Liquified Natural Gas (LNG) Terminal at Cove Point on Chesapeake Bay
Extracted from an Extensive Article by Kevin Rector, Baltimore Sun, March 20, 2019
In a quiet pocket of Southern Maryland where beach bungalows line dirt roads to the Chesapeake Bay, the nation’s booming natural gas industry has established an unlikely multibillion-dollar foothold.
For a year now, natural gas pulled from ancient shale formations deep below the surface of Pennsylvania and other states has been piped across Maryland to a new $4.4 billion gas export terminal in the woods beyond Cove Point Beach in Calvert County.
From there, the gas is cooled through a complex industrial process to minus 260 degrees Fahrenheit, which liquefies it and makes it easier to transport. It is then piped through a tunnel to a platform a mile offshore and loaded onto massive tankers for shipment overseas — to Japan and India, the Middle East and Europe, and countries across Central and South America.
Lea Callahan says the increase in tanker ships in the waters beyond her beachfront home, about 65 miles south of Baltimore, has been shocking. “All of a sudden, it was like boom,” she said. “They come in at all hours, so you wake up in the morning and you see another ship.”
The new activity makes Maryland a global gateway for natural gas extracted from the ground through hydraulic fracturing, or fracking, even though the state has banned the controversial process within its own borders. It also puts Maryland at the vanguard of a growing global trade in liquefied natural gas, or LNG, that U.S. government leaders and energy executives are feverishly working to support by building similar facilities across the country.
Global demand for natural gas is on the rise, particularly in China and other growing Asian markets. The United States is expected to account for 40 percent of the new production needed to meet that demand through 2025, according to the International Energy Agency.
The Cove Point terminal began operations in early 2018 as just the second large LNG export facility in the continental U.S.; Cheniere Energy’s Sabine Pass terminal in Louisiana began exporting in 2016. But more than a dozen others are in the works — each of them eager to replicate Cove Point’s success.
“This is the golden age of gas,” said Nobuo Tanaka, former executive director of the International Energy Agency. He lives and works in Tokyo, where much of the Cove Point gas is heading.
The Maryland terminal, owned by the Virginia-based utility Dominion Energy, used to import gas — from countries like Norway and Trinidad and Tobago. But that business largely dried up with the rise of fracking and other drilling techniques in the United States, and the resulting surge in domestic shale gas production.
In response, Dominion decided to convert the Cove Point facility to exports, initiating what officials called the most expensive private sector project in state history. Construction to convert the terminal, completed last year, employed 4,500 people at its peak and used 800 miles of wire and fiber, 80 miles of piping and 20,000 tons of steel.
The result has been a boon to business and to county coffers. The revamped facility now handles about 770 million cubic feet of natural gas per day, enough to power millions of overseas homes. That business generated more than $500 million in export revenue for Dominion last year. And Calvert County will get more than $50 million in taxes and other payments from the company this year — a massive influx for a jurisdiction with a general fund of less than $300 million.
“Frankly, I think we are the envy of many counties who would like to have such an economic driver,” said Evan Slaughenhoupt Jr., former president of the Calvert County Board of Commissioners.
But environmental activists and some local residents say the terminal is a giant, glaring contradiction — making Maryland the only state in the country that has both a ban on fracking and an export terminal for sending fracked gas to international markets.
Natural gas is used in cooking, heating and electricity production. It also is used in industrial production of plastics and other chemical products. It generally burns cleaner than coal and other fossil fuels, but critics say the industry that produces it is far from environmentally friendly.
Kim Grosso displays a jar of water from her farm’s well in Dimock, Pa. Grosso says the well was contaminated by Cabot Oil and Gas, which was fracking for natural gas beneath her property.
In particular, environmental advocates say fracking — which blasts water, sand and chemicals into rock formations to release trapped gas — is associated with groundwater contamination, increased risk of earthquakes and emissions of potent greenhouse gases.
And they say the Cove Point terminal provides incentive for fracking in states like Pennsylvania, Ohio and West Virginia, undermining and reducing the impact of the Maryland ban that Gov. Larry Hogan signed into law in 2017.
