LNG export extension license request sees less opposition

Posted: Tuesday, February 19, 2008

Opposition to ConocoPhillips' request for a liquefied natural gas export license extension is waning, according to its Nikiski LNG plant manager.

Speaking to members of the Nikiski Chamber of Commerce last week, Lindsey Clark said, "Initially five intervenors opposed the LNG export license extension."

Opposition, he said, centered on commercial issues.

Since that time, Tesoro and Enstar have withdrawn their opposition, Clark said. Another opponent Agrium has closed its fertilizer plant in Nikiski and now Gov. Sarah Palin has announced her unconditional support of the extension.

The state's largest producer of North Slope crude oil and natural gas has asked the Department of Energy to extend its export license through March 31, 2011. The current license ends March 31, 2009.

Primary customers for LNG from ConocoPhillips' plant in Nikiski are Tokyo Gas and Tokyo Electric and Power Co.

"We're cautiously optimistic of getting a positive response from (the Department of Energy) this quarter," Clark said.

Besides providing 58 direct employees and 128 indirect employees with $17 million in personal income, and having a total impact on the state of approximately $160 million, ConocoPhillips believes its LNG plant is necessary for the long-term natural gas supply stability of the Cook Inlet region, according to Clark.

The Nikiski plant currently is running at about 75 percent of its maximum capacity, he said.

"Right now, we don't have adequate markets for the (natural gas) supply we have past 2009," Clark said. "If we shut down the LNG plant, there is no need for our supply.

"Preserving the LNG plant infrastructure provides options for the future," Clark said.

In times of peak demand during extreme cold weather, ConocoPhillips can divert its gas supply to the local utility companies serving residences and small business.

When asked why ConocoPhillips is seeking only a two-year extension, Clark said that term does not require a sales agreement.

Also, by the end of 2011, the company should have a better understanding of the Alaska North Slope natural gas supply picture.

"Another extension (request) may be possible," he said.

Clark was asked if North Slope gas could be liquefied on the Slope and be shipped in the existing Trans-Alaska Pipeline.

"Because of temperature and cryogenic concerns, you can't really transport LNG by pipeline and considerable distance," he said.

Pure methane LNG is minus 258 degrees F. at atmospheric pressure.

He likened LNG shipping requirements to shipping it in a thermos bottle.

The Nikiski plant has been in production since 1969.

Phil Hermanek can be reached at phillip.hermanek@peninsulaclarion.com.

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