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Vol. 14, No. 31 Week of August 02, 2009
Providing coverage of Alaska and northern Canada's oil and gas industry

Rolling blackouts?

The day of reckoning may be approaching for CI utility gas deliverability

Alan Bailey

Petroleum News

During a severe cold snap in January 2009 the rate at which utility gas flowed from the Cook Inlet gas fields, providing energy for electrical power and heat for homes and businesses, came close to the limits of deliverability. And, as the gas available from the fields continues to decline, a cold spell in the coming winter could tip gas demand over the edge of gas supply feasibility, triggering a shutdown of some power generation capacity, an action that would presumably be preferable to dropping the pressure in the gas pipes flowing through Anchorage and the Matanuska-Susitna Borough.

That was a theme running through the discussions at the July 29 Regulatory Commission of Alaska public meeting, during a session reviewing an RCA docket designed to gather information about Southcentral Alaska utility contingency plans.

“There’s a real possibility of rolling blackouts. If there are significant low temperatures, boilers are run pretty much continuously, and that needs electricity,” said Commissioner Anthony Price — people need adequate time to plan for that eventuality.

“I think we’re going to need some kind of public information campaign,” he said.

Long understood

The problems raised by dwindling gas supplies from the Cook Inlet gas fields, most of which have been in operation for decades, have long been understood. But amid wrangling over gas prices and debates over alternative energy sources, little progress has been made in implementing solutions.

“The issues of Cook Inlet gas are thorny and complicated. … I’m pointing the finger at all of us, including the commission, given the fact that public trust and confidence in public officials, our businesses, utilities are probably at an all-time low,” said RCA Chairman Robert Pickett. “Couple that with the fact that in Southcentral Alaska over the last 10 years we have gone from the least expensive wellhead gas in the nation to the most expensive gas … there really hasn’t been a particularly good job of explaining the realities of the situation to the public. … In fact there is a significant part of the population that believes these price increases and the deliverability issues are merely scare tactics to squeeze more money out of them. I don’t share that opinion.

“For us (collectively) to have allowed this situation to get to the point where it is today … is, in my opinion, a breach of public trust.”

Contingency plan

Mark Slaughter, manager of gas supply for Enstar Natural Gas Co, the main Southcentral Alaska gas utility, had earlier in the meeting outlined the status of a utility contingency plan for dealing with any gas shortfall. The plan, now being circulated in draft form, resulted from several meetings between the various utilities; the gas producers, although not part of the utility contingency plan agreement, also participated in these meetings, Slaughter said.

The agreement has also been expanded to include other significant users of natural gas and potential suppliers of alternative electrical power generation, he said.

Slaughter said that Enstar currently has sufficient gas under contract to meet its supply requirements — the concern is gas deliverability in the event of an especially severe cold snap, particularly if equipment such as a gas compressor fails, or perhaps gas well performance falls short of expectations.

If the decline in gas deliverability continues “we are going to be in it this winter at the very edge of our forecasts. … We were very close last year,” Slaughter said.

The draft contingency plan envisages production curtailment at the Kenai Peninsula LNG plant as a first response to bolstering the utility gas supplies. This could be followed by curtailment of interruptible supplies to Enstar’s few, small industrial customers. Other options include maximizing hydropower, the use of alternative fuels for power generation, importing electricity from Fairbanks and implementing rolling power blackouts, Slaughter said.

Public service announcements would encourage reductions in gas and electric consumption, and there is some scope for the reduction of commercial gas usage by, for example, turning off sidewalk heating and turning down thermostats.

Curtailment list

However, in case these various steps are unable to plug the gap between gas demand and supply levels, Enstar is preparing a curtailment list in which institutions such as schools and churches would be last in line for gas supply cuts, Slaughter said.

Commissioner Kate Giard, while thanking Enstar for its presentation, lambasted the lack of a comprehensive, published utility contingency plan and particularly criticized the electric utilities, spelling out some of the issues that she thought a plan should address.

“Here’s the rolling blackouts that we’re going to have. … This is the campaign that we’re going to begin in September. People want to get wood, so that they can heat with wood,” Giard said. “You people collectively, in my opinion, are way behind the curve. … You’d better get it together. … There had better be a plan. … Either it’s not real, and there’s other reasons that you’re creating this frenzy, or it’s real and you’re being irresponsible.”

The commissioners ended the session by agreeing that they would ask all of the utilities to present their emergency plans and inter-utility agreements at the second RCA public meeting in August. And Price said that if the utilities don’t provide adequate answers to contingency planning concerns at that time, the commission should convene an emergency public meeting the following week, for all of the utility chief executives to explain what is happening.

“Winter is coming. It’s too late to put in a generator in January,” Price said.

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