Alaska Resource Review Fall 2024

ALASKA RESOURCE REVIEW FALL 2024 38 Enstar could see shortage in contracted gas supply in 2025 BY TIM BRADNER THE COOK INLET GAS SUPPLY SITUATION ISN’T GETTING BETTER. Enstar Natural Gas Co. said it is facing a shortfall in contracted gas supply of about 6 billion cubic feet (bcf) in 2025, with an expectation that similar annual shortfalls will continue. This is not a production shortfall, although that could happen in 2027. It results because Enstar has not been able to get the supply under contract. The utility needs 37 bcf to 38 bcf per year to meet Southcentral regional gas demand, which is mostly for space heating of homes and buildings. It’s likely the shortfall will be met by Hilcorp Energy, the Inlet’s dominant gas producer, or by HEX Alaska, a small Alaskan-based company that is also producing in the Inlet. Both companies are drilling new gas wells, but neither company can say now that new gas will be available. Hilcorp has about 20 new gas wells planned this year, but it isn’t known how many of those are being drilled to maintain production in existing reservoirs or whether any are targeted at new gas from separate accumulations. HEX, however, is drilling for new gas from its Julius R platform in the company’s Kitchen Lights gas field. In early October HEX began drilling a “sidetrack,” a new lateral well drilled out from an existing well bore. The sidetrack was drilled about 6,000 feet to a prospect with good potential for containing gas, company CEO John Hendrix said. A second sidetrack could be drilled, if the state Department of Natural Resources is able to grant relief of state royalty, to improve the economics of the well, Hendrix said. “We’re taking on this risk (for the first sidetrack) by ourselves. We’re sticking our necks out,” he said. HEX needed a jack-up rig to do the sidetracks from its platform and Hilcorp Energy make its rig available, the only one in Cook Inlet. Hilcorp purchased the Spartan 151 jack-up rig from Spartan Drilling Co. last summer. Spartan has been using the unit in the Inlet for several years, working for Hilcorp and other companies. With wintry weather approaching, Southcentral Alaska residents hope to avoid a repeat of last January’s problems with natural gas. Those were created by a mechanical malfunction in a gas storage facility operated by Enstar and it happened in a period of intense cold. Hilcorp Energy, Cook Inlet’s major producer, keeps gas in storage for its customers and COOK INLET GAS SUPPLY CRUNCH STILL REMAINS New drilling for gas is underway this winter in Cook Inlet.

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