In a letter to the U.S. Department of Energy, Conoco Phillips and Marathon challenged those who are concerned about continuing exports at a time of tight supplies in Southcentral Alaska by saying recent contracts will ensure local needs get met during the extension period.
The current export license, approved by the Department of Energy in 2008, lets Conoco and Marathon ship around 99 trillion British thermal units of LNG to Asia by April 1, 2011. Because of cutbacks in cargo tankers, though, the companies believe they will have shipped only about half that allotment by the deadline, and they asked the department for an additional two years, until March 31, 2013, to ship the rest.
The Energy Department previously decided, based on remaining gas reserves, that those volumes were more than the Alaska market needs. The request from the two companies, though, comes amid growing concerns about the Cook Inlet basin's ability to meet local needs, especially when regional demand peaks on cold winter days.
Natural gas is used locally to heat and power homes and businesses.
A group of Democratic lawmakers, several citizens and Gov. Sean Parnell, who filed late comments, asked the Energy Department to guarantee local needs are met before exports continue.
Conoco and Marathon noted that despite those comments, their application remains "formally uncontested," meaning no one intervened or filed a legal protest.
Contracts meet local needs
The companies said three recent gas-supply contracts should alleviate concerns about local needs during the extension period.
Earlier this year, Marathon got approval for separate supply contracts with Chugach Electric Association and Enstar Natural Gas Co.
Those utilities are the two largest users of natural gas in Alaska. The contracts helped Chugach meet its supply needs through 2014 but still left Enstar 2 billion cubic feet short of what it expects to need in 2011 and 2012, or about 3 percent less than its total need.
Enstar and Conoco recently signed a contract requiring the producer to divert natural gas from the Nikiski LNG plant into the local grid during peak demand as long as it didn't cause "material operational difficulties or technical harm to the facility."
That contract is awaiting approval from the Regulatory Commission of Alaska. It would create another line of defense against supply shortages on the coldest days of the year but would still leave Enstar about 3 percent shy of estimated demand in 2011 and 2012.
Chugach and Enstar have both expressed support for the extension, primarily because the LNG plant, with its significant appetite for gas but ability to cut its demand during cold snaps, lets Cook Inlet gas fields operate full throttle year round.
ConocoPhillips and Marathon have asked for Energy Department to rule by early September.
The Anchorage Daily News/adn.com contributed to this story.
Important warning about e-mails purporting to be from the adn.com staff.