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US FERC authorizes project to bring Alaska LNG terminal back online for imports

Highlights

Portions of plant to be reactivated

No exports from terminal since 2015

New York — The Federal Energy Regulatory Commission approved a proposal to bring the dormant Kenai LNG plant in Alaska back online as a limited-use import facility.

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The Kenai plant in Nikiski, Alaska, was once the only LNG export terminal in the US but has not exported LNG since fall 2015. The liquefaction portion of the Kenai LNG plant would not return to active status, according to a March 2019 project application filed by the developer, Marathon Petroleum subsidiary Trans-Foreland Pipeline (CP19-118).

Instead, the approval FERC granted during its monthly open meeting on Dec. 17 will allow Trans-Foreland to make modifications to reactivate portions of the plant by importing one or more cargoes of LNG and filling existing LNG storage tanks. The project to bring the plant out of "warm idle status" would also enable the transfer of boil-off gas to an adjacent refinery owned by an affiliate.

FERC voted 2-1 to approve the order for the project, with Democratic Commissioner Richard Glick dissenting. Newly seated Commissioner Allison Clements, who is also a Democrat, abstained from voting during her first open meeting, citing a need for more time to review FERC dockets as her office continues to add personnel. Glick cited concerns that the commission failed to consider project impacts on climate change, as he has routinely done in dissents in FERC orders approving new pipeline and LNG projects.

Marathon did not immediately respond to a request for comment about its plans for the facility, but a spokesperson for the company said in early 2019 that the developer wanted to use the plant to "optimize its refinery operations in Kenai" as it determines full-scale plans for the facility. Marathon came to own the facility after its $23.3 billion acquisition of refining company Andeavor that closed in October 2018.

Former plant owner ConocoPhillips began shipping LNG from the facility to overseas buyers in 1969, exporting the bulk of more than 1,300 cargoes to Japanese utilities. ConocoPhillips sold the plant to Andeavor in early 2018 after scaling back operations at the facility, which has an LNG production capacity of 1.6 million metric tons per year.