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State asks ConocoPhillips to reopen idle Kenai LNG plant

Posted: September 16, 2013 - 7:11pm  |  Updated: September 17, 2013 - 9:38am

State officials have asked ConocoPhillips to reopen its mothballed liquefied natural gas plant in south Alaska and resume exports of Cook Inlet LNG to Asia, and company spokeswoman Amy Burnett said the company is considering the request.

Operations were suspended in 2012 due to shortages of gas for local markets.

In a Sept. 5 letter, acting state Natural Resources Commissioner Joe Balash, (DNR Commissioner Dan Sullivan was on a six-month deployment to Afghanistan at the time) requested ConocoPhillips seek a new U.S. Department of Energy LNG export license for three years.

The previous export license expired in 2012. New gas is now being developed in existing Cook Inlet fields and explorers are making new discoveries, Balash said.

In the letter to ConocoPhillips Alaska President Trond-Erik Johansen, Balash said local utility needs for gas — a prime concern for the state — are now met into 2018 through new contracts with Hilcorp Energy, which operates fields purchased in the last couple years from Chevron and Marathon Oil.

The state’s concern now is that there is little market left for other companies exploring and making new gas discoveries in Southcentral Alaska.

“To provide an additional market opportunity for gas from the Inlet, I request that ConocoPhillips file an application with the Department of Energy’s Office of Fossil Energy for a three-year authorization to export LNG from your facility in Kenai,” Balash said in the letter.

ConocoPhillips spokeswoman Burnett said, “ConocoPhillips has said previously that we would consider pursuing a new export authorization if local gas needs are met and there is sufficient gas available for exports.

“We take the state’s request that we apply for a new export license seriously, and we will be working with stakeholders to further evaluate the feasibility of resuming exports from the Kenai facility.”

Buccaneer Energy and Furie Operating Alaska, two Houston-based independents, have recently made offshore discoveries of gas in the Inlet, and NordAq Energy, an Alaska-based independent, has an onshore gas discovery on the Kenai Peninsula. It is not yet known if the discoveries can be commercially produced, however.

Balash said in the letter that without the LNG plant there may be no market for the explorers.

“Without market opportunities for gas discoveries, companies lack the incentive to invest in continued exploration. There are concerns that future exploration budgets may be cut back,” he said. “Diminished exploration budgets hurt the state’s interest in seeing its resources developed. State lands in Cook Inlet hold tremendous amounts of possibly recoverable natural gas, and the U.S. Geological Survey has estimated that the entire basin may hold trillions of cubic feet,” of undiscovered gas.”

Having the existing fields dependent on highly-seasonal utility demand could also create operational problems.

“When existing wells that are currently producing are shut in (seasonally) due to lack of demand for gas, water can migrate through the reservoir to mix with sandstone clays. This can cause serious operational problems when there are attempts to restart the wells,” to meet higher utility demand in winter, Balash said.

The independent explorers endorsed the state’s request.

In a statement, Buccaneer Energy CEO Curtis Burton said, “A robust natural gas market needs to be developed that will exceed the local (utility) demands and allow for the export of natural gas as LNG.

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JohnPeterZenger
729
Points
JohnPeterZenger 09/16/13 - 09:49 pm
3
0
Twas just last winter

...that the powers that be were still saying we had a gas shortage here.

We were supposed to start importing LNG, remember?

Alaska business monthly, (a corporate mouthpiece), was bemoaning our 'gas shortage'.

The Alaska Journal of Commerce, (another corporate mouthpiece) was for a long time quite apoplectic about our looming 'gas shortage'.

Republican DNR commissioner Dan Sullivan, was saying just lately that there weren't enough wells to meet demand. (he's so smart he's now running for a US Senate seat representing Alaska,)

What, you say now Dan? Now there's too much gas, you say? Right. Got it. Go Dan.

And we'd been hearing that doom and gloom for several years in a row before that. Oh we have to give 500 million to a Canadian company to build a pipeline. That'll fix things. Wait, that pipeline wont' get gas to Cook Inlet, we need to spend a few billion to build another gas pipeline. We have a shortage, don't you know. We're gonna go dark and freeze.

Republican Bill Walker is running for governor this year, just like he was running last time, saying he'll build some other pipeline because ....wait for it, 'gas shortage'. Elect Bill. What you say, no gas shortage? Hmmmm. There goes that soundbite.

There were doomsday scenarios being promoted at every turn right into last winter. Residents would freeze in their houses, utilities would go dark, ....Oh nos.

This 'gas shortage' doom and gloom scenario was used as justification for a gas storage facility. Enstar beat the regulatory commission over the head with talk of imminent disaster to justify raising it's rates.

I seem to also remember this 'gas shortage' talk was used to justify giving foreign corporations state money because 'the residents needed gas and we're about to go dark and freeze.

