PSE signed a definitive gas sale and purchase agreement with Cabot Oil & Gas Corporation (Cabot), wherein Cabot has agreed to sell 350,000 MMBtu per day of natural gas for 20 years from its Marcellus Shale position. The contract will commence on the in-service date of the Dominion Cove Point LNG liquefaction project currently scheduled for 2017.
In order to convert the natural gas purchased from Cabot into LNG for export to Japan, PSE has signed a 20-year Terminal Service Agreement with Dominion Cove Point LNG, LP. The LNG is then distributed to two major Japanese utilities: Tokyo Gas and Kansai Electric—both companies signed 20-year Heads of Agreement for the sale and purchase of LNG with Sumitomo Corporation. ST Cove Point LLC (“STCP”) was established as the joint venture company between PSE and Tokyo Gas in order to carry out the contracted natural gas liquefaction processing and LNG sales in Maryland. STCP will sell 1.4 mtpa of LNG to Tokyo Gas and Sumitomo will sell 0.8 mtpa of LNG to Kansai Electric from the Cove Point LNG Project.