9th Circuit closes review of export license

The 9th Circuit Court of Appeals said it has closed its review of a federal decision to continue exports of liquefied natural gas to Asia from a terminal in Cook Inlet.

The announcement follows news May 12 that Chugach Electric, an Anchorage-area electric utility, signed a gas supply contract with ConocoPhillips, a local producer. ConocoPhillips owns the Kenai Peninsula export facility with fellow producer Marathon.

Following several years of deliberations, the U.S. Department of Energy last year extended the export license for the facility by two years, to 2011 from 2009.

The State of Alaska supported the extension in return for concessions from ConocoPhillips and Marathon, including a promise to negotiate with local utilities and to drill more wells.

Chugach challenged the export license, concerned about local utilities having adequate supplies. Proponents of the plant say it serves as a backup during times of high demand.

“This is a win-win for utilities that need gas to supply power and space heat to the bulk of Alaska’s population and for Cook Inlet’s oil and gas industry,” Gov. Sarah Palin said in a statement.

The companies drilled the required wells last year. The newly proposed gas supply contract between Chugach and ConocoPhillips covers the final requirement of the deal.

The contract must still receive approval from the Regulatory Commission of Alaska before Chugach can start buying gas under it. The state said two Enstar contracts with ConocoPhillips and Marathon last year also helped satisfy the requirement. Regulators did not approve those contracts, instead allowing Enstar to buy gas using a provision in its tariff. Enstar is still looking to fill shortfalls in gas supplies expected as soon as 2011.

ConocoPhillips and Marathon were scheduled to appear before the Federal Energy Regulatory Commission on May 21 to discuss safety and reliability requirements at the LNG plant.

—Eric Lidji