Platts.com: US DOE OKs FTA application for ConocoPhillips’ Alaska LNG project

http://www.platts.com/latest-news/natural-gas/washington/us-doe-oks-fta-application-for-conocophillips-21279165
Washington (Platts)–28Feb2014/225 pm EST/1925 GMT

The US Department of Energy has approved an application by ConocoPhillips to ship the equivalent of 40 Bcf of natural gas as liquefied natural gas over a two-year period from its plant on the Kenai Peninsula south of Anchorage to countries which have free trade agreements with the US.

The approval, however, is seen largely as a technicality since ConocoPhillips is expected to target Japan, a country which does not have a free trade agreement with the US, for the LNG from the Alaskan facility.

A separate application from ConocoPhillips to ship to non-FTA countries, such as Japan, is still pending before DOE.

LNG market sources said that while the approval was promising, it would take an approval for exports to non-FTA economies like Japan to have an impact on pricing.

However, market participants noted that South Korea was an FTA partner, and could be a home for the volumes from Kenai, if non-FTA approval was not granted.

The DOE approved ConocoPhillips’ application to ship to FTA countries in a February 19 order, which was posted to the agency’s website late Thursday.

DOE is required to approve applications to ship LNG to FTA countries quickly, but can block or modify applications to ship to non-FTA countries if it determines they are not in the public interest.

The ConocoPhillips application to ship to non-FTA countries is being considered outside the controversial queue DOE has set up for LNG export projects hoping to ship to non-FTA countries. DOE has approved only six applications from that queue since 2012 and at least 24 applications remain in the queue.

ConocoPhillips plans to operate its plant on a seasonal basis when regional demand is low, the company said.

The Alaska plant was built in 1969 by Phillips Petroleum and Marathon Oil, with ConocoPhillips eventually buying out Marathon’s stake. The plant operated until 2012, when the export license expired and declining gas production in Cook Inlet limited the gas available.

–Brian Scheid, brian.scheid@platts.com –Desmond Wong, desmond.wong@platts.com –Edited by Keiron Greenhalgh, keiron.greenhalgh@platts.co

Special thanks to Richard Charter

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