Dominion Resources Rises on Cove Point Contracts: Dallas Mover
Dominion Resources Inc. (D) rose the most in almost three months after announcing it will move forward with plans to export natural gas from its Cove Point facility, after signing agreements with Sumitomo Corp. (8053) and an unidentified company to use all of the project’s capacity to liquefy fuel.
The shares increased 1.3 percent to $51.89 at the close in New York, the most since Jan. 31.
Dominion, based in Richmond, Virginia, still needs federal approval for the export facility, which it plans to begin building in 2014 and place in service by 2017, Thomas Farrell, Dominion’s chairman and chief executive officer, said during a conference call today.
The export terminal would have a capacity of 750 million cubic feet a day, about 75 percent of daily conventional gas production in the Appalachian region, Farrell said. Dominion hasn’t announced the project’s cost yet.
The Sumitomo announcement silenced widespread skepticism that the utility owner would build the first export terminal near the Marcellus Shale basin, said Angie Storozynski, a utility analyst with Macquarie Capital USA Inc. in New York who has an outperform, or buy, rating on the shares.
Farrell dismissed Sierra Club claims that a 2005 agreement gave the environmental group veto rights over any expansion of Dominion’s import terminal in Lusby, Maryland. Sierra Club directors in a letter today demanded Dominion cancel the project, which would “further industrialize” the site and increase hydraulic fracturing in the Marcellus.
“We have reviewed the regulations and agreements governing the site and are confident we can locate, construct and operate a liquefaction plant at Cove Point,” Farrell said in a statement today.
Dominion is negotiating binding terminal-service agreements with the two shippers and expects to finalize them “later this summer,” the company said in a statement today. Dominion will provide liquefaction, storage and loading services, and won’t own or export the liquefied natural gas.
The U.S. Energy Department approved Dominion’s application on Oct. 7 to export LNG from Cove Point to free-trade countries. It hasn’t approved a request to export to countries not included in the trade pacts. Dominion plans to file for Federal Energy Regulatory Commission approval this year, a process expected to take two years, Farrell said.
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