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Targeting LNG imports
Enstar continues to work with Glenfarne on development of Cook Inlet terminal
Alan Bailey for Petroleum News
Anchorage based gas utility Enstar Natural Gas Co. is continuing to work with Glenfarne Energy Transition towards the development of a terminal on the west coast of Kenai Peninsula for the import of liquefied natural gas into the Cook Inlet region, John Sims, president of Enstar, told the commissioners of the Regulatory Commission of Alaska during an Aug. 27 RCA public meeting. The concept is to be able to import LNG from Canada or elsewhere to offset the declining availability of natural gas from the Cook Inlet basin, for the heating of buildings and power generation in the Alaska Railbelt.
Engineering initiated Glenfarne has initiated the engineering that is required prior to making a final investment decision for the project and has been working with engineering company Worley on project optimization. Glenfarne has also been initiating the procurement process for the major components of the terminal, Sims said. Work is also in progress on the cost reimbursement agreement, after which the companies will start work on the terminal use agreement, he said.
Sims has previously indicated that Enstar would need to be importing gas into storage by around 2032 or 2033, to avoid a shortfall in its gas supplies. During the RCA meeting Enstar particularly complemented Hex Cook Inlet on its recent completion of new gas wells in its Kitchen Lights gas field offshore in the Cook Inlet. However, although this additional gas will help address the gas supply issues, there are still significant gas supply shortfalls anticipated in the future.
All utilities working on gas supply issues All of the Railbelt electricity and gas utilities have been working together to figure out how to address the pending gas supply shortfall. Anchorage based Chugach Electric Association has formed an agreement with Hilcorp Alaska pipeline affiliate Harvest Alaska for Harvest to acquire Marathon's liquefied natural gas export facility near Nikiski on the Kenai Peninsula, to convert the terminal into an LNG import facility.
Asked why Enstar has chosen not to participate in that arrangement and had thus created a situation where there would eventually be two LNG import facilities on the shores of the Cook Inlet, Sims said that the import facility being implemented by Harvest would have nowhere close to the capacity needed to support both Chugach Electric's and Enstar's gas supply needs. In addition the Glenfarne facility will not go into operation in time to fill Chugach Electric's pending gas supply shortfall. Hence the need for both import projects to move forward.
Chugach Electric has previously indicated that its current contract for firm gas supplies from Hilcorp expires on March 31, 2028.
No other option The commissioners also expressed concern that Enstar seems to be banking on the Glenfarne project progressing successfully to completion without the gas utility having any other option, should the project fail.
Sims responded that there is no other obvious option for bringing sufficient gas into the Cook Inlet region and that Enstar has a high level of confidence in the rigorous process used to determine that the Glenfarne project is the appropriate route to follow. Any time spent on some alternative project would constitute a distraction at this point, Sims said.
Enstar has considered other LNG import options. In 2024 Alaska Pipeline Co., the utility's pipeline affiliate, obtained RCA approval of an expansion to its service area to include a route for a pipeline for the shipment of natural gas from an LNG import facility at Port MacKenzie, near the mouth of Knik Arm. That arrangement would presumably involve the placement of a floating LNG terminal at Port Mackenzie. Sims told the commissioners that the purpose of that filing had been to clarify the RCA's position, in order to be able to consider that LNG import possibility. However, there were some significant challenges that Enstar had to consider for that option, Sims said.
Evaluation of LNG road transportation During the RCA meeting an Enstar official described an evaluation that Enstar had carried out for the possibility of transporting LNG to the Kenai Peninsula by road from an LNG terminal in Fort Nelson in Canada -- there is a road connection involving the use of the Alaska Highway. As a test of this possibility Enstar successfully shipped 9,072 gallons of LNG by road tanker from Fort Nelson in an operation that took about 36 hours to complete.
However, the total cost of the gas, including the shipment cost, worked out at about $40 per mcf, compared with the current price of Cook Inlet gas of around $10 per mcf. Sims commented that Enstar would need 1,000 trucks to transport just 1 billion cubic feet of gas, a factor that, together with the resulting cost of the delivered gas, probably renders this gas supply option unrealistic.
Fairbanks based Interior Gas Utility is initiating a viable gas supply arrangement under which the utility is shipping LNG by road tanker to Fairbanks from an LNG facility that Harvest Alaska has built on the North Slope. However, while IGU has around 3,000 customers and supplies about 1 bcf of gas per year, Enstar has 155,000 customers that in total consume more than 35 bcf of gas per year, Sims commented.
Glenfarne is also working with Alaska Gasline Development Corp. on the potential development of a gas pipeline from the North Slope to the Cook Inlet. This is a completely separate project from the Cook Inlet LNG import project with Enstar. However, Glenfarne anticipates building the LNG import facility adjacent to the location of a proposed liquefaction plant for gas delivered through the North Slope gas line. Presumably, if the liquefaction plant is built and goes into operation, LNG importing would be replaced by LNG exporting.
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