THE LINK: OCTOBER 2024 36 Lack of drilling in Cook Inlet brings issue to forefront Southcentral Alaska utilities are continuing work on a plan to import liquefied natural gas, or LNG, to the region. With no new drilling underway in Cook Inlet to test prospects identified by companies, Enstar Natural Gas Co., the Southcentral Alaska gas distributor, says it has little choice other than imports to assure customers of a supply of gas from 2027 on. Enstar is working on the imports with electric utilities in the region, which use gas to generate electricity. The utilities have not said who they are working with on an import plan, but Texas-based Excelerate Energy, a major operators of Floating Storage Regasifiation Units, or FSURs has acknowledged it is in discussions with the utility group on a plan to import LNG beginning in 2028, the company told analysts in an earnings call Aug. 8. The company would use a Floating Storage Regasification Unit, or FSRU, to bring LNG to a terminal in Cook Inlet, in southern Alaska, Excelerate CEO Steve Kobos said. Excelerate owns 11 Floating Storage Regasification Units in operation or under construction. The company said it intends to own the Cook Inlet terminal for the FSUR as well as supplying the LNG and selling the gas to regional utilities. “Excelerate is in advanced discussions with local utilities in Southcentral Alaska for the development of an integrated LNG import terminal in the lower Cook Inlet region,” Excelerate said in a statement posted on its website. Kobos would not identify the utilities Excelerate is working with, but Enstar has been taking the lead in an import plan. Anchorage-based Chugach Electric Association and Matanuska Electric Association, which serves communities north of Anchorage, are taking part in the planning. Enstar has told state regulators it intends to have an LNG supply contract in place by the end of the year. The utility group intends to have decisions in place for imports, “within a couple of months,” according to a source within group who is familiar with the plan. Enstar also said it is considering development of an import facility at Nikiski, where there are dock facilities available including at a mothballed fertilizer and ammonia plant owned by Agrium Corp. Port MacKenzie, in upper Cook Inlet is also being considered. The Matanuska Susitna Borough owns the port. Enstar relies on gas to fuel space heating for buildings in the region. Most power generation by the electric cooperatives is also with gas, but production will be declining in gas fields in Cook Inlet, the state Division of Oil and Gas has warned. Hilcorp Energy, the major regional gas producer, has warned utilities that it will not be able to renew gas supply contracts for utilities as they expire. Because there is no physical connection with gas supply infrastructure in the continental U.S., Alaska has been dependent on local gas supplies in Cook Inlet for most of its energy since the 1960s. The issue now has urgency because half of Alaska’s population lives in Southcentral Alaska communities. Ironically, there is 35 trillion cubic feet of gas stranded on the North Slope, 800 miles north of Cook Inlet, but a plan for a $40-billion-plus pipeline to bring slope gas south is on hold. Meanwhile, Cook Inlet has potential for new gas discoveries, but the economics are difficult, given high costs and a limited regional market. State officials worry that LNG imports, once they begin, will undercut the efforts of explorers now hoping to develop known gas deposits in the Inlet, but they concede that utilities must have a gas supply plan. For years Alaska exported gas, as LNG, from Cook Inlet to Japan, but declining gas reserves led to an end of shipments in 2016. — Tim Bradner Southcentral utilities set on importing LNG Chugach Electric’s Beluga Power Plant provides reserve and peaking capacity with six natural gas fired simple cycle gas turbine generators. The plant is located on the west side of Cook Inlet near Tyonek.
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