USA: ConocoPhillips and Marathon Oil to Seek LNG Permit Extension

ConocoPhillips and Marathon Oil will apply June 1 to the U.S. Department of Energy for a two-year extension of a federal liquefied natural gas export license for the companies’ plant near Kenai, a ConocoPhillips official said April 30.

The companies previously announced they would apply for the license extension, but hadn’t said when.

ConocoPhillips owns 70 percent of the plant and Marathon owns 30 percent.

The amount of gas authorized for export – 99 billion cubic feet – won’t be changed by the extension, but would be exported over a longer period, Dan Clark, ConocoPhillips’ manager for south Alaska assets, told local business group Commonwealth North.

Clark said a previous extension of the export license granted in 2009 allowed the export of 99 bcf, but at the current rate of shipments, only about half of that would be exported at the current expiration of the permit, March 2011.

The extension would simply add two more years to ship more than 40 billion cubic feet that would remain in the authorization, Clark said.

No customers have been signed up yet for the post-2011 gas shipments.

The plant now supplies LNG to Tokyo Electric Co. “We don’t have a sales contract yet, so we don’t know where this LNG will go,” Clark said.

The 2009 extension became controversial in Alaska, with local utilities objecting to exports of gas reserves needed for domestic use. ConocoPhillips and Marathon agreed to drill additional gas development wells, and have done so.

The result of the new drilling has been to slow the decline in mid-winter deliverability of gas from rates of 15 percent and 18 percent from 2006 to 2008 to 6 percent in 2009 and 3 percent in 2010, Clark said.

So far there have been no objections voiced to the renewal of the export authorization, but the formal public comment period won’t begin until after the application is made in June, he said.

[mappress]

Source: alaskajournal, May 9 , 2010;