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Owners of Kenai Liquefaction Plant in AK File for License Extension

Marathon Oil Corp. and ConocoPhillips said they have jointly filed for a two-year extension of the Kenai liquefied natural gas (LNG) facility's export license with the U.S. Department of Energy. The current license ends March 31, 2009 and this application would extend the export license through March 31, 2011.

The Kenai LNG facility, located in Nikiski, AK, is the only LNG export plant in North America. The facility initiated operations in 1969 and today employs 58 people; the plant also supports another 128 jobs in the Kenai community. In addition, the operations of the plant contribute approximately $50 million in royalties and taxes to the state and local economies. The plant, operated by ConocoPhillips, is owned by ConocoPhillips (70%) and Marathon (30%).

"The Kenai LNG operation has played a vital role in the economy of South-central Alaska for 38 years," said John Barnes, manager of Marathon's Alaska production operations. "This operation is not only a key element of our Alaskan operations, it is a strategically important asset for the region and the state, and its continued operation provides options and flexibility in meeting the future energy needs of the region."

"This extension will mean continued investments in the development of Cook Inlet gas resources and will maintain high-paying jobs in the community," said Darren Jones, ConocoPhillips vice president of Alaska commercial assets. "ConocoPhillips believes that Cook Inlet has sufficient gas resources to maintain a strong industrial base on the Kenai Peninsula and this extension will provide an incentive for further gas development."

In addition to the direct and indirect employment and other economic benefits to the community, there are hundreds of exploration, production and oilfield service jobs in the Cook Inlet fields, which provide gas to the LNG facility.

In May 2005 ENSTAR Natural Gas Co., which delivers natural gas to about 327,000 customers in Alaska, warned that it may have to begin importing LNG to meet demand because of declining gas output from the Cook Inlet Fields (see Daily GPI, May 23, 2005).

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