Producers name Nikiski as lead contender for LNG plant, export terminal
North Slope producers and TransCanada Corp. have selected a site at Nikiski on the Kenai Peninsula as the proposed terminus for a 42-inch North Slope gas pipeline and a large liquefied natural gas project.
Nikiski is also the location of a smaller liquefied natural gas plant owned by ConocoPhillips that suspended operations when its export license expired in 2012 because of lack of gas supplies from Cook Inlet fields.
North Slope producers ExxonMobil, BP, ConocoPhillips and TransCanada, a pipeline company, selected Nikiski as the preferred site after evaluating 20 possible locations, the companies announced in a press released issued Monday.
Although numerous sites were being studied, Nikiski and Valdez were considered the lead contenders for the LNG plant.
Valdez is the terminus of the Trans-Alaska Pipeline System and location of the Valdez Marine Terminal, and many Alaskans had expected Valdez to be chosen because of the existing terminal infrastructure and navigation advantages of Prince William Sound over Cook Inlet, which has winter ice and strong tides.
The companies had a different conclusion, however.
“The work we have put into the site selection process gives us confidence that the Nikiski site is the lead location for the LNG plant and terminal,” said Steve Butt, an ExxonMobil manager who is senior project manager for the gas pipeline and LNG project, in the release.
“The Nikiski site also results in a pipeline route that provides an access opportunity to North Slope gas by the major population centers in Fairbanks, the Mat-Su valley, Anchorage and the Kenai Peninsula.”
The announcement raises questions as to the future of the Alaska Gasline Development Corp.’s plan to develop a state-led pipeline project along a similar route to Southcentral Alaska. The AGDC, a state corporation, is pursuing its project as an alternative to the larger industry-led pipeline, in case that project is delayed.
ADGC is studying a possible 36-inch gas pipeline that would move 500 million cubic feet of gas per day, a smaller project than the industry pipeline, which would move about 3.5 billion cubic feet per day.
Meanwhile, several engineering and technical, commercial and regulatory issues remain to be settled for the industry group, Butt said. Fiscal terms for gas production, on production tax and royalty, also need to be settled.
“While Nikiski is the lead site, the project team continues to consider other, secondary locations. Pipeline routing definition work also continues based on the summer field work activity, which will be extended south of Livengood,” in the Alaska Interior, Butt said.
The companies are continuing to refine the agreed project concept that includes a gas treatment plant on the North Slope, an 800-mile, 42-inch gas pipeline with up to eight compressor stations, and at least five gas take-off points for in-state gas delivery, and a liquefaction plant and terminal.
The pipeline would transport about 3.5 billion cubic feet of gas daily to the LNG plant, which would manufacture and ship 16 to 18 million tons of LNG yearly primarily to markets in Asia, the companies have said previously.
Construction costs are estimated from $45 billion to $65 billion, and possibly more, the companies have said.
Tim Bradner can be reached at email@example.com.