Have any questions? Please give us a call at 907-561-7737
Terms of Service | Privacy Policy
Your purchase was successful, and you are now logged in.
A receipt was sent to your email.
For decades it was one of Alaska’s industrial icons, a gleaming white plant on the Kenai Peninsula that was the nation’s first and for years the only facility that could export liquefied natural gas, or LNG, to overseas markets.
There have been no exports since 2015 and the plant has been in “warm storage” since 2018. Now it is bring brought back, but to a new life as an LNG importer, bringing gas, ultra-chilled to liquid form, from overseas for local use.
The U.S. Federal Energy Regulatory Commission approved a plan by the current owner of the plant, a subsidiary of Marathon Petroleum Co., to convert the plant to an import facility.
FERC approved the Trans-Foreland Pipeline Co.’s. “Kenai LNG Cool Down Project” Dec. 17. Trans-Foreland, a subsidiary of Tesoro Petroleum that is a Marathon subsidiary, is to have conversions at the plant completed and the plant ready for LNG imports in two years.
The liquefied gas would be stored at cold temperatures in existing tanks at the plant and then regasified, or returned to its natural gaseous state. This would be to supply 3,000 to 7,000 million British Thermal Units, or mmbtus, to the nearby Kenai refinery for fuel, according to the document approved by FERC. The refinery is also owned by Marathon.
This volume of gas, expressed in mmbtus, is roughly equal to five to seven thousand cubic feet, or mcf, per day of gas. That is a quantitative term more commonly used in the U.S. Supplying this would require up to four LNG tankers a year landing at the Kenai plant.
If the price of the imported LNG is less than the cost of purchasing gas from Cook Inlet gas producers, mainly Hilcorp Energy, the LNG would lower energy costs for the refinery and improve its economics.
This is important because the refinery is the las remaining part of Kenai’s once-thriving industrial base, which once included the large Agrium ammonia and urea fertilizer plant, now mothballed, and the LNG plant. All three facilities are in Nikiski, north of the city of Kenai on the peninsula.
When it was owned by Phillips Petroleum and then ConocoPhillips, the plant operated as an LNG export facility from the time it was built in 1969 to 2015, when exports ceased due to perceived shortages of gas in Cook Inlet. Since 2018 it has been in “warm storage,” meaning that it was maintained but that three bulk LNG storage tanks previously keep cold to maintain stored LNG in its chilled liquid state were allowed to warm up.
A U.S. Department of Energy authorization to export LNG from the plant also expired in 2018. Trans-Foreland also told the FERC is has no plans to apply for a new export license Modification of the plant to import, store and then regasify LNG would require skid-mounted vaporizer and new pumps, valves and piping. Trans-Foreland did not release its cost estimates for the conversion and Marathon Petroleum did not return a telephone inquiry on this. However, sources familiar with the plant said they believe the work can be done for about $5 million.
Trans-Foreland also told FERC that it has no plans to sell imported LNG or gas to third parties, such as regional utilities, but there also be no serious impediments in doing this.
This could be, in fact, a way of inducing more competition into the Southcentral Alaska natural gas market, which is now dominated by Hilcorp, the major producer and has some of the highest prices for gas in the nation. The price now averages $7.51 per mcf.
The Kenai plant is also equipped with loading racks so LNG could be shipped by truck to smaller storage sites and regasification facilities elsewhere in the state. Regional gas price not only affects space heating costs in the region but also electricity, since gas is the fuel that is mostly used to generate power.
Copyright © 2004- • Anchorage Press • 731 I St, Suite 102, Anchorage, AK 99501 | Terms of Use | Privacy Policy | Contact Us | The ANCHORAGE PRESS is owned by Wick Communications.
Get up-to-the-minute news sent straight to your device.
Please disable your ad blocker, whitelist our site, or purchase a subscription
Your account has been registered, and you are now logged in.
Check your email for details.
Invalid password or account does not exist
Submitting this form below will send a message to your email with a link to change your password.
An email message containing instructions on how to reset your password has been sent to the e-mail address listed on your account.
Your purchase was successful, and you are now logged in.
A receipt was sent to your email.