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Vol. 15, No. 37 Week of September 12, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Kenai LNG owners press DOE for expeditious extension decision

The owners of the liquefied natural gas export terminal on the Kenai Peninsula say they have already addressed recent concerns raised by a group of Alaska state lawmakers.

ConocoPhillips and Marathon Oil have asked the U.S. Department of Energy for two additional years to ship Alaska LNG to Asian markets. A group of seven Democratic lawmakers believe the export license should only be extended if the terms of a 2008 settlement between the State of Alaska and the two companies are also extended.

That settlement required the companies to meet local needs before shipping natural gas abroad, and to open their facility to third parties, among several other terms.

Although the agreement has been in the public domain since 2008, the lawmakers did not try to put it on the record until Aug. 4, after the close of the comment period. However, the same lawmakers previously raised similar concerns in timely comments filed in July.

Owners believe issues addressed

Regardless of whether DOE adds the settlement to the record, though, ConocoPhillips and Marathon believe they have already addressed the concerns in previous comments, noting three supply contracts negotiated this year and a history of third-party sales.

The lawmakers are concerned, though, because Enstar Natural Gas, the largest user in the state, faces relatively small shortfalls in 2011 and 2012 that get much larger in 2013.

ConocoPhillips and Marathon noted that DOE did not impose the terms of the 2008 settlement, but that the state and the companies negotiated the terms independently.

“Neither should any formal condition be imposed here,” the companies wrote to DOE on Aug. 31. “Applicants will stand by the commitments they have made on this record.”

The companies also noted that the state House and Senate both unanimously passed resolutions supporting continued exports. Some of the group of seven Democrats, though, tried unsuccessfully to add their concerns to those resolutions through amendments.

The current export license expires in April 2011. The companies want to continue exports through March 2013. They’ve asked DOE to make a ruling by early September.

—Eric Lidji



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