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Enstar President Raises Concerns of Natural Gas Shortfall in Alaska

CEO Khai Intela
The setting sun illuminates steam rising from the George M. Sullivan Plant 2A electrical generation station along the Glenn Highway Wednesday, Jan. 17, 2024 in Anchorage. The $300 million, 120-megawatt plant burns natural gas and...

Enstar president warns of natural gas shortfall, delayed solutions for Southcentral Alaska The setting sun illuminates steam rising from the George M. Sullivan Plant 2A electrical generation station along the Glenn Highway Wednesday, Jan. 17, 2024 in Anchorage. The $300 million, 120-megawatt plant burns natural gas and was brought online in 2016. (Loren Holmes / ADN)

The president of Enstar, the largest utility in Southcentral Alaska, has raised concerns about the state's natural gas shortage. John Sims warns that the shortage may occur sooner than expected, posing a risk of power interruptions in the future.

The Impending Gas Shortfall

Enstar provides gas to heat homes and buildings in the Anchorage and Matanuska-Susitna areas, as well as parts of the Kenai Peninsula. With 150,000 customers relying on their supply, Sims is worried about potential gas-supply interruptions and increased demand due to cold weather.

While the region currently has enough gas to meet its needs, Sims expresses concern about the years 2027 and 2028. He fears that the power companies' plans to import liquefied natural gas may not be feasible until 2028, as state and federal agency permitting timelines can cause delays.

The Regulatory Commission of Alaska has also voiced similar concerns, emphasizing the potential catastrophic outcomes if utilities are not adequately prepared.

Collaborative Efforts and Power Rationing

To address the potential crisis, the commission has started a series of meetings with power companies. The aim is to hear their plans for power rationing to protect vital facilities and prevent blackouts or forced power outages.

Hilcorp, the main gas supplier in the Railbelt, had previously warned Enstar and other utilities that they would not have enough natural gas reserves to fulfill new supply contracts once the existing ones expire. This has prompted utilities to seek alternative sources, including renewable energy projects and the possible importation of liquefied natural gas.

Hilcorp has assured that it will meet the obligations of its gas supply agreements. However, the company acknowledges that additional sources of natural gas supply need to be identified for Southcentral Alaska.

Extension for Homer Electric

Homer Electric, the first electric utility in the region to have its gas contract expire, will receive a one-year extension. Enstar has amended its gas supply contract with Hilcorp to provide an additional 3.5 billion cubic feet of gas for a yearlong period, an approximately 10% increase from its usual purchase. Enstar will sell the extra gas to Homer Electric Association for the next 12 months.

The amended contract is subject to approval by the regulatory commission. The arrangement aims to ensure that Homer Electric's members continue to receive gas supply without interruption.

Ensuring Gas Supply for All Utilities

Chugach Electric Association, the largest power utility in Alaska, is confident that it will meet the gas needs of its members. While Chugach has a working interest in the Beluga River Unit gas field, which provides most of its gas needs, it is actively considering opportunities to import liquefied natural gas as a backup plan.

Other utilities, such as Matanuska Electric, are also evaluating options to manage potential gas shortfalls. They have contingency plans in place to coordinate with Enstar and other electric utilities.

The Future of Gas Supply

Enstar's Sims raises concerns that the gas supply for his company may face a shortfall by 2027 or 2028. To address this, he suggests expedited state and federal permitting timelines for liquefied natural gas imports. Additionally, incentives proposed by the governor may help facilitate the discovery of new gas sources.

Consulting firms working with Enstar and the electric utilities are expected to provide the regulatory commission with updated findings and recommendations. Importing liquefied natural gas is likely to be suggested as the best near-term solution to avoid future gas shortages. Sims emphasizes the need for swift action by the utilities to develop a comprehensive plan.

As the deadline looms, collaboration among stakeholders, government support, and strategic planning will play crucial roles in securing the region's gas supply and preventing potential disruptions in the future.

Note: The above article has been written based on the original content and has been adapted to provide a fresh perspective while retaining the core message.