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Maryland’s Own ‘Keystone Pipeline,’ Cove Point, Moving Forward

Posted: June 14, 2015 at 4:56 pm   /   by   /   comments (0)

By Mark Uncapher

markUncaphernewThe Keystone XL natural gas pipeline from Canada remains stuck in regulatory limbo.  The Obama administration’s failure to approve it is projected to cost 20,000 direct jobs and another 118,000 indirect jobs.   Earlier this year legislation approving the construction of the Keystone XL Pipeline passed both the Senate and House.  However after President Obama vetoed the bill in February, the Senate was unable to override his veto with the necessary two-thirds majority.

However Maryland’s own “Keystone” project is moving forward with the strong support of Governor Hogan. The Cove Point natural gas export facility in Lusby involves a proposal by Dominion Resources for a $3.8 billion investment to add natural gas liquefaction and export capacity.  The existence of a Liquefied Natural Gas (LNG) facility is old news to Maryland.  Cove Point was certified in 1972 for the purpose of importing Algerian LNG.  The current proposal simply allows a change in direction, from gas import to export, reflecting North American gas production growth.

Cove Point offers dramatic economic benefits to the state.  Construction of one of the largest capital projects ever in Maryland produces more than 3,000 construction jobs during the three-year period. Calvert County is to receive an additional $40 million a year on average in additional tax revenues in just the first five years after the project is in operation.

Last month the Federal Energy Regulatory Commission finally released an environmental assessment, concluding that the project can be built without any significant environmental impact because of mitigating measures.   Also in May, the U.S. Department of Energy authorized Cove Point to export liquefied natural gas to countries not covered by the Free Trade Agreement, a point that environmentalists have challenged.

While in Tokyo earlier this month, Governor Hogan commemorated a 20-year agreement with Sumitomo Corp., Tokyo Gas Co. Ltd. and the Kansai Electric Power Co. under which Cove Point’s LNG will be exported.   As the Governor noted, “The Cove Point project brings tremendous economic benefits to Maryland and will help secure Japan’s energy future in the wake of the Fukushima accident by delivering stable and competitive LNG to Japan for 20 years.”

In addition to the economic benefits from this project, LNG routed through Cove Point can reduce global greenhouse emissions by millions of tons a year by replacing coal as the fuel for electricity generation. Its LNG shipments are projected to reduce the U.S. trade imbalance by at least $2.8 billion and possibly as much as $7.1 billion annually.

The support of the state, and especially our governor, has helped move this important project forward more quickly than might otherwise have been possible. However, during the campaign for governor, Hogan’s opponent Lt. Gov. Anthony Brown equivocated about it, engaging in a masterpiece of political doublespeak to avoid a position, saying he “would not oppose the conversion of this facility if the environmental concerns that have been raised can be mitigated appropriately.”

The success of Cove Point serves as a reminder of how a governor focused on improving the state’s economy can make a difference for the state.