DOE lets ConocoPhillips Alaska resume LNG sales to non-FTA countries

The US Department of Energy approved a ConocoPhillips Co. subsidiary’s request to resume exports of LNG to countries not having a free-trade agreement with the US from the company’s Kenai facility in Alaska in an Apr. 14 order. ConocoPhillips’s authorization for such LNG exports from the site expired on Mar. 31, it noted.

Exports of as much as 40 bcf of gas equivalent would be authorized for 2 years, DOE’s Fossil Energy Office said in the order. The overseas sales would provide additional demand for Cook Inlet gas, which is otherwise not needed in the state, ConocoPhillips Alaska Natural Gas Corp. (CPANG) said in its application. It included a Sept. 5 letter from Alaska’s Department of Natural Resources supporting this point.

A Feb. 19 DOE order authorizes LNG sales from CPANG’s Kenai Peninsula installation to countries that have an FTA agreement with the US, ConocoPhillips noted. Those sales would be part of the 40-bcf limit, it said.

Alaska’s two US senators applauded DOE’s action. “I’m glad ConocoPhillips will be able to add to Alaska’s 40-year history of supplying natural gas to Japan,” said Lisa Murkowski (R), the Energy and Natural Resources Committee’s ranking minority member.

“DOE’s announcement also highlights the growth that’s occurring in Cook Inlet, where there is now ample gas supply to both meet local needs and help out our friends overseas,” she observed.

“This is great news for the cradle of Alaska’s oil and gas industry on the Kenai Peninsula,” said Mark Begich (D). “With plenty of gas available to meet local needs through at least 2018, we’re seeing the kind of job growth responsible oil and gas development can provide.”

He said he urged DOE to process the ConocoPhillips application to ship LNG to non-FTA countries outside the queue the department established for other LNG export applications. Only six applications in that group have been approved as being in the national interest, and at least 24 more remain, Begich said.

The company plans to operate the liquefaction plant seasonally, during summer when regional gas demand is low, the senator indicated.

ConocoPhillips separately said it is committed to meeting its local gas supply contracts and to diverting gas from the LNG facility to address local supply issues if needed. It previously said it would seek a new export authorization if local Cook Inlet area gas needs were met and there was sufficient gas available for export.

It said that during 2013, local utilities executed agreements securing their gas supplies through at least the first quarter of 2018. “The Cook Inlet area gas supply forecast has increased, which is a positive development for local utilities,” ConocoPhillips said. “LNG exports will provide a market opportunity for Cook Inlet gas production in excess of local market demand.”

Contact Nick Snow at nicks@pennwell.com.

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