Amid a continuing debate over how to address anticipated shortages in natural gas supplies in the Cook Inlet region, Anchorage based Chugach Electric Association has made a Regulatory Commission of Alaska filing, with the results of phase one of a study into the topic by consultancy firm Black and Veatch. This has become an urgent matter, given indications that Cook Inlet gas supplies may fall short of gas and electric utility gas demand around 2027.
The filing sets out the findings to date of the Black and Veatch study, with this phase of the study assessing options for addressing the Cook Inlet gas supply shortfall. The report suggests that it would be possible to obtain gas from imported LNG at prices competitive with gas from Cook Inlet.
The overall objective is the continuity of electricity supplies that are reliable and acceptably priced.
Proponents of the rapid implementation of renewable energy in the Railbelt say that it is feasible to implement renewable energy generation such as wind and solar power to fully compensate for the shortfall in power generated using Cook Inlet sourced natural gas. Renewable energy advocates argue that imported LNG will likely be very expensive and will have highly volatile and unpredictable pricing. And renewable energy is becoming cheaper than fossil fuel generated power, the renewable energy advocates say.
Currently the Railbelt electric utilities obtain about 15% of their power from renewable sources, in particular from the Bradley Lake hydropower system in the southern Kenai Peninsula.
Supply gap despite increasing renewable energy
Chugach Electric's RCA filing does indicate that the utility envisages a steady increase in the amount of renewable energy in the utility's energy supply portfolio, with almost all its electricity supplies coming from renewable sources by around 2050. That, despite a slight increase in electricity demand. Currently the utility is evaluating a potential wind farm and a potential solar energy farm that together may provide up to 400,000 megawatt hours of power annually.
However, the utility's projections, based on what it sees as renewable energy implementation happening as fast as is feasible, indicate a significant gap between its power generation and power demand for several years, unless the gas supply shortage can be filled. That gap will gradually close, as the amount of renewable power generation increases, Chugach Electric thinks.
The utility sits in a particularly strong position relative to Cook Inlet gas supplies, given its two-thirds ownership of the Beluga River gas field on the west side of the Cook Inlet.
"Chugach's gas requirements are fully met through first quarter 2028 with a small supply surplus expected over the next several years," the utility told the commission. "While natural gas will remain essential to Chugach's operations, the Chugach Board of Directors established decarbonization goals in 2022 to reduce carbon by at least 35% by 2030 and at least 50% by 2040, provided there are no material impact on electric rates."
Cooperative project
Chugach Electric is actively working with the other Railbelt utilities, the Alaska Department of Natural Resource, Alaska Energy Authority and consulting company Berkeley Research Group on figuring out the likely future shortage of Cook Inlet gas and how to address it.
A recent report by Berkeley Research Group concurred that additional gas supplies will be needed to offset the projected decline in Cook Inlet gas production.
Gas storage
Black and Veatch's phase one study, commissioned by Chugach Electric, found that the date when Chugach Electric will start to encounter unmet gas needs will depend on the possible expanded use of gas storage for smoothing out the levels of gas availability. The utility is considering establishing major gas storage capabilities using depleted subsurface gas reservoirs, perhaps even within its Beluga River field.
With gas storage, the start of the gas supply gap might be delayed to somewhere between 2029 and 2034. The scale of the gap will depend on the electricity demand, the Beluga River gas field performance and the extent of implementation of clean energy power generation. The analysis included consideration of different scenarios for growth in renewable energy use.
LNG imports most effective option
Black and Veatch investigated multiple options for filling Chugach Electric's gas supply gap, including the supply of gas from the North Slope; emerging technologies for creating ammonia and hydrogen as fuel; and the import of LNG. The import of LNG appears to be the most feasible option. The consulting company also found that the chartering or leasing of a floating LNG storage and regasification unit would be the most cost effective means of achieving this. Gas would be delivered through the existing LNG export terminal at Nikiski, using the terminal's associated pipelines.
The consultants predicted the likelihood that, following a recent period of global LNG supply and demand instability, coupled with volatile pricing, the LNG market will come into equilibrium in coming years, together with sufficient LNG export terminals in North America to enable a Cook Inlet competitive supply. Both Black and Veatch and Berkeley Research Group have projected gas pricing from LNG imports within the range of potential Cook Inlet gas prices, as estimated by the Alaska Department of Natural Resources, Chugach Electric says.
Assuming a final investment decision in mid-2024, the earliest that LNG importing could start would be the beginning of 2027. A more conservative, delayed project would see implementation at the end of 2028.
Phase 2 of the Black & Veatch study, scheduled for completion in the fourth quarter of this year, is further investigating the practicalities of conducting LNG imports using a floating LNG facility.
