Jul. 10--The liquefied natural gas plant in Nikiski has faithfully chilled Cook Inlet natural gas to liquid form and shipped it to Japan for 40 years, never missing a shipment.

But now the plant's future is uncertain, at least in its present form.

That's a concern for Southcentral Alaska home and business owners. The facility plays a vital role in keeping natural gas flowing to furnaces and power plants during winter cold snaps.

The LNG plant is the last of Alaska's major value-added manufacturing industries for export. Everything else, from Southeast Alaska's pulp mills to a major fertilizer plant, have gone by the wayside.

The gas liquefaction plant could join that list when its federal export license expires in March 2011. If this happens, it will also cost the Kenai Peninsula about 50 high-paying positions and 20 or so contract positions. This after the loss of 150 jobs two years ago, when the fertilizer plant owned by Agrium Corp. ceased operations.

But the plant could play some new, as yet undefined, role in assuring Southcentral's gas supply.

Backstop supply?

If the plant simply closes, there's nothing on the horizon in the short term to take its place as a backstop for regional gas supplies except, ironically, imported LNG.

There are plans for a bullet line to bring North Slope gas south to the Anchorage area, but that will take years, assuming it is feasible.

There's also gas to be found in Cook Inlet, but there seems to be a complex web of obstacles blocking the drill rigs; high costs, lack of access to prospective acreage and regulatory hurdles among them.

For at least the next 22 months, the LNG plant is a safety net for heat. Producing wells in the region's gas fields can't produce enough to supply the local gas and electric utilities during very cold weather. Under an agreement with the utilities, ConocoPhillips Alaska Inc. and Marathon Oil Co., the LNG plant owners, divert gas to the utilities that otherwise would have been liquefied for export.

If the LNG plant weren't there, wouldn't more gas be available for the utilities?

Probably not. Gas wells must produce at a steady threshold to retain the capability to cycle up to meet mid-winter peaks in demand. The plant provides a steady, year-round customer for the gas field producers, which the wells produce at a steady rate and then cycle up to meet the peak.

Absent the steady demand from the LNG plant, the gas well would serve mainly the utilities, which require about 150 million cubic feet per day in summer but more than twice that in winter. That much up and down in the production rates would likely damage the gas wells, petroleum engineers say.

The LNG plant doesn't have to shut down if the export license is lost. There are options, including a continued role in supporting local gas supply, according to Peter Micciche, ConocoPhillips' asset and operating integrity superintendent. Components of the facility, such as the three LNG storage tanks and marine loading facilities, could be used other ways.

LNG equal efficient storage

LNG is actually an ideal way for to store gas for use to meet peak demands. It can be vaporized fairly quickly so gas is available on short notice. This is in contrast to other ways of storing gas, such as in depleted reservoirs, where the gas can be withdrawn but not quickly.

For these reasons, LNG units in many sizes are now commonly used to meet peak gas demand needs in the Lower 48, Micciche said. LNG is stored and used to supply a diversified portfolio of natural gas demand from large municipalities in the northeastern U.S. and small rural pipeline networks, to isolated manufacturing plants and even large ranches in the Lower 48.