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ConocoPhillips Mothballing Kenai LNG Until Market Improves

ConocoPhillips, unable to find a buyer for its Kenai natural gas export facility in Alaska, plans to shutter operations until market conditions improve.

The liquefied natural gas (LNG) export facility was the first and for a long time the only export plant in the United States. The shutdown is expected to get underway this fall, spokeswoman Amy Burnett told NGI.

“This fall, ConocoPhillips plans to further scale back operations at the Kenai LNG plant,” she said. The reduced operations will focus on continued preservation of the facilities for future LNG exports.

“The timing is right to begin planning to transition the Kenai LNG Plant for a long-term shutdown. The period for the plant being in this mode will be dependent on market conditions.”

While marketing efforts to sell the facility have been underway since mid-January, 2017, and conversations with interested buyers are ongoing, ConocoPhillips has not come to terms with a buyer for the facility.

About “30 workers may be affected by this decision, 18 of whom are ConocoPhillips employees,” Burnett said.

The plant, put up for sale last fall, has been idled for almost two years, with the last export in late 2015, as depressed global LNG prices reduced demand.

By mothballing Kenai, ConocoPhillips could restart operations once market conditions improve. The producer also is assessing future staffing needs.

The Alaska Gasline Development Corp., which has taken over the proposed Alaska LNG Project to pipe gas to Asian markets, at one time was said to be interested in taking over Kenai. However, no deal has materialized by the state-owned corporation or by a private party.

Discussions with potential buyers for Kenai continue, the ConocoPhillips spokeswoman said. Kenai’s LNG export license with the U.S. Department of Energy is set to expire next February.

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