The Nikiski LNG plant has been the biggest consumer of Cook Inlet natural gas for decades. As gas production from the inlet has declined in recent years -- creating a supply crunch for Southcentral's electric and gas utilities during cold snaps -- renewing the license has been hotly debated.
But over the past couple of years, Conoco and Marathon have eased much of that controversy by diverting gas to the utilities when they need it, instead of directing the gas to the LNG plant.
The Parnell administration, Anchorage utilities and some legislators applauded the companies' decision to seek renewal of the export license from the federal Department of Energy. They said the LNG plant is vital to the Kenai Peninsula economy and to Southcentral utilities.
"This LNG facility provides the backstop for gas supplies during very cold winter days," said Sharon Leighow, spokeswoman for Gov. Sean Parnell.
Enstar Natural Gas Co. pipes gas to heat homes and businesses throughout Southcentral. Enstar officials said the LNG plant could also be a future industrial customer for North Slope gas, making a gas pipeline from the North Slope to Southcentral easier to finance.
The LNG plant is a key customer for Cook Inlet gas in the summer. With less demand for heat and electricity, the utilities can't use enough of the gas production then to keep all of the inlet's gas wells running.
"Without exports, you have no place to put the gas in the summer. You'd have to shut in wells, and then you wouldn't have (enough gas) in the winter" for utility customers, said Lee Thibert, the senior vice president for strategic planning and corporate affairs for Chugach Electric Association.
"The key is keeping a stable production level all year round," Thibert said.
The LNG exports from Alaska to Japan have been falling.
Conoco and Marathon's current export license lets them export roughly 99 billion cubic feet through next March. But to date they have shipped only about a quarter of that total.
The new proposal would extend the amount of time they have to export the 99 billion cubic feet to March 2013, Conoco officials said.
Conoco's Cook Inlet manager Dan Clark testified about the two companies' LNG export plans during the state Legislature's Senate Resources Committee meeting Thursday.
Resources Committee co-chair Lesil McGuire, R-Anchorage, said she supports the license renewal. Sen. Bill Wielechowski, D-Anchorage, said he has no objection to the exports if they don't harm local gas customers.
Conoco and minority partner Marathon have been exporting LNG from Nikiski since the late 1960s. Their plant is the only LNG exporter in the country.
Find Elizabeth Bluemink online at adn.com/contact/ebluemink or call 257-4317.
Important warning about e-mails purporting to be from the adn.com staff.