Cook Inlet utilities say they see a potential crisis looming, with natural gas from Cook Inlet running low and Southcentral facing the cold and dark days of winter annually.
Anchorage Mayor Dan Sullivan told legislators his city has already seen "a couple of scary incidents" stemming from "fairly near misses in terms of deliverability of gas."
The problem, he said, is that declining production from the Inlet's aging gas fields is having trouble meeting needs of industry, power production and home heating.
'A scary thought'
That problem is most pronounced on cold winter days when heating demand surges and threatens to exceed supply, said Moira Smith, vice president and general counsel for ENSTAR, the region's natural gas provider. Power providers Chugach Electric, Municipal Light & Power and the Matanuska Electric Association echoed those concerns.
"To my constituents, that's a scary thought, said Rep. Charisse Millett, R-Anchorage and chair of the House Energy Committee.
Legislative committees this week have plunged into the issue, exploring what's been done and what can be done to head off a crisis. The sessions may play a role in the forthcoming debate on the in-state gasline bill of Reps. Mike Hawker, R-Anchorage, and Mike Chenault, R-Nikiski.
It's been challenging for legislators, however, with the debate going well beyond possible solutions to the most-pressing problem into arguments about the scope of the problem itself.
Gov. Sean Parnell's Department of Natural Resources questioned whether the problem was really that big, saying its studies show substantial additional gas resources in Cook Inlet. With additional exploring and drilling, big new volumes of natural gas can be brought to market, said DNR Commissioner Dan Sullivan, who's not related to the Anchorage mayor.
That drew the ire of some legislators, including supporters of a small-diameter pipeline, who said Sullivan's claims of additional gas could undercut efforts to solve the region's energy problems for the long term.
"Now I'm interpreting, but what I've been told by the department regularly (is): 'Don't worry your pretty little heads, you've got plenty of gas in the Inlet,'" said Hawker, R-Anchorage.
"It's undermining the need for any small line coming from the North Slope or any of our import opportunities," he said.
Millett asked the utilities to explain the fundamental disconnect between their concerns and claims of others that there was plenty of gas. "This has been the ongoing debate between the administration and what the utilities have been saying," Millett said.
DNR's Sullivan told legislators that importing liquefied or compressed natural gas could blunt the heightened interest in Cook Inlet exploration among drillers, but did not identify similar concerns with a pipeline.
Southcentral utilities Thursday told legislators that they were examining numerous strategies for meeting demand, but that a pipeline was unlikely to be in place in time to be among those solutions.
Topping the list of short-term solutions include importing liquefied or compressed natural gas by ship or trucking natural gas from the North Slope. Other prospects include additional conservation, efficiency and new power generation to get away from relying so heavily on Cook Inlet gas.
"In light of the production decline curves we're seeing, we might have to look elsewhere," ENSTAR's Smith said. She said the company would present its plans later this legislative session.
The utilities base their estimates on a study by the firm Petrotechnical Resources Alaska (PRA), and Bill Van Dyke said his company's study was intentionally conservative.
Under questioning from Hawker, Van Dyke said that the Department of Natural Resources study showing more gas than PRA's may well be correct, but that he wouldn't bet the energy security of the community on it.
"Utilities need a guaranteed gas supply," he said. "A probabilistic study of how much gas is in Cook Inlet is not a guaranteed gas supply."
Finding new gas will buy time, but probably isn't the long-term solution even using DNR's estimates, Van Dyke said. "It's going to be very difficult to produce ourselves out of the predicament we're in," he said.
CINGSA makes a difference
One thing that will help is the new Cook Inlet Natural Gas Storage Alaska (CINGSA) facility into which summertime surpluses can be injected for withdrawal during peak winter demand.
Hawker was the driving force behind the Cook Inlet Gas Recovery Act, which the utilities told legislators would give them flexibility that they lost when the Agrium fertilizer plant, a major industrial gas user, shut down.
Gas headed for Agrium could be diverted to homeowners on cold winter days, but rising prices and declining volumes of gas available resulted in its closure.
Contact Pat Forgey at pat(at)alaskadispatch.com