They and some local residents also believe the facility represents a more immediate threat to the communities around it, though Dominion and federal regulators say it is safe.
Callahan, 62, who inherited her Cove Point home from her mother, said she fears an industrial accident could spew out fire, chemicals or toxic pollutants. And she complains the changeover of the terminal to exports has turned her quiet waterfront enclave into a heavily patrolled security zone, where sheriff’s deputies paid by Dominion harass residents as they go about their daily lives.
“It used to be so nice. All of us used to walk over there with our dogs. … I’d bring the kayak right up, look at the marsh, look for blue herons and all that stuff,” Callahan said.
“I wanted to retire down here. And now I’m not doing it. I refuse to live near a potential bomb.”
She and other homeowners have joined environmentalists to protest the facility, both in Cove Point and in Annapolis, accusing state and federal regulators of conducting inadequate threat assessments. But they say their efforts have been ignored by both sides of the political aisle.
The new export terminal was pushed through regulatory and permitting processes during the administrations of President Barack Obama and Gov. Martin O’Malley, both Democrats, and has continued to enjoy support under their Republican successors.
Hogan said it “is delivering economic benefits to Maryland and the nation, and creating jobs right here in our state.” U.S. Energy Secretary Rick Perry, appointed by President Donald Trump, called Cove Point’s expansion into exporting “an exciting and remarkable new chapter in America’s history.”
Maryland officials agree with federal regulators that the facility is safe, and say it is in line with both the Trump administration’s goal of reducing trade deficits and the state’s goal of improving the environment. They contend natural gas is an important bridge fuel between dirtier coal and cleaner renewable energy sources like wind and solar.
“One of the few things that President Obama and President Trump have agreed on is the benefit to the country of exporting clean energy — natural gas — to other parts of the world,” said Benjamin Wu, Hogan’s deputy commerce secretary. “It’s a trade priority for us.”
Others argue the economic benefits to the state and county, dwarfed by Dominion’s own windfall, do not justify the threats the project poses to the public and the environment. In Pennsylvania and elsewhere, they say, other small towns are being overrun by the industry as it churns out gas for distant mega-cities like Tokyo.
These critics see only downsides — and danger.
‘It has a lovely marsh’!!! At least since the 1930s, Cove Point Beach had been an escape.
Far from the bustle of Baltimore and Washington but near enough for weekend getaways, the spit of beach drew residents from both cities. They built bungalows as vacation homes through the 1960s, and many eventually moved in for good, creating a community mixed with year-round and seasonal residents.
By the early 1970s, Cove Point was prized as one of the Chesapeake Bay’s few beaches. So when the park plans were scrapped in favor of building the import terminal, the decision caused a dust up echoed today. Many residents and environmental groups were furious.
“The bay at that point [is] relatively pristine. It is a beautiful site. It has one of the last remaining beaches on the bay. It has a lovely marsh,” said Ronald J. Wilson, then an attorney for the environmental groups.
But faced with a lengthy and unpredictable legal battle, opponents in 1972 agreed to a deal that allowed Columbia to build the terminal. The company made concessions.
It agreed to build a tunnel out to its loading platform rather than a pier. It put a majority of the 1,100-acre property not used for the termina.
Josh Tulkin, Maryland director for the Sierra Club, said the group was concerned that construction of the export terminal would be harmful to the surrounding environment. But it also argued the operations would contribute to global warming by supporting the fracking industry.
“There is no climate model that suggests we can be burning gas, to the extent that this facility requires, 30 years from now — or this planet is baked,” Tulkin said.
The Sierra Club made similar arguments in an unsuccessful legal effort to block the Cheniere facility in Louisiana. In Maryland, the Sierra Club took Dominion to court, and again lost. But about 800 acres of the property still had to remain wooded under the original easement.
The trees are part of why the nearby town of Lusby retains a rural feel, and why Cove Point Beach remains quaint. They also help to obscure 130 acres of dense industrial activity — activity some residents say has led to disturbing changes in their community, and to the bay it sits on.
