by Rebecca Palsha
9:30 PM AKST, February 10, 2011
Concerns about what the closure of the Nikiski liquefied natural gas plant could mean for Anchorage include the loss of a backup gas supply during cold snaps -- but there's also a chance that other producers might decide not to explore in Cook Inlet.
After more than 40 years of operating the Nikiski plant, ConocoPhillips announced its shutdown in April or May. The plant will no longer export natural gas to Japan.
The closure will also cost the town of Kenai more than 30 jobs, and former mayor John Williams says it's already facing budget woes.
"The (Kenai Peninsula) Borough is faced this year with a shortfall in its budget before the plant ever announced a closure," Williams said. "So consequently, come next (year) they'll be even a larger shortfall, and that means there may have to be mill-rate adjustment, and nobody likes to see taxes go up -- so it's a loss to the whole community."
There's also the possibility that other problems could come down the pipe. Jason Brune with the Resource Development Council says losing the plant could take away an economic incentive to drill for new gas supplies.
"It also means a possible lose of future exploration in Cook Inlet, with the shutting down of the LNG export facility as well as the previous shutting down of the Agrium facility," Brune said. "It really makes people wonder whether they should come and invest in Southcentral Cook Inlet to find new gas."
There's also the loss of area natural gas provider Enstar's safety net, since the plant won't be available as a backup supply of gas during deep cold snaps.
"It sort of works as a virtual storage facility, so when we have those peak needs in the dead of winter we had a contract with (ConocoPhillips) that would divert that natural gas over into the Enstar system," said Enstar's John Sims.
Sims says it also might mean turning down the heat in a cold snap, although that's a worst case scenario.
"We have to go into the Energy Watch program sooner than we normally would have -- the LNG diversion is one of those steps on that list of things we could call upon before we would have to ask for customers to cut down on their consumption," Sims said.
ConocoPhillips and Marathon Oil have said that even though they were granted a new export license by the federal government, they were unable to renew new supply contracts with LNG customers in Japan.
Contact Rebecca Palsha at email@example.com
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