By TENNILLE TRACY

WASHINGTON -- The environmental group Sierra Club is threatening to derail Dominion Resources’ plans for a natural gas export facility in Cove Point, Md., saying it struck an agreement with the company several years ago that precludes the construction of the facility.

In a strongly worded letter to Dominion Thursday, Sierra Club pressed the company to withdraw its application to build the facility and to "immediately cease any plans to expand the facility and any plans to export [natural gas] from the facility."

Sierra Club is emerging as a vocal opponent of natural-gas export proposals around the country. The group claims that exporting infrastructure will encourage more natural gas production, which relies on a controversial drilling method known as hydraulic fracturing.

Sierra Club says Dominion agreed in 2005 to use its Cove Point facility only for importing natural gas. By proposing to expand the facility for exports, Dominion is breaking that agreement, Sierra Club says.

Dominion CEO Tom Farrell said the company remains confident it will be able to build the facility after it reviewed rules, agreements and rulings from regulatory bodies governing the site.

Dominion also said Thursday that it had lined up two customers for the facility. One of the customers is Japan's Sumitomo Corp., and the other wasn't named.

"We are pleased to announce that we are moving forward with our Cove Point liquefaction project," Dominion said.

Dominion said the LNG facility is now fully subscribed and that it hopes to negotiate terminal service agreements by the end of the summer.

Dow Jones Newswires (additional reporting by Steve Gelsi)