Living with a refinery!!! What’s behind the trees and a 60-foot sound wall is a high-tech refinery — a maze of piping and metal and massive white storage tanks, where raw gas is purified and cooled into a liquid. That is critical, because the liquid occupies just 1/600th of the space raw gas would take up, making LNG much easier to transport.
There are combustion turbines and gas compressors. The cooling and refrigeration process relies on something called a cryogenic heat exchanger, and on a mixture of chemicals that are stored on site. The process is not easy, and not exactly clean. But the facility is designed to capture as much emissions as possible.
All told, the operation was responsible for more than 1 million metric tons of greenhouse gas emissions in 2018 — three times more than before exports began, according to Maryland Department of the Environment preliminary data.
That makes the facility one of the largest stationary sources of such emissions in the state. But the output fell well within the 2 million metric tons it is permitted to release into the atmosphere each year, state officials say.
Mike Frederick, Dominion’s vice president of LNG operations during the project’s construction, said the company regularly monitors some 270,000 different valves, pipes and other industrial components at any given time, especially for any leaks of greenhouse gases like methane.
For all that, some residents say they pay little mind to the facility. The construction that converted it for exports was annoying, and caused traffic, but that’s over now. It also provided some 10,000 people with temporary work, about 30 percent of whom were from Calvert and nearby Charles and St. Mary’s counties.
And it doubled the permanent jobs on site to nearly 200. Besides jobs, the company provides funding for a local park and local charities. Plenty of people see Dominion as a good neighbor — something Frederick says the company works hard at and prides itself on.
Others, however, believe Dominion’s good deeds are simply its way of buying goodwill not otherwise earned. Rather than being a good neighbor, they say Dominion looms over the community like an illegitimate landlord.
Linda Morin lived about a mile from the terminal for nearly 30 years, but moved 20 minutes north to Prince Frederick last year because of the shift to exports. Morin said she fears the terminal’s expansion made it more dangerous. She and others worry that its densely spaced chemical and gas storage tanks might explode in a chain reaction.
The Federal Energy Regulatory Commission, which gave its approval to the project in 2014, says the plant is safe and the residents’ concerns are unfounded.
Residents have other concerns, too — from the tides of the bay to the men who patrol its shore. Some complain about an arrangement through which the Calvert County sheriff’s office patrols the area on behalf of Dominion — which pays the salaries, benefits, pension contributions and other costs for nearly a dozen deputies. It also buys equipment, including boats, for their use.
Some residents say they have been harassed by the officers, who carry Dominion identification along with their deputy badges. They flash whichever one suits their need as they confront people strolling on the beach and walking their dogs, critics say.
“It just feels really ugly and creepy,” said Leslie Garcia, who has been part of the Cove Point Beach community for four decades. “This is all collusion. Government and corporate collusion.”
Calvert County Sheriff Mike Evans dismissed that notion. He said the county has had agreements with Dominion and the U.S. Coast Guard to provide security around the terminal for more than a decade, with the goal of serving and protecting the citizens, not Dominion. “There is no collusion,” Evans said. “We are good partners in this agreement.”
“Our daily orders come from the sheriff,” said Capt. Steve Jones, who leads the team of deputies detailed to the terminal. “Dominion does not give us marching orders.”
Some residents also believe Dominion caused the tides to change around Cove Point beach — resulting in a deadly undertow — by dredging out the shipping channel to its offshore platform in 2010.
Dominion referred questions about such claims to the government. State and federal agencies told The Sun they do not have the data to confirm or deny a change in the tides or the creation of a heavier undertow.
Garcia and others said they are convinced, citing the drowning deaths of three men in two separate incidents in 2015, in the same waters where they taught their kids to swim. “I’ve kayaked for years out there. …My son and his friends would go to the point and body surf. …You could step way out there and collect sharks’ teeth and do whatever, and you just can’t do that now,” Garcia said.
