BP says it will close its gas-to-liquids demonstration project in Nikiski by the end of the year.

The company says the demonstration was a success, proving that its GTL process to make diesel and jet fuel from natural gas can be scaled-up from the laboratory and operated reliably.

The project operated for seven years. The decision affects about 15 BP employees, who will be offered positions elsewhere.

BP's GTL development program will continue in Europe. The company is working with Davy Process Technology on the engineering design of full scale GTL units. The London-based oil giant started the experiment in Nikiski in 2003 after building its experimental plant there for $86 million. The effort started as natural gas prices started rising and different ways of tapping dormant fields worldwide began to be explored.

Although Alaska's North Slope has huge, locked-in reserves of natural gas, BP said all along that GTL was not the technology for getting that gas to market, preferring instead a conventional gas pipeline. An advantage of the GTL process is that it can create a high-grade liquid fuels that can be transported relatively easily via tanker or pipeline. Drawbacks include the cost of GTL plants and the amount of gas that must be used up in converting gas to a liquid fuel.

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