An Alaska energy blogger breaks down the looming, much-nuanced Cook Inlet gas shortfall

Alaskans who depend on natural gas for heat or electricity are confronting a looming shortfall in Cook Inlet, and many of them have questions about how soon utilities might need to start more expensive gas imports.

There are a few proposals to lessen the blow to ratepayers’ pocketbooks, but some are wondering if enough progress has been made on any of them to at least put off higher bills further into the future.

One of those people is energy blogger Erin McKittrick, a self-proclaimed data geek, who writes at Alaskaenergy.org.

In a recent post, McKittrick looked at a few different timelines related to the gas shortfall and says it’s not surprising that the whole issue has been confusing.

Listen:

Editor’s note: Erin McKittrick sits on the Homer Electric Association board of directors, and her views are not necessarily those of HEA.

This interview has been lightly edited for length and clarity.

Erin McKittrick: There’s so many bits and pieces of information coming out at different times with different quotes from different people. And there’s just a whole lot there, but it’s never just put together in one place to try to tell the bigger story. And so that’s what I tried to do.

Casey Grove: Gotcha. Yeah. Just that. That’s all.

EM: It did take quite a while.

CG: So, I guess there’s quite a few different dates that we could look at and prices that we could look at. But what is kind of the earliest that we would see a gas shortfall? And I think the nuance there is, it’s not that there isn’t gas, it’s just that it’s been described as “available gas,” right? When might that happen? And I guess we’ll go from there.

EM: To answer that question, you’re going to put together a bunch of uncertain things. So one of the things that is somewhat uncertain is how much gas are we going to use? Now, that does vary year to year, with a number of factors, mostly cold, right? Most gas is used for heating. So if it’s really cold, you use more. If it’s less cold, you use less. On the electricity side, it varies how much the utility up in Fairbanks buys gas power from the utilities in the south. Otherwise, they don’t have gas. And there’s some variation based on how much hydropower is produced in any given year. And then you have the forecasts of how much gas is going to be available that the state put together with these different oil and gas pools and the expected decline in production.

So if you put those things together, you get to 2027 or 2028. Now, if there’s some reduction in gas use, which is could be efficiency on the heat side, luck as far as weather, some renewable electricity on the electric side or the (gas) pool decline forecast is not as bad, that could shift out, you know, past 2028 and start getting closer to 2029 or 2030. So that’s kind of the picture.

CG: You know, it’s been a couple of years since we heard that Hilcorp was not going to be able to sign new contracts going forward, to be able to guarantee that gas. But has there really been much in the meantime, in those two years, you know, in whatever direction we need to go, that’s been done?

EM: I mean, no, is really the simple answer there. A lot of people have studied things, right? And I don’t want to dismiss that as an unimportant step, right? We’ve had reports by the state, we’ve had reports by the utilities, but nobody has officially committed to do any large thing that would change the picture of, like, officially committed to, you know, made an investment decision on a gas import facility, or on a major new gas drilling operation, or on a major renewable energy project, or any combination thereof.

So we’re pretty much still doing exactly the same thing. Now, exactly the same thing does include gas drilling. Like Hilcorp has said, and, you know, the data backs them up, is that they do drill quite a few gas wells. They haven’t actually slowed down their drilling of wells. They just claim that, you know, the amount that they keep drilling is what’s necessary for them to offset the natural decline and keep up with the contracts they already have.

CG: So part of this whole equation, it seems like, correct me if I’m wrong, but it seems like some kind of gas imports are going to happen. The question is sort of when that’s going to be and then within that, there’s different versions of that, right? So there’s the version where we build an import facility for, like, my understanding is, sort of large scale, importation of gas. But then there’s kind of this other stopgap measure, where sort of like container size tanks of gas get brought up to Alaska. And I wonder if you could tell me kind of what the difference is there.

EM: Yeah. And so what I’m going with here is like this is basically coming from Enstar, and I think this is something they’ve been saying but that people haven’t picked up on, which seems strange to me, because it seems like a really big deal, is that, you’re right, that the main gas imports would be a large scale facility. Gas comes in on liquefied natural gas tankers, goes into the system.

But what Enstar said during this past legislative session is that their initial consultant report said that, you know, they could get something like this running by, you know, 2027, 2028. And now they don’t think they could until at least 2030, which leaves a few years where it’s possible that we will have a shortfall but not possible to have a large scale import facility.

And if that happens, then what Enstar has said they would do or what they said the option is, is those like little shipping container-size tanks, which presumably come on a container ship, and they’ve stated prices of $25 or $30 (per) 1,000 cubic feet for that kind of gas, which would be, you know, more than triple what we have now at about $8. And so it seems like whether that happens or not, and how much it happens is, you know, the chances of that happening is, you know, increasing the more we delay getting anything done.

CG: Which, I mean, that reminds me of, kind of, I thought, a funny part of that blog post where it says like, “In conclusion, somebody should probably do something.”

EM: Yeah, because we’ve been talking about this a long time. And it’s not just since Hilcorp came up with their, “We don’t want to do new contracts,” in 2022. The state has been putting out reports about Cook Inlet gas every few years since forever, laying out this basic problem. Like we kind of have known this was coming for a long time and haven’t done anything about it.

CG:Yeah. Well, so another thing you wrote about was, it kind of sounded like part of the problem, part of the delays, is that there are a number of options. That, you know, we could bring on big renewable projects, we could encourage people to make their homes more energy efficient, we could build an import facility for natural gas, I mean, heck, we could build a gas line, right? We’ve been talking about that for decades. But that kind of the problem there is that there were so many options that people were kind of waiting for one of those things to come through and not maybe taking care of the piece that was under their control. Is that accurate?

EM: I mean, I think that’s… Do I really know the motivations of why people haven’t done anything? Of course, I don’t know. But it’s been brought up and in multiple ways, because, you know, part of the thing anybody needs to do to develop something is certainty. So people who produce gas have said that, like, they see potential renewable energy and potential gas lines and potential gas imports as, you know, competitive threats, right?

So that’s makes it harder for them to make a decision to invest and, you know, Enstar or the utilities, whoever might invest in an import facility, well, what if the state really does build a gas pipeline, you know? Then you would be putting the money into the import facility for nothing. And then, you know, renewable energy developers, well, if somebody gets a big, you know, gas contract that doesn’t allow room to reduce their consumption, then they can’t buy any renewable energy. And so you have all these things. It’s not even so much that we have different options. Like, we could just pick one and be good with it. But we have all of these things, to some extent, compete with the others.