LNG Export License

By Dave Donaldson

The U-S Department of Energy has approved the continuation of Conoco-Phillips/Marathon Liquefied Natural Gas Export License shipments to overseas markets for the next two years.

The authorization allows the company to ship gas that was authorized but not yet delivered under a license granted in 2008 – but not to increase the quantities allowed at that time.

Concerns had arisen about the continuation of an export license in light of the uncertain gas supplies available for  Anchorage and SouthCentral utilities.  However, the Department found that there are enough contract commitments and safeguards in place to assure that local needs will be met.

Natalie Lowman, of Conoco-Phillips, says those requirements have always been a part of their plans.  She says the export of gas is necessary to stay in business to provide local supplies.

We wanted to make sure that we could continue operating the plant. And that makes more natural gas available for local utility markets in times of supply interruptions or cold winter days.  So while there’s no guarantees of anything, we have always been committed to providing and diverting gas to local utilities when they need it.

Anchorage Republican Mike Hawker has been active in the legislative search for gas for the region.  He says without the federal order,  the plant could have been shut down.  Admitting that it sounds odd to ship gas when a shortage is looming, Hawker says that exporting it makes possible filling the high demand periods.

The demand for gas here in SouthCentral Alaska varies so  greatly.  It’s much higher in the winter than it is in the summer. But gas wells only produce at a fixed rate.  You don’t – gas wells don’t come with rheostats that you can just crank them up in the winter and crank them down in the summer.  So you must produce at a high enough level to meet your peak demands in the winter.  And if we weren’t exporting that gas in the summer, we’d have to be wasting it and flaring it – and that’s completely against state law.  So when you really look into all the facts and circumstances behind this export permit,  it’s just absolutely been a critical part of the supply chain of gas to consumers in Alaska.

Democrat Chris Tuck, of Anchorage,  also has been working on local energy needs for the Anchorage area.  He says seeing the license extended can provide some comfort for residents until a new storage facility becomes available – now planned for the 2012-2013 season.  That will make a reservoir of eight Billion cubic feet of gas, ready immediately.

Cause as we know, our utilities use five times more gas in the wintertime than in the summertime.  And Enstar uses fourteen to as much as twenty times more gas in the wintertime.  So this will help bridge that gap to where we get into third-party natural gas storage, which will help stabilize the energy supplies for SouthCentral Alaska and, help stabilize, hopefully, prices.

The storage facility resulted from legislation Sponsored by Representative Hawker that came of out this year’s session.

The Non-Firm Supply Contracts and the Gas Storage facilities are now before the Regulatory Commission of Alaska.  The Storage application has been scheduled for hearings early next month.

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