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Another LNG proposal
Harvest forms agreement with Chugach Electric for Nikiski facility redevelopment
Alan Bailey for Petroleum News
On Feb. 6 Harvest Alaska and Chugach Electric Association announced an agreement with Marathon Petroleum Corp. for Harvest to acquire Marathon's liquefied natural gas export facility near Nikiski on the Kenai Peninsula, to convert the terminal into an LNG import facility. The concept is to use the importing of LNG to bolster natural gas supplies in Southcentral Alaska, given pending shortages of gas supplies from oil and gas fields in the Cook Inlet basin.
The project is designed to 'repurpose existing assets to enable the timely delivery of additional natural gas supplies to the Southcentral market as early as 2026, with full-scale operations beginning as early as 2028,' the companies said. Harvest would own, develop and operate the LNG terminal, which is currently owned by a Marathon subsidiary.
Harvest is the pipeline affiliate of Hilcorp Alaska, the main gas producer in the region. Chugach Electric uses gas fueled generation facilities as its prime source of electrical power. All of the gas and electricity utilities in Southcentral Alaska are facing potential gas supply shortages in the coming years. As previously reported by Petroleum News, Enstar Natural Gas Co., the Southcentral gas utility, is pursuing a project with Glenfarne Energy Transition to construct another LNG import facility, also on the west coast of the Kenai Peninsula.
Started operating in 1969 The Marathon LNG terminal first went into operation in 1969 as a means of exporting natural gas to Japan during the heyday of Cook Inlet gas production. But with the later decline in production, the terminal stopped operating in 2016 and since then it has remained in long-term warm shutdown mode. Harvest and Chugach Electric say that the facility has a dock historically capable of handling LNG vessels that can carry up to 2.9 billion cubic feet of natural gas in the form of LNG, together with onsite tankage with a 2.3 billion cubic feet storage capacity. The companies say that this infrastructure coupled with existing Federal Energy Regulatory Commission approvals for the terminal will enable the facility to meet near-term energy needs while longer-term alternatives are developed.
Companies express support 'Harvest has a long history of operating critical oil and gas infrastructure across the state and this announcement furthers our commitment to ensuring Alaska has the energy it needs,' said Harvest Chief Executive Officer Jason Rebrook. 'By repurposing Marathon's existing LNG facility, we aim to provide certainty to the Southcentral gas market while meeting the needs of Railbelt utilities. We are proud to collaborate with Marathon, Chugach Electric and other Southcentral utilities to bring this project online to ensure the reliable delivery of natural gas in a timely and cost-efficient manner.'
'Providing our members with safe, reliable and affordable electric service is core to our values and mission. We are pleased to have a potential solution to meet the gas needs of our members and at the right time,' said Chugach Electric Chief Executive Officer Arthur Miller. 'We've been looking at options to fill the gap left by our expiring Hilcorp contract, which ends on March 31, 2028. This is a great opportunity to work with partners who have extensive experience and knowledge of gas operations in Alaska. We look forward to ongoing discussions and analysis with Harvest Alaska as they progress the front-end engineering and design study over the next several months.'
Marathon supports project Marathon also supports the project ' the company's Nikiski oil refinery uses natural gas as a fuel for its operations.
'We believe the Kenai LNG terminal offers the quickest and lowest-cost solution to bring additional natural gas to Southcentral Alaska and beyond,' said Bruce Jackman, vice president of Marathon's Kenai oil refinery. 'Our Kenai refinery employees work around the clock to provide gasoline, diesel and jet fuel to their fellow Alaskans, and a reliable supply of natural gas is critical to the refinery's operations. We're excited about this partnership with Harvest and Chugach to work toward bringing new natural gas to the region.'
Meanwhile, the Regulatory Commission of Alaska has opened a docket to investigate Enstar's proposal to potentially recover some of the initial costs associated with its LNG terminal project through the rates that it charges its customers.
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