BP to close test gas-to-liquids plant in Alaska

By Yereth Rosen

ANCHORAGE, Alaska, Sept 2 (Reuters) - BP (BP.L) said it will close a facility in Alaska that has been used for seven years to test technology that converts natural gas into liquid fuel.

BP Exploration Alaska Inc, the company's Alaska unit, said Tuesday its facility at Nikiski on the Kenai Peninsula south of Anchorage has fulfilled its mission, successfully demonstrating that diesel fuel and aviation fuel can be reliably produced from natural gas.

"The goal was research," said BP spokesman Steve Rinehart. "This was not a production-sized plant. But the processes were scaled up sufficiently to make sure that it would work."

The plant used about Cook Inlet natural gas, about 3 million cubic feet a day, Rinehart said. The plant produced about 300 barrels of fuel daily, which it sold to Tesoro, operator of a nearby refinery, he said.

The project was a success, BP Alaska President John Minge said in a news release.

"The technologies developed and improved there will eventually play a role in meeting the world's growing demand for cleaner fuels," Minge said.

The Nikiski plant will close at the end of 2009, BP said. Its approximately 15 affected employees will be offered jobs elsewhere in the company.

BP said its gas-to-liquids work will continue in Europe, where it and partner Davy Process Technology, a subsidiary of Johnson Matthey Plc (JMAT.L), are working on engineering design for full-scale units.