Sep
12, 2013 (Menafn - Alaska Journal of Commerce - McClatchy-Tribune
Information Services via COMTEX) --State officials have asked
ConocoPhillips to reopen its mothballed liquefied natural gas plant in
south Alaska and resume exports of Cook Inlet LNG to Asia, and company
spokeswoman Amy Burnett said the company is considering the request.
Operations were suspended in 2012 due to shortages of gas for local markets.
In
a Sept. 5 letter, acting state Natural Resources Commissioner Joe
Balash, (DNR Commissioner Dan Sullivan was on a six-month deployment to
Afghanistan at the time) requested ConocoPhillips seek a new U.S.
Department of Energy LNG export license for three years.
The
previous export license expired in 2012. New gas is now being developed
in existing Cook Inlet fields and explorers are making new discoveries,
Balash said.
In the letter to ConocoPhillips
Alaska President Trond-Erik Johansen, Balash said local utility needs
for gas -- a prime concern for the state -- are now met into 2018
through new contracts with Hilcorp Energy, which operates fields
purchased in the last couple years from Chevron and Marathon Oil.
The
state's concern now is that there is little market left for other
companies exploring and making new gas discoveries in Southcentral
Alaska.
"To provide an additional market
opportunity for gas from the Inlet, I request that ConocoPhillips file
an application with the Department of Energy's Office of Fossil Energy
for a three-year authorization to export LNG from your facility in
Kenai," Balash said in the letter.
ConocoPhillips
spokeswoman Burnett said, "ConocoPhillips has said previously that we
would consider pursuing a new export authorization if local gas needs
are met and there is sufficient gas available for exports.
"We
take the state's request that we apply for a new export license
seriously, and we will be working with stakeholders to further evaluate
the feasibility of resuming exports from the Kenai facility."
Buccaneer
Energy and Furie Operating Alaska, two Houston-based independents, have
recently made offshore discoveries of gas in the Inlet, and NordAq
Energy, an Alaska-based independent, has an onshore gas discovery on the
Kenai Peninsula. It is not yet known if the discoveries can be
commercially produced, however.
Balash said in the letter that without the LNG plant there may be no market for the explorers.
"Without
market opportunities for gas discoveries, companies lack the incentive
to invest in continued exploration. There are concerns that future
exploration budgets may be cut back," he said. "Diminished exploration
budgets hurt the state's interest in seeing its resources developed.
State lands in Cook Inlet hold tremendous amounts of possibly
recoverable natural gas, and the U.S. Geological Survey has estimated
that the entire basin may hold trillions of cubic feet," of undiscovered
gas."
Having the existing fields dependent on highly-seasonal utility demand could also create operational problems.
"When
existing wells that are currently producing are shut in (seasonally)
due to lack of demand for gas, water can migrate through the reservoir
to mix with sandstone clays. This can cause serious operational problems
when there are attempts to restart the wells," to meet higher utility
demand in winter, Balash said.
The independent explorers endorsed the state's request.
In
a statement, Buccaneer Energy CEO Curtis Burton said, "A robust natural
gas market needs to be developed that will exceed the local (utility)
demands and allow for the export of natural gas as LNG.
___ (c)2013 the Alaska Journal of Commerce (Anchorage, Alaska) Visit the AlaskaJournal of Commerce (Anchorage, Alaska) at www.alaskajournal.com Distributed by
MCT Information Services
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