Southcentral Alaska’s largest natural gas utility said Tuesday it might not have the gas to make it through this winter. That’s after state regulators last Wednesday denied Enstar’s request that would’ve expanded natural gas storage in Kenai, as the region faces a looming natural gas shortage.
Enstar president John Sims said it’s “not looking good” for the utility’s more than 150,000 Southcentral customers heading into the cold, winter months.
“Just to be very blunt, we need additional production in order to make it through this winter,” Sims said. “We are kind of turning over every stone possible and trying to find more gas resources.”
In the order, the Regulatory Commission of Alaska wrote they were “unsure about the timing of the need for additional natural gas storage capacity, including insertion and withdrawal capacity.”
Enstar proposed developing and operating a depleted reservoir known as the Kenai Loop Pool that is currently leased and operated by AIX Energy, LLC., to store gas to use during the colder months.
The utility was seeking an “advanced determination” from RCA that it was prudent, which would allow the project to unlock financing for development, the order says. In its original filing, Enstar said that the project would help ensure there are enough supplies to meet the needs of its customers.
A search for other options
The commission denied the utility’s request in a 17-page order last Wednesday, saying the Department of Natural Resources hadn’t determined if the facility was capable of serving as a gas storage facility. Hilcorp has a competing application for the same storage facility, the order said.
The RCA didn’t respond to a request for comment Tuesday afternoon.
The facility would hold 25 billion cubic feet of gas, which Sims said is appropriately sized for the current supply needs and future natural gas imports.
“The other benefit of having this storage facility right now is we can go to Furie, AIX, to all the small producers and even Hilcorp and say, ‘Hey, whatever volume of gas you produce, I can buy it.’ And I can store that into this storage facility for later use,” he said.
Longer term, utilities are looking to import natural gas, which would impose an unavoidable price increase to thousands of households and businesses. Legislators are currently in negotiations over a multibillion-dollar property tax break for the developer of the Alaska LNG project, Glenfarne. But it’s unknown if, or when, that project will be built.
According to the order, Enstar’s Kenai storage project garnered support from DNR, multiple state legislators and other regional electric utilities. However, some Anchorage-based property management companies said it was “inappropriate” for ratepayers to bear the cost of the project. The project’s $240 million price tag would’ve increased bills for customers by $10 to $12 per month, according to the filing.
Sims said Enstar is filing a petition for the reconsideration of the ruling next week.
“Just in case the commission denies that request, yes, we are looking at other storage options,” he said. “Unfortunately, based on our analysis that we did before we filed with the commission, those options appear to be more expensive.”
Sims said he’s hoping production and storage ramps up, but if it doesn’t, he said the utility may need to ask customers this winter to conserve supplies by lowering their thermostats.
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This story was originally published by Alaska Public Media and distributed through a partnership with The Associated Press.
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