Electric and natural gas supplier
Dominion Resources Inc.
) received a much needed nod from the U.S. Department of Energy
("DOE") for natural gas exports to non-Free Trade Agreement
countries. Dominion will export liquefied natural gas ("LNG")
from its Cove Point LNG facility on the Chesapeake Bay in Lusby,
The approval will allow the company to export 770 million cubic
feet of natural gas a day (mmcf/d) for 20 years. Prior to this
the DOE had already approved Dominion's request of exporting
natural gas to countries with which the U.S. has a Free Trade
Agreement. Dominion's Cove Point facility is ideally
located for export activities.
The facility has an excellent infrastructure with connection to
the pipeline grid, has an LNG storage capacity and an updated
pier. Dominion will be primarily working to add liquefaction
capability in this plant, which will require a capital investment
of nearly $3.4 billion to $3.8 billion. The construction will
begin in 2014 and the plant is expected to start exporting from
Technological advancement in drilling has resulted in a massive
production increase of natural gas in the U.S. The global demand
for natural gas is on the rise due to its clean burning nature
and the major U.S. producers are trying to cash in on this.
At present more than 20 U.S. based energy companies have applied
to the DOE for LNG export approvals. However, the U.S. government
is taking its time. The delay inevitably raises questions as the
export of natgas would bring in billions of dollars of export
revenues and create thousands of jobs. Some believe unrestricted
export of natural gas would increase its price in the U.S.
Superior fracking techniques will allow energy companies to ably
meet domestic demand, both in volume and price. The export of
natural gas will also lower the possibility of over-supply in the
domestic market. We believe expedited approval of larger volumes
of natgas exports will unlock greater value for this natural
Dominion Resources currently has a Zacks Rank #3 (Hold).
Meanwhile other operators in the sector having a favorable Zacks
Integrys Energy Group, Inc.
NV Energy, Inc.
PNM Resources, Inc.
). All of these stocks currently retain a Zacks Rank #2
DOMINION RES VA (D): Free Stock Analysis
NV ENERGY INC (NVE): Free Stock Analysis
PNM RESOURCES (PNM): Free Stock Analysis
INTEGRYS ENERGY (TEG): Free Stock Analysis
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