Oil and gas explorer
ConocoPhillips
(
COP
) has recommenced deliveries of liquefied natural gas (LNG) from
its mature facility in Alaska, which was on the threshold of being
shut down.
In May 2012, ConocoPhillips sent a shipment of LNG to Japan.
Another four to five consignments of Alaska LNG are expected to be
delivered by the company between now and the year-end. All these
deliveries are to be made to Japan, but the customer's identity has
not been revealed.
Located in the Kenai Peninsula community of Nikiski, the plant
has a monopoly in LNG export in the U.S. The facility commissioned
in 1969 was owned by ConocoPhillips and
Marathon Oil Corporation
(
MRO
), with a respective stake of 70% and 30%. For the major part of
its operating cycle, the plant sourced its output to Tokyo Gas and
Tokyo Electric. Currently, ConocoPhillips is the sole owner of the
Alaska facility, after it acquired Marathon's holding in September
2011.
The partners intended to put the facility under lock and key in
early 2011. The decision was based on the plant's inability to seal
any shipping contract with the Tokyo utilities and the hardships
faced in obtaining natural gas from the mature Cook Inlet basin.
But as a consequence of the natural calamities in Japan in 2011,
the Fukushima nuclear power plant was in ruins, giving rise to new
demand for Alaska LNG.
The LNG facility was shut down by the end of 2011. The shipment
made in May represents the first delivery since fall 2011. However,
there is no certainty about the future of this plant. Its future
depends on domestic needs, the natural gas yield from the Cook
Inlet basin and the accessibility of natural gas through a pipeline
from the North Slope to South-central Alaska.
ConocoPhillips holds a Zacks Rank #5, which translates to a
Strong Sell rating for a period of one to three months. Longer
term, we maintain an Underperform recommendation on the stock.
CONOCOPHILLIPS (COP): Free Stock Analysis
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MARATHON OIL CP (MRO): Free Stock Analysis
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