Kenai LNG

Image Source : Andeavor – Kenai Plant
Location : Kenai, Alaska

Natural Gas, which was considered an unwanted by-product of crude, was made monetizable when the first large-scale cryogenic liquefaction process was setup in Cleveland, Ohio, in 1941. In the late 1950’s, a consortium of American oil companies experimented with transporting LNG on-board a ship for the first time. At the time, oil companies hesitated exploring in Alaska, because of the territory’s distance from major markets. In 1959, Marathon discovered the Kenai gas field, while Phillips and partner companies discovered the North Cook Inlet gas field in 1962. In 1964, Algeria became the first country in the world to commercially export LNG. On the other end of the globe, Japan’s swiftly increasing energy demand and growing concern for air pollution, opened up an ideal market for the relatively cleaner fuel. In 1967, an LNG sales agreement was signed by Phillips and Marathon as sellers and Tokyo Gas Company Ltd. and the Tokyo Electric Power Company Inc. as buyers. The original 15 year contract provisioned a 5 year extension period.

The historical SPA opened the way for construction of the Kenai LNG Plant in Nikiski, on the Kenai Peninsula, some 60 air miles from Anchorage. The site, 10 miles from Kenai city, offered cold climate and clean, non-salty air, which was ideal for preventing corrosion and efficient plant operation. In addition, the raw gas was non-corrosive, extremely low in sulfur and almost purely methane. The project was owned by Phillips (70%), who was responsible for the gas liquefaction facilities, and Marathon (30%), who undertook the operation of the two LNG tankers. Phillips Petroleum Company developed the original Optimized Cascade LNG process for this project. The equipment and infrastructure had to be designed and built to withstand the severe climatic conditions of southern Alaska, this included strong winds, 30-foot tides, ice, 8-knot currents, earthquakes and plunging winter temperatures.

On June 8 1969, overcoming all obstacles, the plant produced its first LNG, within two years of site clearing. Kenai LNG became the second LNG exporting plant in the world and featured the largest LNG tankers of its time. The project also led to the construction of Japan’s first regassification facility. For over 40 years, Kenai LNG was United States’ only LNG exporting plant. The LNG production capacity was upgraded by approximately 28%, without altering the cryogenic section of the liquefaction train. The additional capacity was achieved through equipment upgrades in mid-1970s and a debottlenecking program in early 1990’s. Operation at the plant was temporarily ceased in 2011, to be restarted for spot cargo deliveries in 2012.

ConocoPhillips supports social services, education, civic, arts, environmental and health and safety initiatives statewide.​​ The company invests in educational, cultural and youth programs such as Ilisagvik College in Barrow, the Northwest Arctic Borough Magnet School, and the Alaska Native Science and Engineering Program at the University of Alaska. They also support initiatives for new playgrounds in Nuiqsut, Point Hope and Wainwright, training programs in Anaktuvuk Pass, STEM (Science, Technology, Engineering or Mathematics) summer camps, tribal system and health care system training, and the North Slope food banks. The company pledges its commitment to minimizing the environmental impact of their operations in Alaska and securing a stable and healthy environment for tomorrow.

OWNERSHIP (Equity %)

Marathon Petroleum Corporation 100%

General Data

Estimated Capital Cost (USD)200 M
Plant TypeOnshore Stick-built
Plant StageOperating
Final Investment Decision (FID) Year1967
FEED ContractorNA
EPC ContractorBechtel
No. of Trains / capacity1 Train / 1.3 MMTPA
Production Start Year1969
ProductsLNG
Gas TypeNon-associated Gas (NAG)

Technical Data

Cooling Media Fresh Water (Cooling Tower)
Liquefaction Technology CoP Optimized Cascade Liquefaction® Process
(Closed loop Methane circuit)
Refrigeration Train Details:
Propane Strings 1 & 2
Driver GE MS5001LA
Heavy Duty Gas Turbine
Propane Compressor Carrier Corporation (Elliott)
Centrifugal Compressor
Ethylene Strings 1 & 2
Driver GE MS5001LA
Heavy Duty Gas Turbine
Ethylene Compressor Dresser-Rand
Centrifugal Compressor
Methane Strings 1 & 2
Driver GE MS5001LA
Heavy Duty Gas Turbine
Methane Compressor Carrier Corporation (Elliott)
Centrifugal Compressor
Power Local utility power

