houses at the plant and had more than 50 meetings with citizens. They also mailed a pamphlet to more than 20,000 households, Frederick said.

“We’ve met with anybody that’s asked,” Frederick said.

The project has found support in Hoyer and O’Malley, among others.

“I support the Cove Point project, subject to appropriate environmental review, because I believe it will spur economic growth and bring well-paying jobs to Calvert County,” Hoyer said in a statement.

Cardin and Maryland Sen. Barbara Mikulski asked FERC to engage the public “to the fullest extent possible” through public meetings in a March 6 letter. The senators met with community groups to discuss the project in February.

“I share their concerns that the environmental impact be known, so we want to make sure that whatever’s done at Cove Point is consistent with the protection of our environment,” Cardin said.

At the local level, as in the broader LNG debate, the two sides consistently dispute each other’s facts, and the fundamental disconnect between the camps is large.

While some residents plan to continue fighting, others, like Ward, are becoming resigned to what they see as an inevitability.

“I have a feeling it’s going to go through even though we don’t want it to. But I still pray. And maybe we still stand a chance,” she said.

Frederick said it is in Dominion’s interest to protect its facility and ensure it operates correctly.

“From an environmental perspective and a safety standpoint-- I live here too. Our employees live here too,” Frederick said. “We want to do it right.”