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From export to import at Kenai LNG plant?
New owner, Trans-Foreland Pipeline, would modify existing LNG facility to allow importation of LNG to provide gas for refinery
Kristen Nelson Petroleum News
In the late 1960s the Kenai liquefied natural gas facility became the first in the nation to export liquefied natural gas, making use of abundant Cook Inlet gas discoveries for which there was insufficient use locally.
Its current owner is now proposing alterations at the facility to allow for import of LNG to supply fuel gas to the adjacent refinery.
Export from the Kenai LNG facility ceased in 2015 as Cook Inlet natural gas supplies declined and the international LNG industry grew.
In 2018, ConocoPhillips, then the sole owner (the facility was built jointly by Phillips and Marathon), sold the Nikiski facility to Andeavor, formerly called Tesoro, operator of the nearby Nikiski oil refinery.
The LNG plant was ConocoPhillips’s last Cook Inlet asset.
Andeavor said at the time that acquisition of the facility “further strengthens our integrated value chain by optimizing our operations in Kenai and providing low-cost fuel for our refinery to produce the fuels that consumers in Alaska need to keep their lives moving.” Andeavor already owned the Kenai refinery next door to the LNG facility.
Last year, Andeavor and the larger Marathon Petroleum Corp., MPC, merged.
Marathon, formerly a major Cook Inlet E&P player, split into upstream and downstream companies in 2011, with MPC operating an integrated refining, marketing and transportation system concentrated primarily in the U.S. Midwest, Northeast, East Coast, Southeast and Gulf Coast.
The exploration and production portion of the company, under the Marathon Oil name, became an independent E&P company.
Marathon sold most of its Cook Inlet oil production in 1996 and focused on natural gas. It sold its 30% interest in the LNG facility to ConocoPhillips in 2011 and in 2012 sold its remaining Cook Inlet properties to Hilcorp.
Trans-Foreland Pipeline Co. The name on the current proposal is Trans-Foreland Pipeline Co., which, according to its filings with the Federal Energy Regulatory Commission, owns a 100% interest in Kenai LNG LLC, the company which owns the Nikiski LNG facility and export terminal. Trans-Foreland is a wholly owned subsidiary of Tesoro Alaska Co.
Trans-Foreland has applied to FERC for authorization to construct, install, own and operate modifications to the Kenai LNG Plant, under Section 3 of the Natural Gas Act.
The company has applied to make facility modifications to “bring parts of the Kenai LNG Plant out of current warm idle status by importing LNG and using the LNG to cool existing LNG storage tanks and associated LNG facilities,” as well as minor modifications to prevent environmental and economic waste from boil-off gas, BOG.
The modifications are collectively referred to as the “Kenai LNG Cool Down Project.”
The Kenai LNG Plant is adjacent to the Kenai Refinery in Nikiski, which is owned and operated by Tesoro Alaska, a Trans-Foreland affiliate, the company told FERC.
The LNG plant has been operated by Tesoro Logistics GP, an affiliate of Trans-Foreland, since the plant was acquired in 2018, “but it has been continuously maintained in a warm idle state and has not exported an LNG cargo since 2015,” Trans-Foreland said in its FERC filing.
The company said it wishes to return portions of the LNG plant to active status, “namely the storage tanks and related LNG transfer piping and BOG compression and ancillary facilities.”
The liquefaction portion of the plant, however, “will continue to be maintained in a warm idle state and not returned to active status.”
Work needed Trans-Foreland said boil-off gas, or BOG, is continuously produced while unloading and storing LNG; the Kenai LNG facility is designed to vent or flare BOG in excess of the plant’s fuel demand, but that totals only about 5% of the BOG produced when the liquefaction facilities are in a warm idle state.
The proposed work includes providing “additional electric powered BOG booster compression so that BOG can be delivered for use at the Refinery,” the company said.
Among the work proposed would be valve changes necessary “to facilitate the reversal of flow necessary to fill the Kenai LNG Plant storage tanks with imported LNG.” A new 1,000-horsepower electric-power BOG booster compressor unit will be added along with a skid-mounted heater to facilitate operation of an existing BOG compressor.
Once the needed work is done, “Trans-Foreland will be able to receive cargos of LNG by LNG carrier and load the LNG into the Kenai LNG Plant LNG storage tanks while retaining and using the BOG created by storing the LNG.”
Trans-Foreland said the changes would allow Kenai LNG to deliver up to 7 million standard cubic feet per day of natural gas to the Kenai Refinery.
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