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Vol. 15, No. 45 Week of November 07, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Enstar examines its options if Southcentral has cold winter

Enstar Natural Gas Co.’s gas supply situation is very tight going into the coming winter, Colleen Starring, Enstar’s president, told the Anchorage Energy Task Force on Nov. 3. Enstar is the main Southcentral Alaska gas utility.

“If the system is stressed, we could be looking at curtailment. … In a worst case scenario we’re about 10 million cubic feet a day short of what we believe we need,” Starring said. “… This is the first winter in our 50-year history that we’ll be going into the winter without all of our gas … under firm supply commitment contracts.”

Enstar has options to purchase additional gas supplies through a bid process, but there is no guarantee that the additional gas would be available, she said.

Southcentral Alaska depends heavily on gas for heating and for power generation, but gas production from the aging oil and gas fields of Cook Inlet has been steadily declining for a number of years. And, although Enstar is in the process of building a new gas line to the southern Kenai Peninsula, to ship gas from a new gas field at North Fork, that field is unlikely to come on line before the spring, Starring said.

Depends on temperatures

If the coming winter is as mild as last winter, Enstar should be able to deliver as much gas as is needed, but a sustained cold period or some operational problem could cause the utility to invoke a gas emergency agreement subscribed to by all of the Alaska Railbelt gas and power utilities, Starring said. Emergency procedures could include energy exchanges between different utilities, with some power utilities perhaps resorting to diesel-fueled generators.

In a worst case scenario during a cold snap, supplies to gas-fired power stations might need to be curtailed, to ensure the maintenance of adequate gas pressure in utility gas lines. That would lead to rolling power blackouts in the Southcentral region. However, in addition to heading off blackouts through the utilities’ emergency agreement, Enstar hopes that the Southcentral Energy Watch program will encourage consumers to reduce their gas usage in the event of a gas shortage — a recent Enstar poll indicate that 55 percent of Southcentral consumers are aware of a possible energy deliverability crisis, Starring said.

Gas storage

And help is on the way, to alleviate gas deliverability issues in the future.

Cook Inlet Natural Gas Storage Alaska is engaged in a project to build a new gas storage facility on the south side of the city of Kenai — if that project progresses to plan, the new facility will greatly alleviate the gas deliverability situation in 2012 and 2013, Starring said.

Questioned about the ability of the gas pipeline system to support the delivery of gas to and from the new storage facility, Starring said that CINGSA does not yet know where its customers’ gas is going to come from or where it will need to be delivered. However, once that information is available, Enstar can if necessary configure its system to enable the appropriate gas flows by, for example, adding compressors, Starring said.

LNG imports

Enstar and other utilities have been investigating the possibility of importing LNG into Southcentral, to supplement local gas supplies. In addition to talking to potential suppliers, the utilities are participating in a study of the LNG import concept, Starring said. However, Enstar is not yet in a position to say anything publicly about factors such as potential LNG pricing, she said.

Starring thinks that utility gas in Southcentral will become more expensive, with people becoming increasingly concerned about security of supply. On the other hand, she doesn’t see gas producers drilling the numbers of new gas wells needed to sustain local gas supplies.

“I just don’t think the market is there any longer,” she said. “Without Agrium (the defunct Kenai Peninsula fertilizer plant) and with the LNG plant having reduced export capacity, we are just a very small market,” she said.

—Alan Bailey

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