Palin pleased by court's decision on Alaska LNG export terminal

Alaska Gov. Sarah H. Palin welcomed news that a federal appeals court effectively extended the license for an LNG export facility on Cook Inlet through 2011.

Nick Snow
Washington Editor

WASHINGTON, DC, May 21 -- Alaska Gov. Sarah H. Palin welcomed news that a federal appeals court effectively extended the license for an LNG export facility on Cook Inlet through 2011.

The decision by the Ninth US Circuit Court of Appeals to close its review of the US Department of Energy's decision to extend the Kenai LNG terminal and liquefaction plant's license resolved a long-standing dispute over allowing continued exports of Cook Inlet gas while assuring supplies would be available to local utilities, she said on May 18.

A recently announced agreement by ConocoPhillips to supply all of the Chugach Electric Association's gas supply requirements through the export term, and a large part of the utility's needs through 2016, was at the foundation of the court's action, according to Palin.

The terminal and liquefaction plant have been operating since the late 1960s and have provided high-paying jobs to Alaskans and tax revenue to local governments, she noted. The plant's continued operation is critically important because it helps assure that gas will be available for wintertime high-demand periods, when its supply can be diverted from export to local use as needed, she said.

DOE began to consider the LNG installation's export application in January 2007. Palin said that the state intervened to help assure that local gas supply needs would be met while preserving a critical element of the Cook Inlet gas market and an important part of the Kenia Peninsula's economic base.

The state's intervention resulted in a settlement among the state; Marathon Oil Corp., the Kenai facility's other partner; and ConocoPhillips in which each company agreed to negotiate with local utilities to assure a gas supply and to drill a minimum number of new gas wells, she said.

Palin said that Enstar Natural Gas Co., a gas utility based in Anchorage, reached a supply agreement through the new export license's term with ConocoPhillips and Marathon in December 2008. The companies' May 13 agreement with Chugach Electric, a member-owned utility serving 69,000 customers from Anchorage to the northern Kenai Peninsula, means all local gas utility supply requirements will be covered during the same period, she said.

"The cooperative spirit demonstrated recently by the Cook Inlet oil and gas industry and local utilities has shown what we can do when we all work together," the governor said.

Contact Nick Snow at nicks@pennwell.com.

More in Pipelines & Transportation