Court orders review of Cove Point gas project

By Tom Doggett

WASHINGTON (Reuters) - A U.S. appeals court on Friday overturned a government order allowing the expansion of a liquefied natural gas import terminal in Maryland, saying federal regulators failed to show how a local utility could fix leaks in its pipeline in time to carry the gas.

The Federal Energy Regulatory Commission in 2006 approved almost doubling, to 1.8 billion cubic feet, the amount of gas the Cove Point LNG terminal could send out daily.

Cove point is south of Baltimore on the Chesapeake Bay. The expanded terminal, owed by Dominion Resources, would deliver new winter gas supplies in the Mid-Atlantic and Northeastern states.

WGL Holdings Inc's Washington Gas Light Company, a local distribution company that receives natural gas from Cove Point, asked for court review of FERC's decision, arguing the expansion project will cause severe leaks throughout its pipeline system.

The company said that in the two years after it started receiving Cove Point's LNG, the company's pipeline in Prince George's County, Maryland, saw a 16-fold increase in leaks.

The company said higher heat content of the LNG, compared with traditional natural gas, caused leaks in the seals in the couplings connecting its pipes.

LNG is natural gas treated for transportation aboard special tankers. The gas, cooled to minus 259 degrees Fahrenheit (minus 162 Celsius), changes into a liquid and shrinks to less than 1/600 of its original volume.

Once it arrives at a terminal, the LNG is returned to a gaseous state and shipped through pipelines.