The purchase was completed Sept. 26 but was not announced, according to Natalie Lowman, the spokeswoman. The transaction occurs as ConocoPhillips, the operator prepares to mothball the plant, which is expected to occur near the end of October, Lowman said.

Earlier this year the two companies announced that the plant would cease LNG production but that its facilities would be preserved to help meet regional gas needs in the future, or for a resumption of LNG exports if more gas supply becomes available.

Initially, ConocoPhillips and Marathon said they would cease LNG production in mid-year but then extended the expected shutdown to allow for additional cargoes to be shipped to Asian buyers.

“We have made four shipments since earlier this year and we are studying the possibility of making a fifth shipment,” Lowman said. “We are still working out our plans for preserving the plant facilities.”

One goal in the preservation is to keep the LNG storage tanks in a cold state.

There are three storage tanks at the facility with a capacity of storing 2.2 billion cubic feet of gas as LNG.

The plant is in Nikiski on the Kenai Peninsula, about 10 miles north of the city of Kenai and 60 miles south of Anchorage. ConocoPhillips and Marathon both supply gas to the plant with ConocoPhillips’ gas coming from the Tyonek platform at the North Cook Inlet gas field and Marathon’s gas coming from several onshore fields the company operates. ConocoPhillips is the operator of the LNG plant.

Until recently the plant supplied only Tokyo Gas and Tokyo Electric under long-term contracts, but on the termination of the long-term contracts ConocoPhillips has shipped one cargo to a buyer in China and three additional cargoes to Japan, Lowman said.

LNG is liquefied natural gas, a clear, colourless, non-toxic liquid that forms when natural gas is cooled to around -160ºC. This shrinks the volume of the gas 600 times. In its liquid state, LNG is a clear liquid with a density about half that of water. LNG is odorless, colorless, non-corrosive and non-toxic. LNG has been produced domestically and imported into the United States for more than three decades.

Where does it come from?

Indonesia, Algeria, Malaysia, Qatar, Trinidad, Egypt and Australia are currently the leading exporters of LNG. Russia and Iran also have the greatest potential.

The LNG Industry

Worldwide there are 17 LNG production and export terminals, 41 import terminals and 141 LNG ships altogether handling approximately 120 million metric tons of LNG every year.

LNG in the United States

The United States has the highest number of LNG facilities in the world. There are currently 113 active LNG facilities across the U.S. with a higher concentration of facilities in the northeast region. Among this number are 58 facilities to liquefy and store natural gas, 39 facilities that are used for LNG storage only, four facilities that received imported LNG and regasify it for domestic use, and one export terminal in Alaska. Currently, LNG imports account for less than three percent of the total U.S. consumption of natural gas.

With domestic U.S. gas prices falling and demand for LNG in Europe growing, and drawing investment away from the U.S., LNG has largely dropped off of the U.S. energy debate agenda. LNG is unlikely to be a major player in 2009, although local protests against LNG projects will continue.

CERA’s Robert Ineson told an industry conference in Houston that the consultancy was cutting its prospects for U.S. LNG imports “from 3.2 billion cubic feet per day as of last fall to 2.6 bcfd now,” a nearly 19% reduction. That was close to a contemporaneous EIA forecast of a 16% reduction in LNG imports for the year.

-Caroline Keddy