ConocoPhillips Alaska won't export LNG this year: license for international exports extended to February 2018.

• Author: Resz, Heather A.
• Position: OIL & GAS

[ILLUSTRATION OMITTED]

After carefully reviewing market conditions, ConocoPhillips Alaska has announced it will not export LNG (liquefied natural gas) from its Kenai Liquefied Natural Gas Plant in 2016.

ConocoPhillips Alaska Natural Gas Corporation was granted a license in February to export 40 billion cubic feet of LNG from its LNG facility in Nikiski to international markets during the next two years.

If market conditions change, the company could resume exports at any time before the US Department of Energy authorization to export expires in February 18, 2018.

"The Kenai LNG Plant remains operational and ready to resume exports and we will continue to evaluate opportunities for future LNG exports," according to a prepared statement from ConocoPhillips Alaska.

World's Largest

ConocoPhillips Alaska's Kenai LNG Plant in Nikiski was the world's largest LNG plant when it was constructed and was the only licensed US commercial LNG exporter for most of that nearly fifty-year span.

The Alaska terminal also pioneered LNG exports to the Asia-Pacific market, safely loading and shipping more than 1,300 tankers of LNG since the facility was first licensed in 1967.

On the home front, the LNG plant is a crucial commercial asset that helps keep Cook Inlet natural gas wells operating year-round, helps keep the lights and heat operating on winter's coldest days, and employs about eighty-five people--about twenty-five directly and the remainder through contractors--that add an estimated $13.1 million in personal income to Alaska's economy annually.

Those are just some of the reasons the US Department of Energy noted in a February order authorizing ConocoPhillips Alaska Natural Gas Corporation to continue exports.

Cook Inlet Production

Cook Inlet fields have produced 1.3 billion barrels of oil, 7.8 trillion cubic feet of gas, and 12,000 barrels of natural gas liquids since commercial development of the region's hydrocarbons began in 1958 and could produce another 1,183 billion cubic feet from remaining "proven and probable" reserves in legacy fields, according to September 2015 Alaska Department of Natural Resources Division of Oil and Gas estimates.

Oil and gas production in Cook Inlet began to decline as early as the 1970s, and by the turn of the millennium, producers and the state believed the oil and gas reserves in the basin were largely depleted, according to news accounts from that time.

Supply Uncertainties

Uncertainty about Cook Inlet natural gas...