Runnung on Fumes: The uncertain future Of Cook Inlet's natural gas supply.

• Author: Kay, Alexander

Natural gas consumption from Cook Inlet has reached a tipping point, outpacing production in recent years. The shortage is not a crisis today thanks to surplus gas stockpiled in the years before the consumption and production curves intersected.

"Natural gas from the Cook Inlet basin is essential to meeting the energy needs of Alaska's Railbelt region," according to a 2018 report from the Alaska Department of Natural Resources (DNR). "It generates 70 percent of the Railbelt's electricity, heats over 140,000 homes and businesses and supplies fuel d by industrial users."

"In 2015, natural gas was the fuel source for 83 percent of all electricity generated within the Mat-Su Valley, Anchorage, and Kenai Peninsula and approximately 70 percent of total electricity generated in the entire Railbelt region," the report noted. The inlet fuels every gas-fired power plant in Southcentral, and some of that energy is shared as far away as Golden Valley Electric Association in the Fairbanks area.

The majority of that natural gas is produced by one company, Hilcorp, which started operations in Cook inlet before taking over BP's North Slope assets. Last April, Hilcorp notified a few Alaska utilities that the company doesn't have enough natural gas resources for contracts up for renewal in the next two to eleven years. Homer Electric Association (HEA), with a contract expiring in early 2024. is the earliest. In its warning. Hilcorp noted that, while it has enough natural gas to fulfill current contracts, renewal of contracts in the future would depend on the company's ongoing drilling program.

"Hilcorp's message was a bit of a wakeup call for all of the natural gas users in the Cook Inlet," says Lindsay Hobson, director of corporate resources and communications for ENSTAR Natural Gas Company. "It provided an opportunity for ENSTAR to really dive in and assess our customers' needs into the future with sufficient time to look for additional fuel sources."

Dependence on Cook Inlet gas puts utilities in an unusual position. "Unlike utilities in the Lower 48 that can turn to a network of supply basins and other companies for additional volumes if the need arises, ENSTAR relies on a single system that draws from a single source to meet all of its customers' needs," Hobson says.

Answering the Call

In response to Hilcorp's notice, six Alaska utilities announced the formation of a working group to assess energy security and future gas supply needs in the Cook Inlet...