Tulkin contends that no one knows the full environmental impact of the Cove Point operation because federal regulators didn’t consider the ill effects of the fracking that harvested the gas nor of the greenhouse gases emitted when it is liquified, transported and burned throughout the world.
The Federal Energy Regulatory Commission, which approved the project after studying the issue for two years, determined it was “in the public interest” and would not significantly affect the “quality of the human environment.”
The regulators required Dominion to take various steps to mitigate local environmental concerns. But they also held — and state officials and a federal appeals court affirmed — that they were not required to consider concerns associated with the fracking industry at large.
Critics argue that in supporting the facility, state and federal regulators abdicated their responsibility to people and the environment not just in Maryland, but communities hundreds of miles away. See the Comment(s) to this Article below.
David Goldwyn, the U.S. special envoy for international energy affairs from 2009 to 2011, worked to pitch U.S. shale gas to foreign investors alongside then-Secretary of State Hillary Clinton. Now an international energy consultant, Goldwyn says Cove Point is “very well-positioned” to maintain its place in the market for many years to come given its proximity to the near-boundless Marcellus Shale.
Environmentalists should welcome that, he said, particularly given that coal-dependent developing countries are among Dominion’s customers.
Goldwyn argues the world should be moving from coal and diesel to natural gas as fast as it can — even if that means one day abandoning LNG plants like Cove Point once technological innovations make wind and solar a truly viable alternative.
“In the meantime, I will take every short-term [greenhouse gas] reduction I can get,” Goldwyn said.
Cove Point critics vehemently disagree, arguing the government should be trying to shutter the plant as a significant contributor to greenhouse gas emissions and move immediately toward renewable energy.
“I’m very, very concerned about our future, and not just here in Cove Point,” Garcia said. “I mean, we will be extinguished before everybody else, but we are a canary in a coal mine. …
“This is not the future. This is not the way to go. Period.”
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A farm town transformed, Dimock, Penna.
Excerpted from Baltimore Sun’s article above on Cove Point, MD
In the rolling hills of Susquehanna County in Northeast Pennsylvania, a Houston-based drilling company is working to fulfill a contract with one of Dominion’s biggest customers. The Cabot Oil & Gas Corp.’s fracking operation has transformed the small farming communities nearby — whether for better or worse.
There are several fracking well heads near Kim Grosso’s farm in Dimock, PA. Grosso says the water well on her farm was contaminated by Cabot Oil and Gas, which was fracking for natural gas beneath the property.
Crossroads like Montrose, pop. 1,500, are now essentially gas towns, their local economies thriving thanks to the many men and women who work the drilling rigs and drive the trucks that service them around the clock.
At night, the 100-foot rigs glow white against the thick rural darkness of the surrounding crop fields. Big white pick-ups fill the parking lots of roadside hotels and bars. A nearby Holiday Inn Express & Suites serves a partial breakfast starting at 3 a.m. for all the contractors whose rig work begins early.
By 6:30 a.m., a line of traffic on a dark two-lane road crawls by a digital sign that reads, “HEAVY TRUCK TRAFFIC. PLEASE SLOW DOWN.”
By 5 p.m., happy hour at The County Seat Tavern has already ended, leaving behind a handful of locals playing “Screw Your Neighbor” with bar owner Jan Rosenkrans, 37, who pours the beer and deals the cards.
“I’d say 90 percent of the town supports it,” Rosenkrans said of Cabot’s major presence. “Why not?”
Cabot and other drillers have provided jobs, supported the growth of local businesses and given struggling farmers and other folks a shot in the arm through royalty checks for the gas beneath their land — including Rich and Pam Fisher, 71 and 66, two of the card players at the bar.
He’s retired from the local phone company, she as a jailhouse cook. They have seven acres of property nearby, and when they signed a subsurface lease with Cabot a while back, they got about $2,000 an acre plus royalties they’re still receiving. “We needed it,” Pam Fisher said. “It helps.”
Cabot has tens of thousands of acres leased in the area, and Jeff Hutton, a Cabot vice president, said his company tries to do right by the community.
