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Energy Department grants 2-year extension for Conoco's Nikiski LNG exports

  • Author: Alan Bailey
  • Updated: September 28, 2016
  • Published February 16, 2016

The Department of Energy has approved a request from ConocoPhillips for a two-year extension to the license for the export of liquefied natural gas from the LNG terminal at Nikiski, on the Cook Inlet coast of the Kenai Peninsula. The license, which had been due to expire on Feb. 18 of this year, now continues to Feb. 18, 2018. ConocoPhillips is allowed to export up to 40 billion cubic feet of natural gas in the form of LNG during that period.

Under the license ConocoPhillips can export LNG to any country that imports the material; traditionally the company has exported LNG to Japan. And the company is allowed to export both its own Cook Inlet gas and gas belonging to other entities. ConocoPhillips has been in the process of selling its Cook Inlet gas fields but has also said that it plans to retain its Nikiski LNG plant.

In granting the license extension, DOE said that the LNG exports will not impact the availability of natural gas for Southcentral Alaska needs, given that the local gas and power utilities have sufficient gas supplies under contract to meet their needs during the period of the license extension. ConocoPhillips had told the agency that it anticipates continuing a practice of diverting gas earmarked for LNG production to support peak local needs, if required. But the company also noted that the availability of gas storage facilities on the Kenai Peninsula reduces the likelihood of having to divert gas in this way.

DOE also commented that, with no changes required to the existing Nikiski LNG facility, no environmental review is needed for the export license extension.

ConocoPhillips spokeswoman Amy Burnett told Petroleum News in a Feb. 9 email that the company has yet to evaluate whether to pursue an LNG export program in 2016.

In April 2014, after ConocoPhillips had mothballed the Nikiski plant since early 2013, the company obtained a new Department of Energy license allowing up to 20 million cubic feet per year of gas to be exported as LNG over a two-year period. During that two-year license extension, which is about to expire, ConocoPhillips regularly shipped out LNG cargoes from Nikiski between May in October, according to reports that the company filed with the Federal Energy Regulatory Commission.

In 2014 the company shipped five cargoes, the first in May and the last in late September. In 2015 the company shipped six cargoes between May and mid-October. The first cargo in 2014 consisted of 588,764 barrels of LNG. Since then cargo sizes have ranged from 806,744 to 855,100 barrels. A barrel of LNG is roughly equivalent to 3.5 mcf of gas.

The Nikiski LNG plant has also sometimes supplied LNG to utility Fairbanks Natural Gas to bolster gas supplies for the city of Kenai. According to the FERC reports, ConocoPhillips delivered 65 tank loads of LNG to Fairbanks Natural Gas in 2014 and two tank truck loads in 2015.

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