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Alaska’s Looming Gas Shortfall Sparks Urgent Warnings from Regulators and Advocates

Time Running Out: Alaska Faces Energy Crisis as Gas Shortfall Nears

As Alaska’s urban utilities race toward a natural gas shortfall projected for as soon as 2027, state regulators and advocates are voicing deep concerns about the state’s energy future. With local natural gas production from Cook Inlet offshore platforms on the decline, a potential crisis is brewing — and there’s no clear solution in sight.

“The window for making decisions is closing,” said Bob Pickett, a member of the Regulatory Commission of Alaska (RCA), the state body that oversees utilities. “If things just sort of slide and there’s no leadership, and we’re in the same position 12 months from now, we are looking at a dire, dire situation. And people should get angry.”

While utility leaders assure the public that contingency plans are in place, they are also facing the hard truth: the clock is ticking. With the gap in local natural gas supply looming, Alaska’s urban utilities are scrambling to find a way to bridge the gap. But time is running out, and the options available are becoming more limited.

Rising Pressure on Alaska’s Utilities

The challenge faced by Alaska’s utilities is a growing one. Urban areas, stretching from Homer on the Kenai Peninsula to Fairbanks in the Interior, rely heavily on natural gas, particularly for heating. With gas production in Cook Inlet continuing to decline, utility companies are faced with the urgent task of finding a new supply of energy to power the state’s cities and homes.

Alaska natural gas shortfall liquefied natural gas

John Sims, head of Enstar, the natural gas heating and distribution company serving much of urban Alaska, acknowledged the severity of the situation. “It’s tight. It’s really tight,” said Sims. His company is leading a consortium of utilities to explore importing liquefied natural gas (LNG) to fill the gap.

Sims wasn’t alone in feeling the pressure. “I think all of us in the state — whether you’re a utility, whether you’re a regulator, whether you’re a legislator — you’re feeling pressure right now to get this situation solved,” he added.

Utilities are facing a tight timeline. In mid-2023, the consortium released a report warning that a gas shortfall could hit by 2027, leaving utilities with little time to act. The study urged utilities to make critical decisions about how to address the shortfall by the end of 2023. But as 2024 ends, no concrete projects have been announced.

A Half-Billion-Dollar Gamble on LNG Import Infrastructure

As regulators and utilities struggle to formulate a solution, the focus has shifted to importing liquefied natural gas. One potential option under consideration is the construction of a floating LNG receiving terminal. This facility would receive shipments of LNG, which could be used to supply all the utilities in the consortium.

However, such an infrastructure project comes with a hefty price tag. The consortium estimates that developing LNG import infrastructure could cost upwards of $500 million. With the clock ticking, time and money are two critical factors that regulators and utilities must carefully balance.

Enstar is working closely with other utilities, including Anchorage’s Chugach Electric Association, Matanuska Electric Association, Homer Electric Association, and Fairbanks-based Golden Valley Electric Association, as they consider LNG as a viable option. But behind the scenes, Chugach Electric is also exploring the possibility of building its own import facility.

“We are evaluating options that meet our natural gas needs for 2028 and beyond,” said Julie Hasquet, a spokeswoman for Chugach. “Confidential negotiations with potential partners and suppliers are well underway.”

While discussions continue, some industry executives remain optimistic that a solution will emerge, though there’s little room for error.

Will LNG Be Enough to Fill the Gap?

As utilities scramble to secure the necessary infrastructure, one question remains at the forefront: Is LNG the solution? Although importing LNG could ease the short-term crisis, it may not be the permanent solution that Alaska’s energy future requires.

The state’s energy landscape is complex, and while LNG offers a potential lifeline, it doesn’t address the long-term sustainability of energy resources in Alaska. This raises concerns about whether relying on imported energy will ultimately benefit the state’s long-term economic and environmental well-being.

In the meantime, utility companies are doing everything they can to shore up their energy supply for the immediate future. However, it’s clear that there are still many unknowns, and Alaska’s energy stability is anything but guaranteed.

The Impact of Delayed Action

If no resolution is found soon, Alaska’s urban utilities could face severe shortages in the coming years. The situation is dire, and regulators are becoming increasingly frustrated with the lack of clear direction from state leadership. “It’s concerning that we don’t have a definitive solution yet,” said Pickett from the RCA.

As Alaska’s urban utilities weigh their options and negotiate with LNG suppliers, the window for action continues to shrink. Without swift action, the state risks entering a crisis that could affect residents’ ability to heat their homes and keep the lights on. The pressure on lawmakers and regulators is mounting — and as the clock ticks down, the urgency grows.

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