Borough’s Port MacKenzie.
Federal regulations require LNG export plants to have their own dedicated
docks, but REI would still use the borough’s port for unloading modules and
A challenge the company has, however, is a supply of gas under contract.
Negotiations are underway with several
Cook Inlet gas owners including some
that have not yet gotten discoveries into
Meanwhile, WesPac has at least a ten-
tative agreement on a gas supply from
BlueCrest’s Cosmopolitan discovery,
but the company does not yet have a
market for its LNG. Fairbanks is a pos-
sibility along with coastal communities
like Unalaska, which are interested in
substituting lower-cost LNG for diesel.
However, sales contracts are not yet
signed. REI, for its part, has the market
in Japan but no gas, at least yet. R
Mike Bradner is publisher of the
Alaska Legislative Digest.
LNG project, is important. But being
smaller, starting with 1.5 million tons
of LNG per year, will allow it to get a
toehold in the market and then expand
as the market grows.
The Alaska LNG Project, in contrast,
is so big that it will have to secure sales
contracts for very large volumes at long
terms, which may be difficult to do with
many other LNG projects chasing the
same buyers in Asia, including Japan.
REI got its start in 2011 after the
earthquake and tsunami severely damaged Japanese coastal communities
and nuclear power plants. Japan had
to sharply escalate LNG imports, and
prices shot up. One forward-thinking
regional government, Hyogo Prefecture, formed a group to explore options
for its own, independent source of LNG.
Thus was formed REI, led by a team
of experienced retired Japanese LNG
experts. After an extensive study of
sources of LNG in 2011, an REI team
settled on Alaska as the best sources for
long-term reliable supplies. The shorter
sailing distance and long track record
of reliably supplying Japan with LNG
from the ConocoPhillips plant at Nikiski were big factors in the decision.
An important element in REI’s plan,
however, is to get the plant built and
exports of LNG underway by 2020, four
years before the huge Alaska LNG Project can complete its project-assuming
the larger project proceeds. As for the
existing ConocoPhillips plant, that
facility has performed reliably and efficiently for forty-five years but is now
approaching the end of its design life.
If its operations were to be extended,
a substantial investment in upgraded
plant systems will be needed, and new
regulatory requirements may be imposed.
This is an important year for REI’s
project. After several years of conceptual engineering and detailed surveys
of Southcentral Alaska gas resources,
the company hopes to launch its final
engineering in mid-2015 and, later
in the year, to begin the applications
with the US Federal Energy Regulatory
Commission and for a US Department
of Energy LNG export permit. The company has an option on lease for its plant
site adjacent to the Matanuska-Susitna