October 06, 2010 --- Vol. 16, No. 88October 2010

Department of Energy grants Nikiski LNG export extension

The U.S. Department of Energy has granted a two-year extension to ConocoPhillips and Marathon to export the remainder of the LNG previously approved for export from the companies’ Nikiski, Alaska, liquefied natural gas facility.

DOE said in its Oct. 5 order that the companies now have until March 31, 2013, to complete export of the 99 trillion British thermal units of LNG authorized in 2008. The 2008 order expires March 31, 2011, and the companies told DOE they expected to export an estimated 55 trillion Btu by expiration of the 2008 order.

ConocoPhillips Alaska spokeswoman Natalie Lowman said in an e-mail that the company was very pleased that DOE approved the export license extension.

“The LNG facility provides about $130 million per year in economic benefit to the state and local economies and supports about 60 direct jobs and is estimated to support an additional 50 indirect jobs on the Kenai Peninsula,” Lowman said.

“The license extension also creates the opportunity for continued operation of the plant which will increase the amount of natural gas that will be available for local utility markets, including Anchorage, in the event of supply interruptions or peak demand on cold winter days,” she said.

Shell applies to drill in the Beaufort Sea in 2011

Shell announced today that it has applied to the federal Bureau of Ocean Energy Management, Regulation and Enforcement for a permit to drill a single well in its Sivulliq prospect on the outer continental shelf of the Beaufort Sea during the 2011 open water season.

“We have every reason to believe the administration will permit 2011 exploration drilling in Alaska,” said Pete Slaiby, Shell Alaska vice president. “The president, himself, endorsed our Alaska exploration program last spring. Unfortunately, the Deepwater Horizon tragedy occurred and led to a suspension of offshore activities in Alaska. Since then, Shell has taken extraordinary steps to build confidence around our 2011 program, which involves a limited number of exploration wells in shallow water with unprecedented, on-site oil spill response capability.”

Slaiby today told reporters that the company may also apply to drill a second well at Sivulliq and that the company has not yet discounted the possibility of drilling in the Chukchi Sea in 2011. Shell is initially targeting the Beaufort Sea for its 2011 drilling plans because court cases in Alaska District Court and in the U.S. Court of Appeals for the District of Columbia, challenging the U.S. Minerals Management Service 2008 Chukchi Sea lease sale, remain unresolved, Slaiby said.

Interior appeals Alaska District Court Chukchi Sea ruling

In a court case filed Oct. 1, the U.S. Department of the Interior has appealed to the U.S. Court of Appeals for the 9th Circuit against a July 21 decision by the U.S. District Court for Alaska upholding an appeal against the U.S. Minerals Management Service 2008 Chukchi Sea lease sale. The District Court has required that Interior revise the environmental impact statement for the lease sale and has meantime banned oil and gas lease related activities in the Chukchi Sea.

In a filing posted today in the 9th Circuit Court, Interior said that “the main issue on appeal is whether the District Court erred in ruling that Interior’s environmental impact statement was deficient for purposes of the National Environmental Policy Act.”

However, it also appears that Interior is trying to comply with the District Court ruling. Yesterday the agency posted a notice in the Federal Register, stating an intent to prepare a supplemental Chukchi Sea lease sale EIS that would meet the court’s stipulations.

See full stories in the Oct. 10 issue of Petroleum News, available to subscribers online at noon, Friday, Oct. 8 at

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