The mayor of the Kenai Peninsula Borough said the mothballed Kenai LNG plant sold for $10 million, a figure that's a fraction of the property's assessed value and one that companies involved in the deal would not confirm.
ConocoPhillips sold the aging facility on Jan. 31 to Andeavor, which owns a crude oil refinery near the Nikiski plant and is Alaska's primary supplier of gasoline and jet fuel.
"The word's out; Andeavor bought the LNG plant, bargain price — $10 million," said Mayor Charlie Pierce at the borough assembly meeting Tuesday.
Both companies have agreed to keep the transaction price confidential, said Scott LaBelle, a spokesman for Andeavor, formerly Tesoro and based in San Antonio, Texas.
"We are not at liberty to disclose the transaction price or any associated details," he said Friday by email.
A ConocoPhillips spokeswoman also would not discuss the price.
LaBelle said the company is reviewing its options for how it will use the plant.
For decades starting in 1969, the plant produced LNG, or liquefied natural gas, for export. It was once the world's largest facility of its kind, and the first serving the Asian market, though it's small by today's standards.
Regular exports to Japanese utilities ended in 2011, amid concerns over dwindling Cook Inlet gas supply. Occasional exports continued through 2015, but the following year, ConocoPhillips announced it would sell the plant. With LNG prices low, it cited "market conditions" for the halted exports.
The company said it wanted to focus on its North Slope operations, which include a significant winter exploration season this year. The sale represents ConocoPhillips' exit from the Cook Inlet oil and gas basin, where it had long operated.
The plant and land are assessed at $55 million for tax purposes, according to borough records.
Pierce said at the meeting that the borough's assessing department is looking at the $10 million purchase price and considering its relationship to future assessed value and taxation of the property.
Pierce did not return phone calls and an email seeking comment about the sale price.
Larry Persily, former oil and gas adviser to Pierce's predecessor, Mike Navarre, said the property tax at the current assessed value is about $500,000 annually. Navarre left office in November.
Property assessments don't necessarily reflect sale value, said Persily. If two companies in a fair process agree on a price, then that's the right sale value for the property, he said.
Tom Anderson, the borough assessor, said Friday he could not confirm the sale amount.
Anderson said he discussed the transaction with Pierce before the Tuesday meeting, following an "informal" discussion with the property tax director for Andeavor, Chip Twomey.
"The details of the terms of the transaction are confidential, so I cannot confirm anything," said Anderson on Friday, adding that he had not seen documents verifying a price.
Twomey did not return a phone call Friday.
LaBelle, with Andeavor, had said the acquisition can provide low-cost fuel for the company's Kenai refinery.
Asked if LNG exports would be renewed, he said "we are still early in the process and evaluating all options."
Persily said Andeavor could overhaul the plant to import LNG, to help fuel Andeavor operations. But that would be costly and require approval by the Federal Energy Regulatory Commission.
"It's not like, 'Hey, let's import some cheap Indonesian gas next week,' " Persily said. "Money, time and planning would have to go into that."