Refrigeration Train Configuration

Key Facts

  • Kenai LNG was the first LNG plant ever to employ the ConocoPhillips’s two-trains-in-one design LNG Liquefaction technology. It also showcases world’s first baseload refrigeration plant. The plant employs six Frame 5 Gas Turbine compressor drivers.1,2,3
  • Kenai LNG was initially owned by ConocoPhillips (70%) and Marathon Petroleum (60%). In October 2011, ConocoPhillips acquired Marathon Petroleum’s share and became 100% owner in the project.4
  • On November 4, 1969, Kenai LNG delivered its maiden cargo to Yokohama, Japan, marking Japan’s fist LNG import, as well as first commercial LNG export from the western hemisphere. In October 1998, Kenai LNG shipped its 1000th LNG cargo to Japan on-board the 87,500 m3 LNG vessel, “Artic Sun”.5,6
  • For carrying LNG from Kenai, 2 LNG vessels, of capacity 71,500 m3 each, were built at the Kockums yard in Sweden, in 1969. The vessels, now decommissioned, were named “SCF Polar” previously “Polar Alaska” and “SCF Arctic” previously “Arctic Tokyo”.7,8,9
  • Kenai LNG receives feed gas from 10 wells in Beluga River Unit (BRU) and 15 wells in North Cook Inlet Unit (NCIU).10
  • In mid-1970s, Kenai underwent a production capacity upgrade, which involved replacing the propane compressor rotors and enlarging the propane condensers. By 1989, the original sales and purchase agreements concluded their extension period. In early-1990s, a debottlenecking program was initiated, to meet the extra production requirements of the revised sales agreements. The debottlenecking program involved installing an auxiliary fuel gas compressor, two new cooling tower cells, a large vapor blower, and making minor upgrades in fan blades, control valve trim and other equipment. Approximately 28% increase in capacity was achieved through these two sets of upgrades.11
  • In 2011, after almost 42 years of operation, Kenai LNG was temporarily shut down due to unfavourable market conditions, on account of aging gas field and depleting gas production in Cook Inlet. ConocoPhillips even considered converting the plant to an import facility to service domestic demand. As market conditions improved, ConocoPhillips resumed operations in 2012. Kenai’s LNG export license expired in 31 March 2013, however, in April 2014, the facility received permission to export 20 BCF of LNG per year for two years ending 2016.12,13,14,15
  • ConocoPhillips placed the Kenai LNG plant on the market in November 2016 and in the fall of 2017 the facility was mothballed for a long-term warm shutdown. The aging plant was eventually sold for a bargain price of $10 million to Texas-based oil company, Andeavor in February 2018. Subsequently, in October 2018, Marathon Petroleum merged with Andeavor in a $23.3 billion deal, to become the sole owner and operator of Kenai LNG.16,17,18,19

Source:

1. ‘Bayu-Undan & Darwin LNG Projects’, Tokyo Gas Australia Website
2. Nott G. ‘From LNG Mega-trains to mid-sized modular units: An exploration of the investment risks in today’s LNG export terminals’, Det Norske Veritas Germanischer Lloyd (DNV GL) US Website, 18 October 2018
3. Dr. Akhtar S. ‘Driver Selection for LNG Compressors’, MSE Consultants Website, 14 December 2004
4. ‘ConocoPhillips Purchases Marathon’s Stake in Kenai LNG’, LNG World News Website, 13 October 2011
5. ‘Celebration of 1,000th cargo of LNG from Alaska to Japan’, Alexander’s Gas and Oil Connections Website, 19 October 1998
6. ‘Kenai Alaska LNG Terminal’, ABarrelFull.wikidot.com Website, 30 April 2015
7. G.N. Peter ‘A Short History of LNG Shipping: 1959-2009’, Society of Naval Architects and Marine Engineers (SNAME) Website, 10 February 2009
8. ‘SCF POLAR’, Marine Traffic Website
9. ‘SCF Arctic’, , Marine Traffic Website
10. Farris K. ‘Kenai Industry Outlook Forum’, ConocoPhillips Website, January 2014
11. Andress D.L. ‘The Phillips Optimized Cascade LNG Process – A Quarter Century Of Improvements’, ConocoPhillips Website, 1996
12. ‘Conoco To Stop LNG Exports From Kenai Plant In Alaska’, EPC Engineer Website, 10 February 2011
13. ‘Kenai Liquefied Natural Gas Plant and North Cook Inlet Gas Field, Alaska’, ConocoPhillips Website, April 2014
14. ‘ConocoPhillips files for renewal of Kenai LNG export licence’, LNG World News Website, 9 October 2015
15. ‘U.S. reauthorizes ConocoPhillips LNG exports from Alaska’, LNG World News Website, 10 February 2016
16. DeMarban A. ‘ConocoPhillips moves toward shutting down Kenai LNG facility that once blazed trail’, Anchorage Daily News Website, 16 July 2017
17. Fisher J. ‘ConocoPhillips Selling LNG Plant in Kenai, AK’, Natural Gas Intelligence Website, 18 November 2016
18. DeMarban A. ‘ConocoPhillips sold LNG plant for $10M ‘bargain price,’ borough mayor says’, Anchorage Daily News Website, 10 February 2018
19. ‘Done Deal: Marathon & Andeavor Close on $23.3B Merger’, Convenience Store News Website, 1 October 2018