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ConocoPhillips buys Marathon’s share of LNG plant in Kenai

Posted: October 12, 2011 - 11:48am

ConocoPhillips has purchased Marathon Oil Co.’s 30 percent interest in the Kenai natural gas liquefaction plant the two companies have owned since 1969, a ConocoPhillips spokeswoman confirmed Oct. 11.

The purchase was completed Sept. 26 but was not announced, according to Natalie Lowman, the spokeswoman. The transaction occurs as ConocoPhillips, the operator, prepares to mothball the plant, which is expected to occur near the end of October, Lowman said.

Earlier this year the two companies announced that the plant would cease LNG production but that its facilities would be preserved to help meet regional gas needs in the future, or for a resumption of LNG exports if more gas supply becomes available.

Initially, ConocoPhillips and Marathon said they would cease LNG production in mid-year but then extended the expected shutdown to allow for additional cargoes to be shipped to Asian buyers.

“We have made four shipments since earlier this year and we are studying the possibility of making a fifth shipment,” Lowman said. “We are still working out our plans for preserving the plant facilities.”

One goal in the preservation is to keep the LNG storage tanks in a cold state.

There are three storage tanks at the facility with a capacity of storing 2.2 billion cubic feet of gas as LNG.

The plant is in Nikiski on the Kenai Peninsula, about 10 miles north of the city of Kenai and 60 miles south of Anchorage. ConocoPhillips and Marathon both supply gas to the plant with ConocoPhillips’ gas coming from the Tyonek platform at the North Cook Inlet gas field and Marathon’s gas coming from several onshore fields the company operates. ConocoPhillips is the operator of the LNG plant.

Until recently the plant supplied only Tokyo Gas and Tokyo Electric under long-term contracts, but on the termination of the long-term contracts ConocoPhillips has shipped one cargo to a buyer in China and three additional cargoes to Japan, Lowman said.

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