(SitNews) Ketchikan, Alaska - ExxonMobil, BP, ConocoPhillips and TransCanada announced today the selection of a site in the Nikiski area on the Kenai Peninsula as the lead site for the proposed Alaska LNG project’s natural gas liquefaction plant and terminal.

According to the announcement, more than 20 locations were evaluated based on conditions related to the environment, socioeconomics, cost, and other project and technical issues.

“This is a step forward for the Alaska LNG project and shows continued progress toward building Alaska’s energy future,” said Steve Butt, senior project manager. “The work that 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. The Nikiski site also results in a pipeline route that provides an access opportunity to North Slope natural gas by the major population centers in Fairbanks, Mat-Su Valley, Anchorage and the Kenai Peninsula.”

In response to today's announcement, Alaska Governor Sean Parnell said in a prepared statement, “This is real progress toward our administration’s goal of getting a natural gas pipeline to provide lower cost energy for Alaskans,” Governor Parnell said. “This project is taking shape and the companies’ commitment will help bring Alaska’s gas to Alaskans and markets beyond. This presents a new opportunity for synergy and alignment among the producers and the project being pursued by the Alaska Gasline Development Corporation.”

U.S. Senator Mark Begich (D-AK) called the selection of Nikiski as the site for the new LNG Plant “Great News”.

Begich said, “The decision by Alaska’s major oil and gas producers to move ahead on a new project to deliver to market Alaska’s enormous natural gas reserves is great news for our state. This demonstrates that America’s leading energy companies have full confidence in their ability to economically produce Alaska’s natural gas resources."

 “A Nikiski area liquefaction plant and export terminal will be a multi-billion investment and huge shot in the arm to both Alaska’s economy and confidence in our state’s energy future," said Begich. "A gasline from Prudhoe Bay to the Kenai Peninsula can meet Alaska’s in-state energy needs while supplying the energy-thristy countries of the Asia Pacific," he said.“

Begich said he is keeping up his work in the U.S. Senate to advance an Alaska gas project. "I already have introduced legislation to extend the benefits of the federal gasline coordinator’s office to any such gas project, including this LNG proposal. That legislation is significant to an LNG gasline, a pipeline to the Lower 48 through Canada or an all-Alaska gasline.”

In Southeast Alaska, the City of Valdez has made a case for the Port of Valzez to be the site chosen for the proposed Alaska LNG project’s natural gas liquefaction plant and terminal.. When learning of the selection of a site in the Nikiski area, the City of Valdez Manager John Hozey said in a prepared statement, “Like all Alaskans, we are excited to learn Alaska’s major North Slope producers are one step closer to building a large-diameter natural gas pipeline for export."

Hozey said, "Alaskans have waited far too long to realize the dream of commercializing our abundant North Slope natural gas in ways that lower the cost of energy in state, while providing critically needed additional revenues to fund so many important state projects and programs.  Taking this project to the next step, by determining the route and terminal locations, is in the best interest of all Alaskans; and we strongly encourage all parties to actively continue advancing this effort."

Hozey said that Valdez has been working with industry for decades to successfully deliver North Slope crude to market despite traversing one of the world’s most challenging environments.  He said this was largely possible due to the many unique attributes Valdez offers as a terminal location.  The city will therefore continue working with the project managers to insure they have all the best information when finalizing this decision.

Hozey said the City of Valdez will continue to make the case for its port. "It is much more important for all Alaskans that the ‘right’ project is actually built; wherever the route and terminal are eventually located.”

Representative Eric Feige (R-Chickaloon) was disappointed with the selection. In a prepared statement he said, “The selection of Nikiski by the Alaska Pipeline Project for the terminus is a disappointment to me and the constituents I represent. I have made it clear during many committee hearings that I support, and will continue to support, a gasline through the Richardson Highway corridor."  

“Conversations with the project managers have shown that Valdez was a lead contender but in the end was not the optimal spot because of civil engineering challenges, site preparation and excessive snow load. The project team exercised due diligence and evaluated six different spots in Valdez and came up with the same issues; engineering hurdles and permitting concerns. It is still my hope that we can create solutions to the existing concerns prior to a final decision and reevaluate the location of the plant and terminal," said Feige.

Rep. Feige said, “The good news in all of this is that a decision has been made and the project can continue moving forward to benefit Alaskans. With the ever increasing likelihood of a merger with the APP, I now urge the Alaska Gasline Development Corporation to look at the Richardson Highway corridor as the number one priority for constructing a smaller pipeline off the big line and supplying lower-cost energy to the corridor."  

Feige said at his insistence, language was included in House Bill 4 directing the Alaska Gasline Development Corporation to analyze potential pipelines connecting to industrial, residential or utility customers in other regions of the state.”  

Identification of Nikiski as the terminus of the pipeline is based on economics; supported by environmental and technical information; and offers energy security for 70% of the state’s population in the Railbelt, said Rep. Mike Hawker and House Speaker Mike Chenault.

“I couldn’t be more pleased that APP [Alaska Pipeline Project] has selected the route with the potential to serve the majority of Alaskans,” Mike Hawker, R-Anchorage, said. “I’m optimistic that today’s news is yet another indicator of the potential for APP and the Alaska Gasline Development Corporation to merge efforts into the project with the greatest possible benefits to Alaskans.”

“This route makes sense - Nikiski and the western Kenai have a long history of supporting LNG exports,” Mike Chenault, R-Nikiski, said. “Clearly these world-class companies have thoroughly evaluated the pros and cons of possible terminuses, and I’m not surprised that they find the Kenai to be the best choice.  All we need now is the go-ahead; let’s turn dirt.”  

Senate President Charlie Huggins (R-Wasilla) also welcomed the decision by the Alaska Pipeline Project to route the North Slope gas pipeline to Nikiski. Huggins said, “I am very pleased Nikiski was chosen as the destination for the Alaska gas liquefaction plant,” said Sen. Huggins. “This is a major milestone for our state and I am optimistic we’ll see gas moving off the North Slope for the benefit of all Alaskans. This is only the beginning of a larger plan to bring affordable energy to the people of this great state.”

According to today's annoucement by ExxonMobil, BP, ConocoPhillips and TransCanada, a number of engineering, technical, regulatory, fiscal, commercial and permitting issues still need to be resolved as work on the potential $45-$65+ billion project progresses. While Nikiski is the lead site, the project team continues to consider other secondary locations. Pipeline routing definition work also continues based on the project summer field work activities, which will be extended south of Livengood.

The companies are continuing to refine the agreed project concept that includes a gas treatment plant located on the North Slope, an 800-mile, 42-inch pipeline with up to eight compression stations and at least five off-take points for in-state gas delivery, and a liquefaction plant and terminal. The teams are currently preparing for more detailed engineering and design work, consistent with previously released plan phases.

A competitive, predictable and durable oil and gas fiscal environment will be required for a project of this unprecedented scale, complexity and cost to compete in global energy markets. Quoting a news release, the companies remain committed to working with the state to responsibly develop North Slope resources. A successful project could provide a host of economic benefits to Alaskans including state revenues, new job opportunities and access to decades of domestically-produced natural gas for homes and businesses.

Sources of News: 

ExxonMobil
www.exxonmobil.com

Office of Governor Sean Parnell
www.gov.state.ak.us

City of Valdez

Representative Eric Feige, R-Chickaloon
www.akleg.gov

Rep. Mike Hawker
www.akleg.gov

Alaska House Speaker Mike Chenault
www.akleg.gov

Alaska Senate President Charlie Huggins (R-Wasilla)
www.akleg.gov

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Ketchikan, Alaska

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