Enstar sees gas shortage in 2025 firm contracts fall short of demand

Alan Bailey

for Petroleum News

During a Feb. 6 meeting of the Alaska House Energy Committee, officials from Enstar Natural Gas Co., the gas utility for Southcentral Alaska, told the committee that the utility does not have sufficient gas supplies under firm contract to fully meet its anticipated gas demand in 2025. The utility obtains all of its gas from Cook Inlet oil and gas producers, primarily Hilcorp Alaska.

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"We have not yet had a communication with a producer that's willing at this point to supply that gas under firm contract," John Sims, president of Enstar, told the committee.

Inna Johansen, Enstar director of gas supply operations, told the committee that a reduction of firm supplies under a contract with producer Furie Operating has resulted in a significant change in supply arrangements in 2025. There is also a reduction in contracted firm supplies from Vision Operating. In addition Homer Electric Association will start purchasing its gas supplies from Enstar after HEA's contract with Hilcorp terminates at the end of March. The HEA contract will increase Enstar's supply gap for 2025 from somewhere in the range 1.0 bcf to 1.5 bcf to a range of 5 bcf to 6 bcf, Johansen said.

Sims said that Enstar has had conversations with all of the gas producers in the Cook Inlet region and that, thus far, no one is willing to extend existing contracts. After nine months of negotiations Enstar was able to contract gas supplies for upcoming supplies to HEA, he said. He commented that at present Hilcorp is likely the only producer with the possible capability to increase production.

And, while the gas producers have not indicated a willingness to fill the projected firm gas shortfall in 2025, nobody has yet tooled up a facility for importing liquefied natural gas. In addition, there is no gas pipeline from the North Slope.

For some time people have been discussing a prediction that shortfalls in gas supplies would begin in 2027, not 2025. Sims commented that that a graph prepared in 2022 had indicated adequate gas supplies through to 2027. However, that graph had made assumptions about gas exploration and development by BlueCrest Alaska Operating and Furie in 2023. None of this development actually happened, Sims said.

--ALAN BAILEY