Alaska’s LNG terminal shaking off years-long stasis with revamp to stave off gas shortages

Three players have signed on the dotted line to enable an existing liquefied natural gas (LNG) terminal in Nikiski on Alaska’s Kenai Peninsula to change hands and be given a kiss of life through redevelopment, which will unleash new flows of natural gas to the Southcentral market, keeping looming supply shortages at bay.

Thanks to an agreement Harvest Alaska (Harvest) has struck with Marathon Petroleum Corporation (MPC) and Chugach Electric Association (Chugach), the existing Kenai LNG terminal, currently owned by a subsidiary of MPC, will be brought into Harvest’s fold.

The acquisition move is being made to bolster Southcentral Alaska’s energy supplies through the repurposing of existing assets to enable delivery of additional natural gas supplies as early as 2026, with full-scale operations beginning as early as 2028.

The proposal would enable Harvest to own, develop, and operate the LNG terminal and infrastructure, allowing Chugach, MPC, and any other Railbelt customers to secure further natural gas supplies to help meet the market demand.

The redevelopment project will leverage MPC’s legacy LNG export infrastructure to alleviate the potential short-term natural gas shortage facing Southcentral Alaska. This infrastructure, combined with existing U.S. Federal Energy and Regulatory Commission (FERC) approvals, is perceived to position the facility to meet near-term energy needs while longer-term alternatives are developed.

Jason Rebrook, Harvest’s CEO, highlighted: “Harvest has a long history of operating critical oil and gas infrastructure across the state and this announcement furthers our commitment to ensuring Alaska has the energy it needs. By repurposing Marathon’s existing LNG facility, we aim to provide certainty to the Southcentral gas market while meeting the needs of Railbelt utilities.

“We are proud to collaborate with Marathon, Chugach Electric and other Southcentral utilities to bring this project online to ensure the reliable delivery of natural gas in timely and cost-efficient manner.”

Moreover, the facility includes existing dock infrastructure, historically capable of handling LNG vessels up to 138,000 cubic meters, or approximately 2.9 billion cubic feet of natural gas, and onsite tankage with a storage capacity of 107,000 cubic meters, which is about 2.3 billion cubic feet of natural gas.

Arthur Miller, Chugach’s CEO, underlined: “Providing our members with safe, reliable and affordable electric service is core to our values and mission. We are pleased to have a potential solution to meet the gas needs of our members and at the right time. We’ve been looking at options to fill the gap left by our expiring Hilcorp contract, which ends on March 31, 2028.

“This is a great opportunity to work with partners who have extensive experience and knowledge of gas operations in Alaska. We look forward to ongoing discussions and analysis with Harvest Alaska as they progress the front-end engineering and design study over the next several months.”

Therefore, Chugach, which is in discussions with Harvest to utilize the Kenai LNG facility, emphasized the importance of this partnership in addressing the energy needs of Southcentral families, businesses, and ratepayers. MPC also expressed strong support for the project and noted the benefits it can provide to the region.

Bruce Jackman, Vice President of MPC’s Kenai Refinery, explained: “We believe the Kenai LNG terminal offers the quickest and lowest-cost solution to bring additional natural gas to Southcentral Alaska and beyond.

“Our Kenai refinery employees work around the clock to provide gasoline, diesel and jet fuel to their fellow Alaskans, and a reliable supply of natural gas is critical to the refinery’s operations. We’re excited about this partnership with Harvest and Chugach to work toward bringing new natural gas to the region.”

Marathon got its hands on the Kenai LNG plant in 2018 by purchasing it from ConocoPhillips to supply LNG as fuel to its nearby refinery and embarked on a quest with FERC to repurpose the plant to enable LNG imports.

A year before the sale, difficulties in finding buyers forced ConocoPhillips’ hand, and the firm mothballed the terminal after decades of LNG exports, generated with Cook Inlet gas, to energy customers in Asia, such as Japan.

The zest for the revival of the Kenai LNG terminal follows the steps Doug Burgum, the U.S. 55th Secretary of the Interior, took to boost American energy independence and streamline processes aimed at advancing President Donald Trump‘s agenda by signing six orders to make America “energy dominant.”

One of these, order 3422, is envisioned to unleash Alaska’s resource potential by directing the Department of the Interior (DOI) to take all necessary steps to unlock Alaska’s “abundant and largely untapped supply of natural resources.” 

This implements Trump’s Executive Order 14153, ‘Unleashing Alaska’s Extraordinary Resource Potential,’ by, among other policies, maximizing the development and production of the natural resources on both federal and state lands within Alaska. 

Burgum’s move has put the wheels in motion to launch a review of all restrictions that have targeted resource development in Alaska and requires the Interior Department to develop plans of action to carry out President Trump’s agenda for how Alaska can help make America energy dominant.