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Nikiski chosen as lead site for ANS gas LNG plant, terminal
The Nikiski area on Southcentral Alaska’s Kenai Peninsula has taken the lead as a site for the liquefaction facility and terminal for the proposed Alaska LNG project.
The project proponents — ExxonMobil, BP, ConocoPhillips and TransCanada — said Oct. 7 that more than 20 locations were evaluated based on conditions related to the environment, socioeconomics, cost and other project and technical issues.
Commenting on that decision, Alaska Gov. Sean Parnell said the companies have agreed “to pursue the acquisition of property in the Nikiski area to site the liquefaction facilities associated with the Alaska LNG project,” and called the decision “real progress” toward his administration’s goal of a natural gas pipeline.
Parnell also said in a statement that the “project is taking shape” and “presents a new opportunity for synergy and alignment among the producers and the project being pursued by the Alaska Gasline Development Corporation.”
AGDC was established by the Alaska Legislature to pursue an in-state gas pipeline, which could also become a spur line for in-state deliveries off of a major line from the North Slope.
Pipeline routing work continues Steve Butt of ExxonMobil, senior project manager, said in the statement from the companies that this is a step forward for the Alaska LNG project.
He said that in addition to site selection factors, Nikiski “also results in a pipeline route that provides an access opportunity to North Slope natural gas by the major population centers in Fairbanks, Mat-Su Valley, Anchorage and the Kenai Peninsula.”
While Nikiski is the lead site, secondary locations continue to be considered, the companies said. And work continues on a number of engineering, technical, regulatory, fiscal, commercial and permitting issues.
The project concept includes a gas treatment plant on the North Slope, an 800-mile pipeline with up to eight compressor stations and at least five off-take points for in-state gas delivery, and a liquefaction plant and terminal.
“The teams are currently preparing for more detailed engineering and design work, consistent with previously released plan phases,” the companies said.
Cost of the project has been put in the $45 billion to $65 billion range, and the companies noted that “competitive, predictable and durable oil and gas fiscal” terms are required for the project.
Site competition Valdez City Manager John Hozey said in a statement that Valdez, which has been promoting that city as the site for the liquefaction plant and terminal, would continue to “make the case for its port.”
He said it was a step closer to having ANS gas for export, but also said, “Valdez has been working with industry for decades to successfully deliver North Slope crude to market.” Valdez has “many unique attributes ... as a terminal location,” he said. “The city will therefore continue working with the project managers to insure they have all the best information when finalizing this decision.”
The Richardson corridor Most legislative response to the announcement was positive, although Rep. Eric Feige, R-Chickaloon, said he was disappointed and continues to support a Richardson Highway route.
Feige said that in conversations he has had with project managers, “Valdez was a lead contender but in the end was not the optimal spot because of civil engineering challenges, site preparation and excessive snow load.”
Six Valdez sites were evaluated but represented the same “engineering hurdles and permitting concerns,” he said, adding that he hoped solutions to the concerns could be created and that the location will be reevaluated before a final decision.
Feige said this decision increases the likelihood of a merger between the mainline project and AGDC and with that in mind, he said he urges AGDC “to look at the Richardson Highway corridor as the number one priority for constructing a smaller pipeline off the big line and supplying lower-cost energy to the corridor.”
Mainline, AGDC proponents pleased Rep. Mike Hawker, R-Anchorage, and House Speaker Mike Chenault, R-Nikiski, sponsors of HB 4, said in a statement that they were pleased by the Nikiski selection.
Hawker praised the selection as “the route with the potential to serve the majority of Alaskans,” and Chenault said the route makes sense because of the long history of Nikiski and the western Kenai Peninsula in supporting LNG exports. (The state’s original LNG export facility, not currently active, is at Nikiski.)
HB 4 created AGDC as a standalone state corporation charged with developing an in-state gas pipeline and also charged AGDC with evaluating a merger with the larger project.
In a statement Democratic House legislators also praised the announcement.
House Democratic Whip Chris Tuck of Anchorage said Nikiski is “a location that allows room to build a value-added industrial base.”
Rep. Scott Kawasaki, D-Fairbanks, said the big line “allows ample gas for Alaskans to meet local heating and energy needs by tapping into the resources going south.”
“The key now is to find a way forward that pencils out for both Alaskans and the industry,” said Anchorage Democratic Rep. Andy Josephson.
“A large-diameter line gets the lowest cost gas to Alaskans and the most revenue to the state,” said Rep. Les Gara, D-Anchorage.
—Kristen Nelson
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