Alaska’s utility and pipeline regulator supported LNG imports as a “public necessity” as the state’s largest natural gas service provider progresses plans to stave off an expected supply shortfall.
The Regulatory Commission of Alaska (RCA) granted conditional approval to Alaska Pipeline Co. (APLC), a unit of Enstar Natural Gas Co., to allow it to expand its service area. It also approved a 16-mile extension to the existing 20-inch diameter Beluga Pipeline, according to a filing.
The extension is part of Enstar plans for potentially supplementing production from Alaska’s Cook Inlet Basin with imports via a floating liquefied natural gas import terminal at Port MacKenzie.
In its order, RCA noted Enstar’s forecast of a natural gas supply shortfall in central Alaska by 2027 and the need for alternative supply to meet consumer demand.
“Based on the statements made by APLC in the application, previous presentations made at our public meetings and our familiarity with the stated limitations of Cook Inlet producers, we find that the public convenience and necessity requires the diversification of natural gas supply,” RCA staff wrote in the commission’s order. “We further find that the importation of natural gas to the proposed LNG import facility serves to diversify the supply of natural gas and, therefore, find the Port MacKenzie Expansion to be required for the public convenience and necessity.”
Enstar told RCA in separate filing that it could file a gas sales agreement to purchase LNG by the end of the year.
A unit of Calgary-based TriSummit Utilities Inc. acquired Enstar from AltaGas Ltd. in 2022. Enstar serves more than 150,000 commercial and residential customers in Southcentral Alaska, covering about 60% of the state’s population.
Shortly after the acquisition, Enstar and other Alaskan utilities formed a working group to explore solutions to the state’s looming supply problem. Explorers in Cook Inlet – which previously fed LNG exports to Japan – have seen exponential decline in production as wells mature and have warned of shrinking profitability.
Hilcorp Alaska LLC, an operator in all of the active federal Cook Inlet oil and gas units, has specifically warned that the increased cost of drilling and mineral severance taxes stand to cap future natural gas production projects.
North Slope Solution
Alaska historically has been the country’s fourth largest gross natural gas producer, but the majority of the volumes withdrawn are reinjected into North Slope wells to maintain oil production rates, according to U.S. Energy Information Administration (EIA) data. The state also has regulations against flaring gas outside of emergencies or system tests.
Alaska Gasline Development Corp. has also recently shifted the focus of its LNG export project to send associated gas from the North Slope to in-state consumers as soon as 2029. In June, the state-backed developer of the 20 million metric tons/year capacity Alaska LNG project, launched the design phase and forged precedent sales agreements with a unit of Pantheon Resources plc.
The proposed Alaska LNG project, sited for the south central coast near Nikiski, would be connected to massive amounts of North Slope associated gas by an 800-mile natural gas pipeline.
