LNG carrier arrives at Nikiski facility

The first LNG vessel to pick up a cargo of liquefied natural gas from ConocoPhillips’ LNG facility on Alaska’s Kenai Peninsula since the re-opening of the facility has arrived at the dock in Nikiski, ConocoPhillips spokeswoman Amy Burnett told Petroleum News in a May 5 email. The vessel, called the Excel, will carry the first of six cargoes to be exported from Nikiski to Japan this year, Burnett said.

In 2013 ConocoPhillips mothballed the facility because of uncertainties over gas supplies from the Cook Inlet basin. However, a resurgence of the Cook Inlet gas industry has encouraged the company to restart the plant. On April 14 the U.S. Department of Energy issued a new export license, giving permission for the export of up to 40 billion cubic feet of gas per year through the plant to non-free-trade-agreement countries such as Japan.

Although there have been concerns in recent years about the adequacy of gas supplies from the Cook Inlet basin for Southcentral gas and power utilities, the utilities have now secured supplies through to the first quarter of 2018. And, with companies exploring for gas and developing new gas fields expressing concern about finding markets for new gas discoveries, the LNG facility can presumably provide a commercial outlet for gas production. In addition, the operation of the facility can enable gas producers to keep gas wells operating during the summer, when utility gas demand is low, thus improving the efficiency of well production. And in the winter, during periods of peak gas demand, the LNG facility can act as a backstop for utility gas delivery, with gas otherwise designated for LNG production used to bolster the utility supplies.

—Alan Bailey