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Alaska Gas Supply Crunch Expected Next Winter

Importing liquefied natural gas (LNG) by the winter of 2014-2015 is the only sure way to ensure adequate gas supplies for Southcentral, AK, Enstar Natural Gas CEO Colleen Starring told an Anchorage audience last week.

Alaska's Southcentral region has faced the threat of gas supply shortfalls for the last several years as output from Cook Inlet gas wells declines (see NGI, Nov. 12). While the area has attracted renewed producer interest and the region has a new gas storage facility to help balance supply and demand, these things still aren't enough to stave off a supply shortfall, Starring said at an Anchorage Chamber of Commerce luncheon.

"All those things are happening, and they're all good, and they're all moving us forward," Starring said, as reported by KTVA-TV. "It's not enough. We simply can't conserve our way out of what we believe we're facing right now." In her presentation slides, Starring outlined a "three steps forward, two steps back" scenario for natural gas supply in Southcentral.

While the state's Cook Inlet Recovery Act has stimulated producer activity in Cook Inlet, the result has not been enough to counter the decline in production from legacy wells, she said. The average field production decline in Cook Inlet is 22%, Starring said.

The Cook Inlet Natural Gas Storage Alaska storage facility was completed on time and under budget, Starring said. Injections of gas began last April, and the first withdrawal from the facility was made Nov. 9. The facility allows for storage of up to 11 Bcf of gas and is intended to help meet more than 30% of the monthly average peak demand in winter. It would be available for the storage of imported LNG or compressed natural gas (CNG), Starring said.

However, a chart of Enstar's projected demand and committed gas supply for the years 2013 through 2018 shows committed supply from four different companies dropping from about 25 Bcf/d next year to about 7 Bcf/d in 2018 while demand hovers around to somewhat above 35 Bcf/d.

To meet Southcentral's short-term needs, LNG by tanker or CNG by truck -- "with timely engineering and permitting" -- could fill the bill, Starring said. A study is under way by Northern Economics to compare the attractiveness of imports with trucking LNG from the North Slope with a decision expected some time during the first quarter, Starring said. "Absent new, major discoveries that can be brought online in one-two years, the current pace of development could mean a shortfall in Cook Inlet supply in 2014-2015. LNG or CNG import is [the] only 'certain' method to ensure no supply shortfall."

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