Kenai LNG plant owners will ask two-year extension for export permit

Posted: Wednesday, April 08, 2009

ConocoPhillips Alaska Inc. and Marathon Oil Co. will seek a two-year extension of the liquefied natural gas export license for the Kenai Peninsula LNG plant owned by the two companies, a ConocoPhillips spokeswoman said Thursday.

The plant's current export license expires less than a year from now, in March 2011.

A license extension, if granted by the U.S. Department of Energy, would be good news for Kenai because it would preserve about 110 jobs, but Southcentral Alaska communities will also enjoy added security in winter gas supplies because the plant would be operating.

The request will involve extending the time allowed for the export of LNG but it will involve the same amount of gas approved for export by the energy department in a 2009 extension of the export permit, ConocoPhillips spokeswoman Natalie Lowman said.

In 2009 the DOE extended a previous export permit to March 2011 and authorized the export of 99 trillion sted btus of gas, Lowman said. The new request will be just an extension of the time period and will not increase the volume of gas approved for export in 2009, she said.

That works because ConocoPhillips and Marathon have cut back on LNG exports at certain points over the past three winters so that gas could be diverted to local utilities during winter cold snaps. The plant has become a backstop for the utilities because the aging gas wells in producing fields in the region can no longer meet the peak winter demand of utilities during very cold weather.

Because this was a warm winter, no diversion of gas was needed from the plant but gas was needed, and LNG shipments were curtailed, during cold weather during the two previous winters.

The plant has shipped LNG to Japan since 1969, and is owned 70 percent by ConocoPhillips and 30 percent by Marathon. The facility employs about 60 directly and another 50 in contract support jobs.

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