AIDEA to share more expenses for studies on Port Mac LNG plant

The state of Alaska has expanded its financial commitment in aiding a new Cook Inlet liquefied natural gas project being planned by Japanese companies. In its Dec. 16 board meeting the Alaska Industrial Development Authority, the state’s development finance corporation, agreed to expand the authority’s sharing of expenditures on feasibility studies from $240,000 to $440,000.

A 1 million to 1.5 million tons-per-year LNG project is proposed to be built in upper Cook Inlet adjacent to the Matanuska Susitna Borough’s Port MacKenzie across from Anchorage.

A preliminary capital cost is estimated at $1 billion to $1.5 billion for the plant and a dedicated LNG loading terminal, but this cost is now being refined, said Mary Ann Pease, general manager for Resources Energy Inc., the Japanese consortium planning the project.

Another $1 billion could be spent by REI in Cook Inlet gas purchases or participation in gas development and production, she said.

Mark Davis, AIDEA’s associate development director, said the amount is modest but important in signaling the authority’s belief that the project is sound.

“We believe it’s a good project,” he said.

A combination of Japanese and American investment in the project is expected, “and we (the state authority) could be involved on the American side although this is very preliminary,” Davis said.

AIDEA has financed and invested in several Alaska energy projects. AIDEA staff and consultants visited REI’s owners in Japan in doing due diligence, Davis said.

The project is now in the feasibility study and preliminary engineering phase with a goal of beginning the final Front-End Engineering and Design, or FEED, stage in March. KBR Inc., a Houston-based engineering company, has just completed a technical study of the proposal and has given REI several options on LNG technology, Pease said.

A final selection of a site is expected at the end of December. Port MacKenzie’s dock facilities will be used to bring in construction equipment and materials but under federal rules the project will need its own dedicated dock to load LNG carriers, she said.

The plant would require about 160 million cubic feet per day of natural gas. Pease said REI’s studies indicate that Cook Inlet has potential to supply the volume, which would be surplus to local needs, based on discovered but undeveloped gas resources as well as potential resources.

Several companies have made discoveries in the Inlet but have not moved to development because of a lack of markets, which the new REI plant would offer. Currently the only markets for gas in Southcentral Alaska are regional gas and electric utilities which are being supplied by Hilcorp Energy with contracts extending into 2018 and the existing LNG export plant owned by ConocoPhillips Alaska Inc., which mainly processes the company’s own gas but has agreed to purchase some gas from other producers.

A key goal of REI’s owners, a consortium of Japanese municipal governments and private firms, is to invest in a dedicated Alaska LNG project so the Japan owners will control their own supply of LNG, Pease said.

REI also intends to build its project on a fast track with a goal of completion and shipments of LNG beginning by 2020 or before, she said.

Tim Bradner is a reporter for the Alaska Journal of Commerce. He can be reached at tim.bradner@alaskajournal.com.

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