ConocoPhillips mothballing LNG plant; no buyer for Kenai facility

In the coming fall ConocoPhillips plans to further scale back operations at the company’s liquefied natural gas plant at Nikiski on the Kenai Peninsula, company spokeswoman Amy Burnett told Petroleum News in a July 12 email.

“The reduced operations will focus on continued preservation of the facilities for future LNG exports,” Burnett said. “The timing is right to begin planning to transition the Kenai LNG plant for a long-term shutdown.”

In November 2016 the company announced that it was putting the plant up for sale and in April of this year the company confirmed that it had received bids for the facility. But, although there are continuing discussions with prospective purchasers, ConocoPhillips has yet to come to acceptable terms for the facility’s sale, 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 the 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.

The facility, although old, presumably has value as an operational and permitted LNG plant at tidewater in a region with plentiful gas supplies.

- ALAN BAILEY