State to assist LNG workers: Plant closure will have impact on borough, service area finances

Posted: Friday, February 11, 2011

The State of Alaska announced Thursday that it will help with job training and placement efforts for Kenai Peninsula residents who are losing their jobs as a result of ConocoPhillip's decision to close the Liquified Natural Gas plant in Nikiski.

Rep. Kurt Olson, R-Soldotna, said that about 60 employees will be directly affected by the closure, which is scheduled for April or May. That includes 30 employees who work directly for ConocoPhillips, and approximately 30 more who work for contractors involved in the LNG plant, although that number isn't a firm count.

Olson said that no Marathon Oil employees will be affected by the closure.

ConocoPhillips operates the LNG plant, which it co-owns with Marathon Oil.

Olson said that the Alaska Department of Labor will work on job training and placement for the workers. ConocoPhillips has said it will work to provide jobs within the company for its employees.

The department also handled Agrium's transition plan, Olson said.

"They have experience, unfortunately, on the Peninsula," he said.

In a statement, Olson said that the department will also provide companies with information about the federal Trade Assistance Act, which could provide additional resources to the employees.

But the central Peninsula will lose more than just jobs. Borough Mayor Dave Carey told the Peninsula Clarion that the company is paying about $595,000 in property taxes in the current budget. Over the last nine years, Conoco Phillips has paid more than $7 million in property taxes. That money plays a significant role for some aspects of the borough.

"It is very significant certainly to the borough as a whole and especially to the service areas as the only money they have access to is property taxes," he said.

The North Peninsula Recreation Center, Nikiski Senior Center, Nikiski Fire and emergency services, Central Peninsula Hospital and roads are all funded via service areas, and will feel the fiscal change.

Because Conoco will still have the property, their taxes won't go to zero.

The state currently values the LNG plant at $170 million, but will probably change.

Carey said the valuation is based on "a factor the state uses that has to do with how much is being produced in the plant, land, structure, infrastructure, also a portion of the value of what they're producing."

He didn't know how much the value would decrease, but said it would be notable.

"We certainly expect that's going to go down very low," Carey said.

Although the numbers are bound to go down, it isn't necessarily permanent. There is a chance that the plant will reopen at some point.

Natalie Lowman, a representative for Conoco Philips, said she didn't forsee an immediate sale of the plant, and that the company intends to keep it ready for exporting LNG, or another use, like importing LNG, in case the need and opportunity arises.

"Our intent is to mothball it and keep it in good working condition," she said.

Although the borough will lose revenue, it might not take as a big of a hit in charitable giving. ConocoPhillips has made donations to a number of local organizations and causes, including a $25,000 donation to the Boys and Girls club last spring and assistance with events such as a scholarship dinner last fall and a veterans picnic last summer.

According to the company's website, about half of its donations go to education and youth programs, a quarter is directed to social service organizations and the rest supports civics, arts, the environment and industrial safety programs.

Information on the amount or distribution of donations on the central Peninsula was not immediately available.

Lowman said ConocoPhillips' giving is based on an application process that considers the projects and support from employees and the community. She said they hadn't addressed how or if their giving would change.

"I would venture to say that I don't see anything changing in the near future," she said.

Molly Dischner can be reached at

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