Kenai LNG exports still uncertain for ’17

ConocoPhillips Alaska Inc. has yet to determine whether it will export liquefied natural gas this year from its Kenai LNG terminal in Nikiski, which is being marketed for sale.

In a recent semi-annual report to the Federal Energy Regulatory Commission, the company said it had yet to finalize its 2017 schedule of operations for the plant.

While the company did not export any LNG from the plant last year, it did operate the liquefaction unit for a week in June. The run from June 18 to June 25 produced approximately 172,000 barrels of LNG for storage, which the company used “to rebuild inventory to ensure cryogenic status during the non-export period, as well as a potential backstop for interior Alaska utility trucking sales should the need arise.”

Also during the second half of 2016, ConocoPhillips transferred eight tanker truckloads of LNG from the Kenai LNG facility to Fairbanks Natural Gas LLC facilities.

Under its current export license, ConocoPhillips can export as much as 20 billion cubic feet per year from the Kenai LNG plant to overseas customers through Feb. 18, 2018.

The Kenai LNG plant passed three federal inspections in the latter half of 2016.

The Pipeline and Hazardous Materials Safety Administration inspected the plant from Sept. 26 to Sept. 30 and closed its inspection on Dec. 14. The U.S. Coast Guard inspected the plant on Oct. 12. FERC inspected the plant on Sept. 21 and Sept. 22 and is expected to recommend completion of a new Storage Tank Settlement Survey every three years.

Based on the inspection, ConocoPhillips conducted a settlement survey on Oct. 16 and said the results “prove the unprecedented stability of the Kenai Facility’s LNG, Propane and Ethylene tank foundation structures.” A table included with the report suggested that the relevant facilities had settled only minimally since surveys in 1993, 1994 and 2002.

ConocoPhillips decommissioned Kenai LNG Marine Terminal bunker and diesel loading system last year and sold the Tyonek pipeline as part of a wider sale of Cook Inlet assets.

The company recently announced plans to put the facility on the market this year. The plant was built in 1969, and requires significant investment to support long-term use.

- ERIC LIDJI