BP wins approval to launch pilot plant

Construction of gas-to-liquid plant to cost $86 million and be complete in 2002

Posted: Tuesday, February 27, 2001

KENAI - BP has received the remaining permits needed to begin construction of a pilot plant in Nikiski to test technology for turning natural gas into synthetic crude oil.

Ken Konrad, senior vice president for BP Exploration Alaska, said the gas-to-liquid plant is scheduled to begin operating early in 2002. Once the plant is finished, it will employ 15 to 20 operators and produce roughly 300 barrels of synthetic crude daily, BP has said.

If BP can prove the technology in Nikiski, Konrad said, it will consider building a production-scale plant producing 80,000 to 100,000 barrels of synthetic crude per day on the North Slope. It also will consider building gas-to-liquid plants elsewhere around the world.

BP has said the Nikiski gas-to-liquids plant will operate for about five years. After that, BP could tear it down or use it for additional research projects.

Kvaerner Process Technology - a Dutch firm - is providing engineering, construction management and procurement. Austin Industrial - based in Houston, Texas - is doing the heavy construction. And Udelhoven Oilfield System Services will install electrical instrumentation.

Twenty-five people already have been hired, and about 50 more should be on the job in the next two weeks.

Workers already have erected a tent 100 feet wide, 160 feet long and 40 feet tall at the site, said Gary Ramberg, construction manager for Austin Industrial. They are using steam and heaters to thaw the ground.

Once that's finished, workers will excavate and pour the plant's foundation, all in the heated tent. By May, workers should be building the structure, he said.

About half the $86 million budget for the project will go to buy steel, pipe, valves, vessels, control systems, design and engineering, BP officials said. About $40 million will be spent to buy goods and services in Alaska.

About 20 Alaska contractors already have been hired, about half of which are Kenai Peninsula companies or peninsula branches of larger operations. The remainder of the contracts are to Anchorage operations.

Konrad said the construction work force should reach about 200 people this spring and summer, then taper off toward the end of the year.

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