The company has a whole page on its website devoted to good work it does, with posts about a community picnic, repairs to local roads and scholarships for local students. In one video, Adam Diaz, owner of a local subcontracting company, says work for Cabot in hauling, disposal and other ancillary services allowed him to grow his company from 30 employees to 120 over the course of a year and a half.
Jeremy Weber, a University of Pittsburgh economist, says residents living in Pennsylvania’s gas-rich regions received about $1 billion in natural gas royalties in 2018. And Rosenkrans says much of that money stays local.
Cabot workers and their families, some of whom have become friends, buy beer and $5 pizzas from her bar, she said, and patronize most of the other businesses in Montrose, too. “It’s amazing what they’ve done for this town,” Rosenkrans said.
Others in the area, while acknowledging the perks, say there is a darker side to the gas.
In 2009, Cabot was fined $120,000 after the Pennsylvania Department of Environmental Protection identified a raft of violations in the neighboring township of Dimock — including the contamination of water wells and an explosion caused by an underground methane leak. The company agreed to stricter-than-normal regulations moving forward, and was temporarily barred from operating in Dimock.
More than a dozen families sued the company, some alleging their wells had been contaminated with so much methane that their tap water could literally be lighted on fire. Without admitting any wrongdoing, Cabot paid a settlement to many of those families in 2012 and settled with others in 2017.
Later that year, Cabot was again found to have violated the law. The company acknowledged failing to submit compliance reports about “air quality violations related to equipment at natural gas wells throughout Susquehanna County,” according to state regulators. The company paid a nearly $100,000 civil penalty. George Stark, a Cabot spokesman, said the problem was that “paperwork just wasn’t done properly.”
Many residents who took cash settlements agreed not to discuss their experiences. But some who never settled with the company will talk, including Kim Grosso and Ken Morcom, hog farmers in Dimock.
“It was right after the fracking that the water went bad,” Grosso said over hot coffee on a cold winter morning as an old pug, two Jack Russell terriers and three “house pigs” came and went through the kitchen.
Sometime around 2011, the couple were happy. They had just built a new barn and had plans to expand their farm. They had signed a sub-surface lease with Cabot, meaning they would receive royalties. And when other people started complaining about contaminated water, Grosso said they scoffed. “We actually thought all these people were crazy, for the fact that our water was fine,” she said.
But not long after Cabot began fracking on a new site nearby, the dogs and then the barn animals started refusing the farm’s well water.
Kim Grosso’s dogs and pot-bellied “house” pigs wait for treats in the kitchen of her Dimock, PA, home. Grosso says her water well was contaminated by Cabot Oil and Gas, which was fracking for natural gas beneath her property.
“That’s how we discovered it. It’s not like we just woke up one day and said, ‘Well let’s just say our water’s bad,’” Morcom said. “When your animals won’t drink the water, something is up.”
Morcom said he had someone come out to test the well, and the readings were startling. Their water was flammable, he said. It was also disgusting, Grosso said, pulling a jar of it from storage to show all the sediment within.
Ever since then, Cabot has delivered water to the farm on a daily basis. The company has offered to buy the property so they can move, but Grosso says it hasn’t offered enough for them to purchase a similar property elsewhere. Meanwhile, her royalties have dropped from nearly $300 a month to less than $100 as gas production on the property has ebbed.
That’s how we discovered it… When your animals won’t drink the water, something is up.” — Ken Morcom, hog farmer in Dimock, Pa.
Of Grosso’s claims, Stark said Cabot “has worked tirelessly with both the property owners and the regulators to resolve and settle this matter.” Company officials, he said, are “committed to a resolution and have made every effort to find a solution agreeable to all parties.”
But Grosso says she feels stuck — in a house with no water, on a property that’s been devalued, in a rural town that’s lost its charm amid the constant industrial activity and traffic. “When I first moved up here, it was the tranquility, the quiet,” she said. “It was beautiful, and all the sudden this stuff comes. There’s no longer peace and quiet.”