ConocoPhillips resumes shipments of LNG from Nikiski

ConocoPhillips has resumed shipments of liquefied natural gas to Japan from its Nikiski, Alaska plant, a company spokeswoman said Thursday. A shipment was made in late May and three to more shipments are planned this year, all to Japan.

The company could not disclose the customers, but Bloomberg News has identified one of the purchasers as Kansai Electric Power Co.

All the shipments are being made on a spot cargo basis, ConocoPhillips spokeswoman Natalie Lowman said.

The company is also using a larger LNG tanker this year, the LNG Gemini, which can carry 125,000 cubic meters of LNG per voyage compared with the 87,000-cubic-meter capacity of the vessel used last year, the Polar Spirit, Lowman said.

“The LNG Gemini is under contract to carry all spot cargos to be shipped this year,” Lowman said.

ConocoPhillips shipped 6 cargoes last year to the plant, mostly to Japan but 1 to China, she said.

ConocoPhillips announced in February 2011 that it would close the Nikiski LNG plant, which has operated since 1969, but announced later in the year that additional shipments would be made to help Japanese utilities deal with power-generation needs when Japan’s nuclear plants were shut down after the nation suffered the earthquake and tsunami.

The plant was put into a winter maintenance mode following the final shipments of 2011 but then resumed making LNG in February, to fill storage tanks, when more natural gas from Cook Inlet producing wells became available, Lowman said.

Three storage tanks at the plant site have the capacity to store 2.2 billion cubic feet of LNG.

From November through January virtually all gas produced in Cook Inlet by ConocoPhillips and other producers goes to local utilities to meet peak power and space heating demand, she said.

Lowman could not comment on gas purchasing strategies but one independent producer in the region, Buccaneer Alaska, said in a press release that it had signed a contract to supply gas to the LNG plant if needed.

Previously ConocoPhillips has purchased gas only from its own production and from Marathon Oil, another Cook Inlet gas producer who was a former minority partner in the Nikiski plant.

About 60 workers are employed at the plant, about half of them employees of ConocoPhillips and about half employees of contractors providing support services, Lowman said.

In 1969, when the plant was built, Phillips Petroleum (now ConocoPhillips) and Marathon launched the world’s first long-distance ocean transport of LNG, supplying two Japanese utilities, Tokyo Gas and Tokyo Electric.

Shipments continued over four decades to the same customers.

As Cook Inlet gas reserves declined, however, ConocoPhillips and Marathon began to struggle with a way to keep the plant viable.

The plant’s future is still uncertain but if explorers now drilling in Cook Inlet do find more gas, the plant could be a customer for those companies.