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NEWS BULLETIN

April 10, 2007 --- Vol. 13, No. 32April 2007

Gov. Palin supports Nikiski LNG license extension, with conditions

Gov. Palin has told the U.S. Department of Energy that she supports a two-year extension of the export license for the LNG plant at Nikiski on Alaska’s Kenai Peninsula, provided that certain conditions protecting utility gas consumers can be met. The current export license is due to expire in 2009 — ConocoPhillips and Marathon, the plant owners, have applied to DOE for the two-year license extension.

“While I support an extension of LNG export, I have concerns that the interests of Alaskans may be jeopardized in granting the blanket authorization unless several criteria are met,” Governor Palin told DOE’s Office of Fossil Energy.

The governor’s conditions include a requirement that binding contracts are in place for the supply of gas to domestic utilities during the term of the proposed license reauthorization. The governor also wants the DOE to require the gas producers to commit to gas projects that will maintain the level of Cook Inlet gas reserves. And, to encourage gas development by new entrants to the Cook Inlet gas industry, the governor wants to see access to the sale of gas to the LNG plant by third party producers.

The state recognizes the importance of the plant in the economics of the Cook Inlet gas industry, provided that utility gas supplies for consumers can be continued at reasonable price levels, Kevin Banks, acting director of Alaska’s Division of Oil and Gas, told Petroleum News.

“We recognize that the LNG role in the Cook Inlet gas market is important to new exploration and new development,” Banks said. “We want ConocoPhillips and Marathon to commit to replacing these (gas) reserves and we want access to the LNG plant to others who might find gas in the Inlet.”

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