Furie, which was Escopeda, got slapped with a 15 million dollar fine while trying to beat the deadline to get 20 million dollars or so from the state. 'Gas shortage' was the word.

Buccaneer got what?, about 24 million or so from the state because 'gas shortage'.

The talk then was the LNG plant was going to be needed to make up for the 'gas shortage'.

All along during all this talk of 'gas shortage', the geologists were saying there is plenty of gas.

Well OK then, that means the state must subsidize foreign corporations to fix our 'shortage'.

Today?

So now, all of a sudden, this state financed foreign corporation says it's now the state's responsibility to 'create a market' which will exceed that 'shortage' invention that was used as a cudgel to justify all the state money for the 'gas shortage' and all the price increases to cover the costs supposed to 'fix' the shortage.

Gotta hand it to those foreign corporations and those oil and gas corporations, if they don't have a market they'll create one, either through claiming a shortage or an excess, doesn''t matter which one, and it's the state and the public who is expected to make this business plan work. Just get the oil lobbyist governor and a few oil dependent legislators properly greased and voila. So-called 'problem' solved.

Guess which legislators and which governor greased the wheels in this 'free market' fiasco?

Yep, that would be those same ones who say America will die tomorrow if anyone attempts to meddle with the 'free market'.

This lesson in hypocrisy is brought to you by the GOP and their [filtered word] enablers. All hail the free market.

(....gas prices? Oh yeah. Don't hold your breath waiting for those prices to go back down now that there's so much gas they can't figure out where to sell it.

It's kind of like any other oil and gas product, it goes up immediately at the mere hint of a mythical 'shortage', it doesn't even have to be an actual shortage, just a maybe. You know, it could happen,a maybe pretend one. But it 'could happen'. Trust them, it could. Right?

The price rises but when the mythical shortages don't actually happen, (who knew? giggle, snort,) ...they leave the prices at elevated levels and just invent a new prediction as an excuse, that new prediction will be the excuse of another looming shortage sure to be on the way. Or maybe it's to be a glut. Who knows? Right? Who cares really, the oil corporations and their oily public servants will come out on top. What more could you want?

The Alaska public is paying for this fiasco. And don't even begin to think no one could have foretold what's happening today, ...that was the plan all along.

You've been played. And you re-elected them to play you again.

The public is fleeced again and again. All power to the corporations and their puppet public servants.

Those corporations? They're people too, you know, ...greedy, money grubbing grifter people, yes, ...but people nonetheless.

http://www.aidea.org/Portals/0/PDF%20Files/2013_02-22_LNG-FBXreportFINAL...

(maybe a local wingnut could explain how it's all Obama's fault, ...in three, two, one.....

KMarx
181
Points
KMarx 09/17/13 - 07:58 am
2
1
Senator Wagoner, smart guy

I guess former Senator Wagoner is looking pretty smart these days. He cautioned against running amuck with multi-billion dollar projects until we took the time to see what happened in Cook Inlet in response to the exploration and production incentives he was responsible for having written into law.

If the private sector can't calculate an adequate return on investment for a project with an acceptable risk, the State should probably stay out of the sandbox.

JohnPeterZenger
729
Points
JohnPeterZenger 09/17/13 - 09:51 am
4
0
Let's not kid ourselves.

The exploration and production incentives were written by the corporations who stood to gain from free public money.

Tom did hand in the paperwork, but like so much legislation these days, those bills were custom tailored to corporate needs by lobbyists and consultants.

Boilerplate corporate welfare legislation, the same as a long line of the same which has been forthcoming for years.

As far as 'looking smart'?

Large pools of public money subsidizing and driving selective corporate profit is not smart.

That isn't capitalism, that's not in any way a free market.

It's favoritism and corporate welfare on a massive scale.

It is definitely in direct opposition to that 'free market' that Republicans claim to be all about.

These 'Republicans' couldn't care less about free markets, what they care about is keeping their corporate masters happy with a steady flow of public money.

The real welfare queens? These multinational corporations making their living and reaping their profits on public money handouts and giveaways.

Politicians giving away public money aren't ever going to look smart, ...what they are doing isn't smart.

Watchman on the Wall
2893
Points
Watchman on the Wall 09/17/13 - 07:06 pm
0
2
I told you so along time ago

I told you so along time ago that this IndependantDemocrateRepublican smelled a rat as to the we're running out of oil & gas. It will never happen as long as this earth is spinning and the sun rises in the east and sets in the west.
When one watches the many oil & gas related business' being built out north road and HEA building that mammoth substation next to Unical one can also see that a scam of the public from energy related business's and all other like minded business's.
When hillcorp took over and whamo they all of a sudden have all the natural gas needed for home heating and anything else then people should have smelled that consumer ripoff rat. It's to late now they suckered the consumers into their scam and we will now pay for their deceptions.
It's not a democrate or republican thingy, it's a greed thing and abuse of people not being informed and believing everything their told. The earth will never run out of oil & gas and they know it as all the supposed oil & gas fields have filled up again and are being productive at a higher cost. Like the old timers said back in the 70's, cap those wells until the price is right. Looks like the price is almost right for a while anyhow.

