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ConocoPhillips applies to restart exports

Move comes at behest of DNR

Posted: December 12, 2013 - 8:40pm

ConocoPhillips on Wednesday filed for a permit to resume exports of liquefied natural gas from their Kenai facility in the Nikiski industrial area.

According to an internal email, ConocoPhillips Vice President of

Commercial Assets Vice President Bij Agarwal announced the company sought a two-year export permit from the U.S. Department of Energy.

The permit was sought with support from local stakeholders and the Alaska Department of Natural Resources, who recently sent a letter requesting that the company restart exports as a way to stimulate natural gas production in the Cook Inlet gas fields and continued exploration for more gas, ConocoPhillips Alaska spokesperson Natalie Lowman said

In September, Acting Commissioner of The Alaska Department of Natural Resources Joseph Balash sent a two-page letter to ConocoPhillips president Trond-Erik Johansen asking that he seek a three-year permit from the Department of Energy Office of Fossil energy to export natural gas.

Balash wrote that doing so would promote energy security and advance the state’s interests in “economic health, robust employment, and responsible development of the state’s abundant natural resources.

“The operation of ConocoPhillips Kenai LNG export facility is needed to sustain exploration and development,” Balash wrote.

According to Agarwal’s email, the industrial gas market offered by his company exporting will help keep current natural gas fields producing and provide an economic basis for exploration and the development of new supplies.

“Resuming exports is good for the natural gas market,” Lowman said. “If you don’t have a place to sell your gas why would you go look for more?”

Regarding an expected timeline for permit approval from the Department of Energy, spokesperson Allison Lantero wrote in an email that the Department of Energy reviews pending applications for LNG exports on a case-by-case basis in the order received, while also closely monitoring market developments.

Lowman said ConocoPhillips’s Kenai plant restarting its export operation will benefit the local job market by maintaining 50 direct jobs and 120 indirect jobs supporting operations. The plant provided $20 million in benefit to the state and local economy through payroll and taxes, she said.

Kenai Peninsula Borough Mayor Mike Navarre said that the news of exports resuming bodes well for local employment, the borough tax base and other natural gas burning operations on the Peninsula.

The export operation will have an increased tax evaluation, but that number is yet to come. There will be some additional employment at the plant, but perhaps “more importantly” the service industry supporting the plant will see an increase, Navarre said.

Exploration and other long-term aspects of the news had definite support, Navarre said.There has not been much exploration since word came that there was a 40-year supply of natural gas. With recent “work-overs” from Hilcorp Energy Co. and new gas from Cook Inlet Energy, everyone has helped increase the supply, he said.

Balash wrote that smaller gas exploration budgets hurt the state’s resource development interests. According to his letter, ConocoPhillips’ Kenai plant is the only possible current market for additional demands.

“State lands in Cook Inlet hold tremendous amounts of possibly recoverable natural gas and the United States Geological Survey has estimated the entire basin may still hold trillions of cubic feet,” Balash wrote.

The exported natural gas would be shipped to any nation that the U.S. has a Free Trade Agreement with, according to the export application on file with the Department of Energy.

With Agrium in negotiations for natural gas supplies and the state permits needed to reopen their Nikiski fertilizer plant filed for, this bodes well, Navarre said.

Permits will require ConocoPhillips to stop exports if the gas is needed locally.

“It’s good news for the borough and the state,” Navarre said.

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