Enstar president encourages special legislative session, saying more can be done to address natural gas shortfall - Alaska's News Source

Enstar president encourages special session to address natural gas shortfall

ANCHORAGE, Alaska (KTUU) - Speaking outside of the Alaska Sustainable Energy Conference to Alaska’s News Source, Enstar Natural Gas President John Sims encouraged the state to hold a special session, saying this year’s legislative fixes are not enough to avoid future natural gas shortages.

For months, Sims expressed concerns about a possible Cook Inlet natural gas shortfall as producers struggle to keep up with demand.

During a cold snap last winter, Enstar officials said they were extremely close to being unable to deliver gas. According to Sims, two of the four natural gas storage wells went down in January during a period of high demand.

During the most recent session, lawmakers passed House Bill 50 with the hopes it would expand storage capacity and prevent another winter scare. The bill would establish a loan program through the Alaska Industrial Development and Export Authority for drillers struggling with financing in Cook Inlet.

to incentivize oil producers to develop natural gas reserves.

“One of the issues that we have is on very cold days, we can’t produce enough gas in Cook Inlet, and so we’ve been steadily relying more and more on gas storage,” Sen. Bill Wielechowski, D-Anchorage, said. “The problem is we don’t have enough gas storage wells in Cook Inlet. We have empty wells that could be used for gas storage.”

The bill would also allow the Regulatory Commission of Alaska to regulate third-party natural gas shortage facilities in part to oversee the prices charged for that storage.

But Sims said it would entirely be up to companies like Hilcorp. He said storage is only part of the problem; production is also a key issue.

“If Hilcorp decides not to offer third-party storage, then we really have some work to do to figure out what exactly we’re going to do because currently, they own the reservoirs that are available out there for third-party natural gas storage,” Sims said.

When asked about the loan provision in the bill, Sims said it isn’t exactly “scratching the itch.”

“There were a couple of producers — Furie [Operating Alaska], to name one — specifically said they need royalty relief in order to do more investment in Cook Inlet. That’s something that didn’t pass. I think that needs to be addressed, and hopefully that’s done so in the near future,” Sims said.

Concerned that the legislation would not lead to more production, Senate lawmakers did not take up royalty relief legislation.

Sims said he would encourage lawmakers and the governor to consider a special session to take up legislation that was left on the table.

“We need to have more natural gas coming from other locations, preferably the North Slope and Nenana Basin,” Sims said. “Our preference is always going to be Cook Inlet, but the market has told us that it is slowly going away, and there’s not more investment being done out there. So we have to address that.”

Sims said the Alaska Pipeline Company and Enstar applied with state regulators Monday to expand its service territory.

He said the filing would allow the entities to extend a transmission line down to Port McKenzie to provide an option for the importation of liquefied natural gas (LNG) so they can get that gas to customers and meet critical needs.

“We’ve asked for expedited consideration of this filing, we asked for 45 days, this is the first step in what is going to be a longer process towards importation of LNG,” Sims said. “Once that filing, hopefully, is accepted and approved, then we can go to the next step, which is looking at the importation facility and working with the market and other vendors to try and make that happen.”

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