DOE extends Kenai LNG plant export permit

Eric Watkins
Senior Correspondent

LOS ANGELES, June 5 -- Natural gas users in Japan and other Pacific Rim nations are the main beneficiaries of a decision by the US Department of Energy to approve a 2-year extension of LNG exports from the Kenai LNG plant at Nikiski, on Alaska's Kenai Peninsula.

ConocoPhillips and Marathon Oil Corp., which operate the terminal, had sought the extension, which will run from Apr. 1, 2009, to Mar. 31, 2011. The extension, which was supported by Alaska Gov. Sarah Palin and other state officials, will allow the two firms to export up to 98 bcf of LNG (OGJ, Jan. 14, 2008, p. 27).

To secure the extension, the two firms agreed with Palin's office to ensure that there will be enough gas for local utilities. They agreed to develop additional gas reserves in Cook Inlet, allow third parties to monetize their gas production through the LNG plant, and sell Cook Inlet seismic and well data to third parties.

Despite concern in recent years that Cook Inlet's natural gas reserves were depleting, DOE said its review showed gas exports could continue without risking local shortages.

"The record shows there is sufficient regional supply of natural gas to satisfy local and export demand through the authorization time frame," said DOE's Office of Fossil Energy. The extension will continue benefits provided by the export to the Alaskan economy and international trade, the agency said.

According to the Energy Information Administration, the US exported to Japan an average of 3.14 bcf/month of LNG during October 2007 through March 2008. The monthly totals stood at 1.68 bcf in October, 3.20 bcf in November, 4.44 bcf in December, 2.84 bcf in January, 2.73 bcf in February, and 3.94 bcf in March.

Contact Eric Watkins at hippalus@yahoo.com.

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