Export extension good news, but issues remain

Posted: Sunday, October 10, 2010

Good news this week: Federal regulators have granted an extension for ConocoPhillips and Marathon Oil to export liquified natural gas from their plant in Nikiski through March of 2013.

The announcement provides at least a little stability in what is an uncertain time for energy production in Southcentral Alaska. The facility has been in operation since 1969, and in addition to the economic benefits -- more than 100 direct and indirect jobs and significant tax revenue for the Kenai Peninsula Borough -- it provides a stop gap to ensure local utilities and are able to deliver adequate natural gas during peak winter demand. In that capacity, a functioning LNG plant is a crucial piece of infrastructure for the region.

That said, the export license extension in and of itself should not be interpreted as a long term solution to Southcentral's brewing energy concerns. The greatest determining factor as to whether the plant remains operating in its current configuration is the availability of natural gas to Southcentral Alaska. Indeed, ConocoPhillips spokeswoman Natalie Lowman told the Clarion last week that there are no immediate answers to what will happen with the plant after March of 2013.

"At this point we're just pleased with this step," she said.

There are many more steps that need to be taken, and at this point, various entities are heading in different directions.

The state administration and Legislature are pushing both a large-diameter pipeline from the North Slope that would include a spur line to Southcentral, as well as a smaller diameter bullet line. And two of the three major producers on the North Slope are backing a different pipeline to the Lower 48. We have yet to learn what commitments open seasons have elicited.

Ideas have been floated for other projects, from coal gasification to geothermal to tidal energy generation.

Meanwhile, a few small independent explorers are looking at the Cook Inlet basin while production from the larger outfits has tapered.

We're pleased to see the LNG facility merits an export license extension. At the same time, we'd like to be able to have an energy plan in place that will meet our needs for more than just the next two years, and there's many questions to be answered and much work to be done to make that happen.

In short: The extension of the LNG export license for ConocoPhillips and Marathon Oil is good news for the Kenai Peninsula, but it is just a small piece in the very complex puzzle of addressing Southcentral Alaska's future energy needs.

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