Utilities gain breathing space for decision on gas importing

With contracts in the offing for gas supplies through to 2018, the Southcentral Alaska utilities have gained some welcome breathing space in making a decision over whether and how to import gas into the Southcentral region, as supplies from aging Cook Inlet gas fields decline, John Lau, director of engineering for Enstar Natural Gas Co., told the Regulatory Commission of Alaska on May 29.

Previously, with gas deliverability likely to run short during the winter of 2014-15, the utilities had been faced with fast-tracking a capability to import gas as liquefied or compressed natural gas, probably from western Canada. But with Hilcorp Alaska, the company that has taken over Chevron’s and Marathon’s Cook Inlet assets, forging ahead with a determined program of field refurbishment and development, it now appears certain that adequate gas supplies can be continued for at least an additional four years.

Lau said that he feels comforted by the new gas supply time horizon, given the very aggressive schedule that would have been required to meet that earlier 2014 import deadline.

At this point no one knows what the gas supply situation will be beyond 2018. And so, to be prepared for the eventuality of having to import gas, the utilities are moving ahead, preparing the ground for a possible gas import facility. The plan now is to do some preliminary engineering for a facility and to obtain feedback from the Federal Energy Regulatory Commission, or FERC, on the permitting issues that would be involved, Lau explained.

The concept is to build an import facility at Nikiski on the Kenai Peninsula coast, Lau said, adding that the facility would be separate from the liquefied natural gas export facility that already exists there.

The utilities anticipate presenting their ideas to FERC in July, Lau said. In about a year’s time the utilities, by then understanding the project costs, knowing how FERC views the project and having agreements with facility owners at Nikiski, will be in a position to make a decision on whether to proceed or whether to defer a decision further, Lau said.

—Alan Bailey