Company plans LNG facility at Pt. Mac

POINT MACKENZIE — An American subsidiary of a Japanese company hopes to start shipping liquefied Cook Inlet natural gas to Japan in five years.

Mary Ann Pease, Vice President and Anchorage General Manager for REI (Resource Energy Incorporated) has been touring the state pitching the project. She’s presented it in Mat-Su already but on Tuesday she and Eiji Maezawa, Executive Vice President and Chief Operating Officer for REI, brought the show to the House Energy Committee in Juneau.

“The stated timeframe for completion of this project is first LNG deliveries in 2020.

We have all affectionately told Mr. Maezawa that the next time he goes back home to Japan it has to be on an LNG tanker,” Pease told the committee, a recording of which is available online.

In an interview after the meeting, House Energy Committee co-chair Rep. Jim Colver — R-Mat-Su — said that the project’s potential for the borough and the state is exciting.

“I like their approach that, A. they’re using an existing supply, B. they’ve got a short time frame and C. they want to do it in Mat-Su. What’s not to like about it?” Colver said.

He said the committee also seemed more-or-less receptive.

“The questions that we asked were what kind of things can we do to help you with the permitting and those kinds of things,” he said.

Pease said that, by law, an LNG facility has to have its own dedicated dock. REI has an option on land next to the Mat-Su Borough’s facility at Port MacKenzie. The idea would be to bring in a modularized facility that could liquefy natural gas. The liquid product would then be shipped via tanker to Japan. She said that the company’s option on the Point MacKenzie land expires at the end of the year and currently the company is investigating the soils there.

“With the weight of an LNG plant including the tanks and other support infrastructure it’s necessary to make sure that you have very stable soil conditions,” Pease said.

Asked how big a facility the company envisions, Pease used a couple of measures. Starting with the caveat that this early in the process the price could be off by as much as 50 percent, she said that REI is anticipating something like a $1.8 billion facility.

“We’re calling this the small LNG project but in reality it is still a substantial project,” she said, before pulling out her second measure of the plant’s size: “It is about the same size as the existing ConocoPhillips plant in Kenai.”

Pease said that the company has started working on obtaining permits and hopes to enter begin the front-end engineering and design process this year.

REI is also working to bring the Cook Inlet natural gas producers together. Only one producer in the inlet — Hilcorp — has the potential to meet the plant’s demands so REI will need to bring more than one onboard.

She said that the facility also will make LNG available for local use in Alaska at the plant’s front gate.

Maezawa told the committee about the demand for natural gas in Japan. He said that Japan imports the most gas in Asia. Its demand increased greatly after the 2011 Fukushima nuclear power plant disaster when nuclear power fell out of favor. Nuclear plants are restarting in Japan, he said, but at around 2020 a lot of long-term natural gas contracts will be up for negotiation.

“That is a window of opportunity,” Maezawa.

He said that between projected changes in demand and those contracts coming open, 8 million tons of natural gas demand in Japan would be up for grabs, open for anyone to fill.

Pease is a familiar face in the Alaska energy sector who has worked on oil and gas projects for decades. She said she sees great potential in the project.

“It would be of great benefit not only to the people of Japan but to my home state,” she said.