JohnPeterZenger
729
Points
JohnPeterZenger 09/17/13 - 03:59 pm
1
0
watchman,

You've strayed from the context and I'm afraid once again that you've promoted a few too many false assumptions.

I'll leave you to your more fantastical facets of your belief in natural systems, there's no accounting for some beliefs, but to say partisanship plays no part is simply wrong. Too much evidence stands to unequivocally refute such a blatantly uncorroborated statement.

Watchman on the Wall
2893
Points
Watchman on the Wall 09/17/13 - 05:22 pm
0
1
JPZ explain how I've strayed

JPZ explain how I've strayed from the context. Is this article not about the sudden excess of oil & gas here on the Kenai?
My assumptions are the simple facts of utilities working together for a more productive, profitable business for all in the consumer supply areas of energy. My beliefs are no more fantastical than are yours, it's just depends on which side one is typing on. My beliefs are mine and yours are yours and in this case I say that as this article says we have plenty of natural gas and either we were lied to about the shortage or it the shortage really did exist at one time and all of a sudden is a miracle, we now have gas in an abundance so let those dollars role in. As I said last year when one looks at all the oil & gas related business's that have been built out North Road, then even the simplest minded can go figure what's up.
Not wanting to pick a word fight, just wondering why your supposedly right and I am wrong.

Mariner
148
Points
Mariner 09/17/13 - 05:44 pm
1
0
Russians....why always a winner and looser?

Why does the U.S. always have to be the one to broker international deals? Why is it important that there's always a winner and looser in international relations and the U.S. always has to win? Why can't the perspective be that peace is achieved and chemical weapons are destroyed? If the Syrians don't comply then all bets are off. Why not try another tactic than send our military first and then determine "it's not all we were told". Imagine if U.N. weapons inspectors kept wandering around Iraq looking for WMD's. That Iraq kept them all hidden all this time and all the damage would have been prevented and our national debt and deaths and injuries would have been saved. Where are the "right to life" folks when it comes to doing all we can to avoid war before using weapons as a FIRST CHOICE? Why is the "right to life" only for the initial stages of life and not life in it's entirety? Help me understand? You seem to have thoughts and ideas on most things?

Mariner
148
Points
Mariner 09/17/13 - 05:49 pm
0
0
Watchman.....comment was posted after the wrong article.

Sorry but the previous comment was placed after the wrong article. It obviously belongs after your comment concerning the opinion vote on the Russians and Syria.

Watchman on the Wall
2893
Points
Watchman on the Wall 09/17/13 - 06:52 pm
0
0
Mariner you can go in and

Mariner you can go in and edit your comments when you mess up. At the bottom of your posts is the word edit, hit edit and change or delete what's not correct and move on to save comments. Not knowing if you knew this, it took along time before someone on Gretawire showed me this blogging trick.
I've messed up and posted wrong opinions on the wrong articles as well, who has not?

JohnPeterZenger
729
Points
JohnPeterZenger 09/17/13 - 09:30 pm
1
0
On the one hand, watchman

I did explain how you were wrong,

and on the other hand, you decided maybe you'd edit some of what you originally wrote.

Watchman on the Wall
2893
Points
Watchman on the Wall 09/18/13 - 10:30 am
0
1
SVP, I mean JPZ, I was not

SVP, I mean JPZ, I was not wrong I only rethought some of what I wrote and undid it. But back to the article, we by some miracle now have an abundance of natural gas and local utilities were just lucky enough to be building facilities in place to prosper from this miracle and future growth of business's out north road due to the oil & gas now available.
Miracles do happen, this is not one of them though. Consumers got scammed and we all know it.
There are two options as to what happened with this miracle of an abundance of natural gas now. Either it naturally was replenished or they lied about a shortage. I still maintain that the earth will never run out of oil & natural gas and we are being played by greedy people.
Have a GR8 day.

JohnPeterZenger
729
Points
JohnPeterZenger 09/18/13 - 11:03 am
1
0
That's rich,

You fundamentally changed what you wrote, thought better of it, you say, ....'undid' it, is the description you use, yet you weren't wrong?

In your world you can alter or edit your reality as you wish, as if what once was is now never to be considered?

Great trick. It's illusory, but that's what the phrase 'all in one's mind' denotes. Don't expect others to agree to such fanciful invention.

And watchman, after claiming to follow along on a contextual thread, and requesting illustration and being granted the same, ...you then repeatedly decline to respond to the requested clarification.

That indicates to me that you aren't interested in maintaining any context, any objectivity, any probity or rectitude.

It's not dialogue you're practicing, it's self generated fictional narrative.

And I'll leave you to it.

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