Firms announce top LNG site for Alaska project


By Becky Bohrer, AP

JUNEAU, Alaska–The companies seeking to advance a multibillion-dollar natural gas pipeline project in Alaska have a leading contender for the terminal site where gas would be liquefied and shipped to Asia, signaling that a decades-old dream could become a reality even though major hurdles remain.

Exxon Mobil, BP, ConocoPhillips and TransCanada Corp. announced Monday that the Kenai Peninsula town of Nikiski is the leading contender. Senior project manager Steve Butt said three or four other sites are still being considered, but Nikiski has the land needed for the plant and the companies know they can route a pipeline there. Land acquisition work is under way. He declined to identify those other sites.

Another advantage for Nikiski, a town of about 4,600 people located 10 miles (16 kilometers) north of the city of Kenai, is that routing a pipeline there would allow the state’s major population centers, including Fairbanks and Anchorage, to access gas from the line, he said.

A liquefied natural gas plant operated in Nikiski for decades and provided exports to Japan. But ConocoPhillips and its then-partner, Marathon Oil Corp., announced plans to close the plant in 2011, citing market changes. Sporadic shipments continued until ConocoPhillips announced earlier this year that it had decided not to renew its export license. The state has asked ConocoPhillips to reopen the mothballed site and apply for a new license to provide an incentive for petroleum companies to explore and invest in Cook Inlet.

Butt said the liquefied natural gas plant envisioned as part of the pipeline project would be 16 or 17 times larger than that plant.

Alaskans have long dreamed of a gas line as a way to shore-up revenues as oil production — Alaska’s economic lifeblood — declines, create jobs and provide energy for residents. Monday’s announcement was another step toward building a gas pipeline to rival that of the trans-Alaska oil pipeline, though the companies have not yet committed to building and continue to stress the need for “competitive, predictable and durable” terms on oil and gas taxes and royalties to pull the project off.

The pipeline envisioned would span 800 miles (1,290 kilometers) from the prodigious North Slope to south-central Alaska, and the mega-project could cost $45 billion to more than US$65 billion.