More
- Classifieds
- Cars
- Deals
- Real Estate
- Rentals
- Photos
- Blogs

Cove Point means business

By Editorial Board,May 06, 2012

JUST OFF COVE Point on Maryland’s Western Shore sits an array of empty docks. Built to accommodate massive tankers bearing natural gas from abroad, the facility saw only five ships pass through in 2011, reports Dominion Resources, the owner. None have come this year. American firms have increased their production of natural gas from unconventional shale formations so much in the past few years that they are running out of places to store it, the price has plummeted and Cove Point’s expensive facilities are all but idle.

On the other side of the planet, in Japan, the price of natural gas has soared. An energy-hungry world is coping with the shutdown of Japan’s nuclear reactors after last year’s Fukushima Daiichi meltdown, which left the country scrambling to find fuel for backup power plants. Japanese companies are investing hundreds of millions of dollars in natural gas projects and have paid 10 times the American price for imports.

The opportunity here is obvious: The United States should export some of its bountiful stocks of natural gas to Japan and other countries with fewer supplies and high demand. That is why Dominion Resources wants to retrofit its Cove Point facility to service exports as well as imports. It’s no surprise that Sumitomo Corp., a Japanese energy outfit, is already in contract talks to use the retrofitted terminal, pending regulatory approval of exports to Japan.

But the Sierra Club has declared that it opposes the retrofit of Cove Point. The organization claims to have an unusual amount of leverage over Dominion, in the form of a 2005 agreement with the company on what it can do on the site. Dominion fires back that it can make the changes it needs on the terminal’s existing footprint.

Even if the language ends up not favoring Dominion, logic still would. Though environmental groups worry about hydraulic fracturing, the process drillers use to extract unconventional gas, the right response is to push for proper oversight for all energy firms, not to punish one company for trying to provide a reasonable service that others will succeed in furnishing in coming years.

In fact, with the Interior Department and the Environmental Protection Agency both out with sensible new rules over the past few weeks, approving projects such as Cove Point should be seen as a win for everyone, environmentalists included. Though it’s possible that allowing exports might raise natural gas prices somewhat in America, doing so would also improve the country’s trade deficit, produce returns on domestic energy projects, increase state and federal tax revenue, support construction and maintenance jobs, reduce the leverage of gas-rich international bullies such as Russia, provide nations such as Japan a lower-emissions alternative to burning lots more coal and oil, and, as Japanese Prime Minister Yoshihiko Noda indicated at the White House last week, tighten trade ties with America’s leading Asian ally.

On the other hand, those docks could also continue to sit, empty.