Conoco sells last Cook Inlet asset, Nikiski LNG facility, to Andeavor

Alan Bailey

Petroleum News

ConocoPhillips has sold its liquefied natural gas facility at Nikiski on the Kenai Peninsula to Andeavor, formerly called Tesoro, the operator of the nearby Nikiski oil refinery.

“The sale closed and the operatorship was transferred to Andeavor on Jan. 31,” ConocoPhillips spokeswoman Amy Burnett told Petroleum News in a Feb. 2 email.

“We can confirm that Andeavor has acquired the Kenai Liquefied Natural Gas (LNG) facility,” Andeavor spokesman Scott LaBelle told Petroleum News. “This acquisition further strengthens our integrated value chain by optimizing our operations in Kenai and providing low-cost fuel for our refinery to produce the fuels that consumers in Alaska need to keep their lives moving.”

The LNG facility is the last of ConocoPhillips’ Cook Inlet assets to be sold - the company has been departing the Cook Inlet gas industry and has already sold its gas fields in the region. The company’s Alaska policy is to focus on its North Slope oil fields and exploration interests.

“With the sale of Kenai LNG, ConocoPhillips Alaska is able to direct its full attention to its North Slope operations,” Burnett said.

The plant was originally opened by Phillips Petroleum and Marathon Oil in 1969 to provide a means of monetizing excess natural gas coming from the Cook Inlet basin. And over the years the plant produced LNG for delivery by tanker to Japan. However, more recently, as gas supplies from Cook Inlet tightened and the price of Cook Inlet gas increased while global LNG prices have fallen, the export of LNG from Nikiski slowed to a halt. There were just five cargoes exported in 2014 and six in 2015. Exports stopped entirely in 2016.

ConocoPhillips put the Nikiski LNG plant up for sale in November 2016.

- ALAN BAILEY