January 07, 2008
The agreement between the State and the owners of the LNG plant ensures that there will be adequate supplies of gas for local utilities. The agreement also requires the owners to develop additional natural gas reserves in Cook Inlet and allow third parties the opportunity to monetize their gas production through the LNG plant. Marathon and ConocoPhillips have also agreed to sell Cook Inlet seismic and well data to third parties.
"It is our hope that, by reaching this agreement, the U.S. Department of Energy will have the assurances necessary to approve their request," said Governor Palin. "We understand that the export approval is just one step in the process of securing a future for the LNG operation and look forward to working with all stakeholders in achieving the goal of improved gas supply security for Southcentral."
The Kenai LNG facility, located in Nikiski, is the only LNG export plant in North America. The facility initiated operations in 1969 and today employs 58 people; the plant also supports 128 other jobs in the Kenai community. In addition, the operations of the plant contribute approximately $50 million in royalties and taxes to the state and local economies.
"This agreement improves
the prospects for future drilling in the Cook Inlet and supports
continued operation of the Kenai plant," said Jim Bowles,
president of ConocoPhillips Alaska. "This new level of
cooperation is a very positive outcome and is essential for a
solution to the natural gas development issues facing Southcentral
and the State as a whole."
"It is important that the producers and the state can work together," said Gene Dubay, senior vice president of operations for Semco, the parent company of Enstar Natural Gas Company. "In this case the state intervention was the catalyst to reaching agreement on our near-term supply needs."
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