A handful of Agrium employees were at odds with Kenai Liquefied Natural Gas facility executives over a resolution being considered by the Kenai City Council on Wednesday.
The proposed resolution threw city support behind an application by ConocoPhillips and Marathon for a U.S. Department of Energy two-year extension of the export license for the Kenai LNG facility.
Primary customers for LNG from Kenai have been two major Japanese utility companies in Tokyo. The current license ends March 31, 2009, and the application would extend the export license through March 31, 2011.
Seventy percent of the feedstock for the LNG plant comes from ConocoPhillips; 30 percent is from Marathon.
The Agrium workers said they were opposed to the export license extension and believed that any natural gas being liquefied for export meant less gas available to Agrium, which uses gas as a primary feedstock for its fertilizer products.
In addition to endorsing the two-year extension, the council’s resolution supported the continued operation of the LNG plant, Agrium and the Tesoro refinery.
LNG Plant Manager Lindsey Clark thanked the city for the resolution and said, “It supports our entire industry.”
Responding to a question from council member Rick Ross, Clark said the plant directed some gas to the local market this winter for home heating, and said, “Should we get down the road to where we are not able to export, the facility could turn around to import LNG.”
Robert Cox, who identified himself as an Agrium employee, said, “I do not support the extension of the LNG contract.
“If they sell to foreign customers, then turn around and import (LNG), it’s gonna cost more to the community,” Cox said.
Another Agrium worker, who identified himself as Chris Bouche, said he believed the natural gas supply issue was more a political shortage than physical.
“If Unocal still had a plant out there, there wouldn’t be a gas issue right now,” he said. “Are the oil and gas companies colluding to get a higher price ... I say they are.”
Agrium employee Jim Cooper said Agrium has been trying to get natural gas from ConocoPhillips, but has been told all of ConocoPhillips’ gas supplies are committed.
“We’ve lost a lot of jobs ... good jobs,” Cooper said. “We still have 150 jobs.
“I’m pretty sure Agrium’s people are working with ConocoPhillips, but I’m opposed to the extension,” he said.
Jim Kauffman, Agrium employee, said he was against the city’s “strong support” of gas exports.
“Are we going to continue shipping reserves out of state at a cheaper price when we don’t have enough?” he asked.
Marathon executive Lynden Ibele said Marathon has an interest in the LNG plant and sells to all industrial users in Cook Inlet.
“If the industrial markets disappear, it would force Marathon to cut its employees by 50 percent,” Ibele said.
Clark told the council that the Department of Energy “looks to see if we have enough reserves to meet utility and industrial contract obligations.”
After Ross offered an amendment to the proposed resolution suggesting the city support the extension as long as the DOE determines the gas being exported is in excess of the residential, commercial and industrial needs of the community, the resolution passed unanimously.
Phil Hermanek can be reached at firstname.lastname@example.org.
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