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HomeMy WebLinkAboutResolution No. 2010-26the city ✓f KENAI.ALA SKA CITY OF KENAI RESOLUTION NO. 2010 -26 Suggested by: City Council A RESOLUTION OF THE COUNCIL OF THE CITY OF' KENAI, ALASKA, URGING THE UNITED STATES DEPARTMENT OF ENERGY TO EXPEDITIONSLY APPROVE A TWO YEAR EXTENSION OF THE KENAI LIQUID NATURAL GAS (LNG) EXPORT LICENSE. WHEREAS, the Kenai LNG Plant has been operating safely and efficiently for more than 40 years and is currently the only significant industrial user of natural gas in southcentral Alaska; and, WHEREAS, the Kenai LNG Plant received a two -year extension of its export license in March 2009, which will expire in March 2011; and, WHEREAS, there is ample room under the current export license volume limit of 99 trillion BTUs such that no additional authorization for volumes is needed, only additional time; and, WHEREAS, the Kenai LNG Plant is a significant economic engine for the Kenai Peninsula Borough and the cities of the Kenai Peninsula, and it generates approximately $130 million in economic benefits to the state and local economies each year; and, WHEREAS, the LNG facility supports about 60 direct jobs and is estimated to support 50 indirect jobs, all of which account for an estimated $17 million in personal income; and, WHEREAS, the production of gas for feedstock to the LNG facility and the sale of LNG generate about S60 million in royalties and taxes for the State of Alaska and the Kenai Peninsula Borough; and, WHEREAS, the LNG plant provides gas supply stability for Southcentral Alaska by backing up gas supplies, thereby serving as a virtual storage facility for local utilities during periods of peak demand on cold days or when disruptions occur in the gas supply system; and, WHEREAS, currently, there is no real alternative to the back -up gas supply provided by the LNG plant although additional storage options are being investigated, encouraged, and pursued, but to date these remain potential options for the future; and, WHEREAS, the LNG plant helps drive investment in resource development in Alaska; resources developed for the LNG plant can and will be used during the life of the LNG plant and may continue even if exports are discontinued in the future to meet local demand; and, maintaining natural gas demand is vital to the economics of gas exploration and development throughout Alaska; and, Resolution No. 2010 -26 Page 2 of 2 WHEREAS, preservation of the LNG plant infrastructure maintains options for use of the plant in the future to help meet natural gas demands of Southcentral Alaska; and, WHEREAS, there is an excess of gas deliverability beyond local needs, which if not exported, may be shut in likely resulting in lost reserves and lost deliverability further jeopardizing the ability to meet peak winter demands; and, WHEREAS, the Alaska Department of Natural Resources, on March 15, 2010, declared it has committed, under the terms of the LNG settlement agreement of 2007, to work with the Kenai LNG Plant owners and stated it recognizes the importance of the LNG export facility for the market and economy of the Cook Inlet and wants to see the facility stay in operation. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA: SECTION 1. The Kenai City Council supports a two -year extension of the Kenai LNG export license. SECTION 2. The Kenai City Council urges the United States Department of Energy to expeditiously approve a two -year extension of the Kenai LNG export license. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 19th day of May, 2010. ATTEST: Carol L. Freas, City Clerk PAT PORTER, MAYOR