Conoco confirms LNG plant bids

ConocoPhillips has confirmed that it has received bids for the purchase of the company’s liquefied natural gas plant at Nikiski on the Kenai Peninsula.

“We are currently evaluating the bids to determine next steps,” company spokeswoman Amy Burnett told Petroleum News in an April 17 email. “We believe the plant is a strategic asset that offers good opportunities for the right buyer.”

The company announced in November that it was putting the LNG plant up for sale and had required initial bids for the plant to be submitted by March 17. The company received interest in the plant and, following the end of the bidding period, has now closed the data room for the bidding process, 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 as a consequence of oil exploration and development. Over the years the plant produced LNG for delivery by tanker to Japan.

However, in more recent years, as gas supplies from the Cook Inlet tightened and the price of Cook Inlet gas increased, the export of LNG from Nikiski slowed. The number of LNG cargoes dropped to just five in 2014 and six in 2015. Hit by the plunge in global LNG prices, the Nikiski facility did not export any LNG in 2016. A report published in 2006 indicated that, given the plant’s age, it will need some modernization.

However, the facility presumably retains value as an operational and permitted LNG plant, at tidewater in a region with plentiful gas supplies, and with local gas producers looking for market outlets.

- ALAN BAILEY