A research report released today by environmental groups confirms there is no evidence that Virginia-based Dominion Resources has secured major financial backing for its plan to export fracked Appalachian gas to Asia through a terminal on Maryland’s Chesapeake Bay. Opponents of the plan simultaneously warned potential investors that the Cove Point liquefied gas export project—estimated to cost $3.8 billion—is socially controversial, legally uncertain, and morally objectionable.
The report, written by the widely used and respected financial research firm Profundo, searched publicly available databases worldwide and found no evidence that Dominion had secured the key, 16-year project loan reportedly needed to finance 60-70 percent of the gas export project’s total construction costs. While a Dominion spokesperson asserted to Bloomberg in September 2013 that, “We have financing,” the company has yet to publicly reveal the source, if it exists.
“It’s typical for project sponsors to announce the source of their financing, once the financing is in place,” said Doug Norlen, policy director at Pacific Environment and an expert in the area of fossil fuel project financing. “For Dominion to say they have secured financing and to not identify the source is rather odd and raises tough questions for potential investors.”
Cove Point rests at the center of the U.S. gas industry’s plan to export billions of cubic feet of fracked gas to Asia from the Marcellus Shale region. The U.S. Department of Energy has said such exports will raise U.S. gas prices and harm virtually every sector of the U.S. economy except the gas industry.
In a tele-press conference today, Norlen also cautioned that many liquefied natural gas (LNG) export projects around the world are experiencing cost over-runs at already higher price tags. Additionally, according to Norlen and legal experts, delays in the permitting process are likely in such projects and similar delays could endanger Dominion’s end-user contracts with Japanese and Indian companies—crucial to the long-term profitability of the project for shareholders. Dominion has not publicly stated when those contracts are set to expire.
“Dominion still has to convince a host of state and federal regulators that this project is in the public interest. They have to convince a judge that they’re not violating the terms of an earlier settlement with Sierra Club. And, now it appears as if they still have to convince a lot of investors that this project is a good bet,” said Earthjustice Associate Attorney Jocelyn D’Ambrosio. “It all adds up to this: Dominion still has many hurdles to clear. And, as a growing number of residents and elected officials line up to oppose and raise questions about this massive industrial project, it’s clear that Dominion has failed to convince the public that they won’t harm people, our climate, and the treasured Chesapeake Bay.”
Speakers representing environmental, law and faith-based groups cautioned potential investors that their companies risk being instantly embroiled in fierce grassroots and legal opposition if they become involved in the project.
“Dominion’s shareholders and potential investors should understand that people all across Maryland see Cove Point as something affecting them in a major negative way through new pipelines, unprecedented carbon pollution, and harm to the Chesapeake Bay,” said Mike Tidwell, director of the Chesapeake Climate Action Network. “So opponents will naturally push back in a major way against any investor who joins Dominion in this high-profile, high-harm investment.”
Over the past month, the Cove Point issue has ballooned into a statewide controversy. The Baltimore Sun editorial board and Maryland gubernatorial candidates recently called for tough federal scrutiny of the potential climate, health and environmental impacts of exporting fracked gas at Cove Point. The opinion pages of southern Maryland newspapers have been overrun by local residents calling for action to address nearby health and safety threats, from increased smog and noise pollution to a surge of tankers on the Bay. The offices of Senators Barbara Mikulski and Ben Cardin have received dozens of calls urging them to demand a full federal environmental impact statement. This fall, more than 1,300 Marylanders also joined a nine-county tour organized by more than thirty environmental, faith, health, student, and community groups uniting to stop Cove Point, with hundreds penning letters on the spot urging Governor O’Malley to intervene.
The grassroots backlash to Cove Point is expected to gain momentum in 2014, as federal and state regulators begin to hold hearings and public meetings to consider the series of permits Dominion needs in order to begin construction. On February 20th, activists plan a massive rally outside the Maryland Public Service Commission headquarters in Baltimore as that body begins to review controversial air and water pollution permits for the Cove Point project.
“Those seeking investors for this project may say it’s an investment in cheap energy,” said Joelle Novey, Director of Interfaith Power & Light (DC.MD.NoVA). “But no energy whose extraction or combustion makes people sick or poisons their water is cheap. When people are paying for dirty energy with their health, when we’re paying for this energy by permanently destroying our climate, such energy is not cheap. It is intolerably expensive.”