Port MacKenzie gas project one step closer

A Japanese energy company wants a state – to -state government agreement for an LNG export plan.  The plan would ship Cook Inlet gas oversees from a facility at Port MacKenzie.

REI is based in Kyoto prefecture, but opened it’s Alaska arm, REI Alaska, about a year ago, when the company announced it’s plan to pursue an LNG export project. To that end, REI Alaska has leased land at the Matanuska Susitna Borough’s Port MacKenzie with the goal of building an LNG processing plant there.

Although the plan is still on the drawing board, and will have to have FERC approval, REI’s goal is to provide 150 million cubic feet of LNG a day for Japan, according to the Mat Su Borough’s port director Mark Van Dongen. Van Dongen recently returned from meetings in Japan, where he met with REI officials in Kyoto.

“So there would be an LNG liquifying plant at Port MacKenzie, and then a receiving plant at this port in Kyoto. I think the two key things that have to be pegged down at REI is working on are obtaining contracts for the 150 million cubic feet per day of natural gas from Cook Inlet, and then the financing for the project.”

Van Dongen briefed the Borough Assembly last week on his return from Japan, saying that his confidence in the viability of the LNG project went up from 50 to 80 percent after the Japan meetings. He said gas contracts and financing are expected to be in place by January 1.

REI Japan representative Kunioki Homma told the Assembly that Japan is hungry for natural gas, especially since the huge earthquake of March, 2011. Homma said that the parent company wants to double it’s LNG business by coordinating with parties in Alaska and Japan to structure an “LNG chain” from Cook Inlet gas reserves through a pipeline to a liquification plant at Port MacKenzie. Japan would handle the shipping and a liquification plant and receiving terminal North of Kyoto at a port in Meido city. Governor Bill Walker and the governor of Kyoto prefecture signed an LNG agreement at meetings in September, he said, and now is the time to cement a local government agreement with the Matanuska Susitna Borough.

“So based on that understanding, both Kyoto prefecture and Meido city organized a working team together with us. The target date for this working team is [the] early part of next year, to form a business plan and to form a more complete business entity.”

The REI plan is a stand – alone project that depend’s on Cook Inlet natural gas, but not on Alaska LNG. Japan currently needs about 60 Million metric tons of natural gas a year, and the REI Alaska plan could provide about one Million metric tons of gas to that nation. Port Director Van Dongen says that the gas can be transported through an existing Enstar line that runs from Cook Inlet near Tyonek, along Knik Arm,  through Wasilla. Van Dongen says a short spur line needs to be built that would be able to connect the Enstar line to the Port.

Mary Anne Pease, CEO of REI Alaska, said in an earlier interview that REI’s goal is to have the Port MacKenzie facility operational by 2020.  Pease was unavailable for comment this week.

John Moosey, Borough manager, says the Borough and REI have been in discussions with REI for the past year. He says currently, analysis is underway on whether or not the plan will work financially. He says REI has said that some of the natural gas it handles will be available for local needs.