The U.S. Federal Energy Regulatory Commission, or FERC, Tuesday re-approved Dominion Resources' (D) Cove Point, Md., liquefied natural gas expansion project, but capped existing gas flow levels on the Washington Gas Light Co., or WGL, system.

The ruling follows a federal court decision earlier this year that suspended FERC's original 2006 expansion approval because a local utility claimed the project could create dangerous leaks. The court ordered FERC to review the case and provide better documentation on the safety of the expansion.

FERC's decision essentially allows the regulator to continue to study the risk that may be created in the WGL system by expanded flows, but allows the expanded distribution through the other networks connected to the terminal.

Natural-gas distributor WGL had objected to the expansion, saying the influx of LNG would cause its system in the mid-Atlantic region to suffer severe leakage, and replacing the weak parts of its pipe infrastructure would take years.

Current gas flow levels through the WGL system from the terminal will continue.

Dominion spokesman Karl Neddenien said in a statement the company was pleased by the decision.

"We look forward to completing the expansion and bringing much-needed additional supplies of natural gas to Maryland and the East Coast," he said.

He couldn't immediately say what percentage of the expanded capacity would be restricted by the WGL flow cap.

Cove Point is in the final stages of a significant expansion project designed to take the facilities peak capacity from its current 1 billion cubic feet a day to 1.8 billion cubic feet. The company said it still plans to bring the expanded capacity online in December.

Norway's StatoilHydro ASA (STO), BP PLC (BP) and Royal Dutch Shell (RDSA) each own capacity at the terminal.

Copyright (c) 2008 Dow Jones & Company, Inc.