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ENSTAR briefs regulators on Nikiski LNG import proposal

Regulatory Commission of Alaska Chair Robert Pickett at a February meeting in downtown Anchorage about the proposed BP-Hilcorp deal.
Tegan Hanlon
/
Alaska Public Media
Regulatory Commission of Alaska Chair Robert Pickett at a February meeting in downtown Anchorage about the proposed BP-Hilcorp deal.

ENSTAR Natural Gas’ proposed liquefied natural gas import project in Nikiski got mixed reactions from state commissioners Wednesday. The company hopes the project will bridge the gap between natural gas supply and demand. But some on the commission worry the proposal may be too little, too late.

“Time is of the essence.”

ENSTAR President John Sims was briefing the Regulatory Commission of Alaska, just 6 days after his utility company announced an exclusive agreement with Glenfarne Group LLC. Glenfarne develops and operates energy projects and is working exclusively with ENSTAR to advance a liquefied natural gas import facility in Nikiski.

“And I know that the commission normally doesn't appreciate expedited review of, you know, very, very important things, but this is something that's going to be essential before we can move forward,” he said.

If it’s built, Enstar’s import facilities would share space in Nikiski with the proposed export facilities of the $44 billion natural gas pipeline.

Since 2022, Southcentral utilities have scrambled to stave off a looming natural gas shortage in Cook Inlet. Sims says Enstar estimates Railbelt utilities generally will need to import natural gas by 2029 or 2030 to keep meeting customer demand. He thinks ENSTAR specifically can last a little longer – the company has its own contracts.

“I won't be comfortable, I'd say, for a couple years making the statement ‘We're good,’ from a gas supply perspective, even with the great contracts that we've got with Furie, the Cook Inlet market is stressed,” he said. “It is challenging, and that's for all the utilities. So every winter, we go into it on pins and needles.”

From state regulators, ENSTAR is asking permission to add a new cost element to its gas cost adjustment – that’s the amount ratepayers pay for gas. In 2023, the commission said ENSTAR could put off paying money it spent while studying the Cook Inlet gas crisis.

To date, ENSTAR’s spent roughly $4.5 million. Sims says the rate increase needed to pay that amount off would be small – probably not noticeable to a decimal point. For comparison, he says ENSTAR’s existing gas cost adjustment generates about $300 million annually.

If all goes well, he says the infrastructure costs associated with the import facility would be paid for using the same arrangement. But Sims wouldn’t estimate those project costs for commissioners.

“There are costs that are floating around that I'm not prepared to communicate today,” he said.

Commissioner Robert Pickett was skeptical and thinks the project is too little, too late. He says this project, like some other ways stakeholders are addressing the problem, aren’t enough. The core problem, he says, is lack of substantial quantities of natural gas.

Pickett also pointed to recent hiccups in federal permitting for gas projects, including some involving Glenfarne.

“I think we’re out of time, frankly,” he said. “I don’t see anything coming into play before 2030 if we’re lucky, and you can’t really do much until you have a final investment decision … and I don’t see that even under the best of circumstances happening before 2027 with a real project.”

Sims said they’re not giving up hope.

“We feel like we have a project that just absolutely knocks it out of the park,” he said. “And so even though it's a little later than we would have all hoped, we are very, very optimistic about this and the potential that it brings to the state.”

There are still a lot of unknowns regarding the import project. Notably, the cost, timeline, where ENSTAR could put all of the gas it would be importing and what its environmental obligations are. Also, ENSTAR’s project doesn’t have any federal permits yet.

Sims said Thursday they hope to have a formal rate proposal before the commission by the end of the year.

Corrected: January 17, 2025 at 10:24 AM AKST
This story was corrected to more accurately describe ENSTAR’s request from state regulators.
Prior to joining KDLL's news team in May 2024, O'Hara spent nearly four years reporting for the Peninsula Clarion in Kenai. Before that, she was a freelance reporter for The New York Times, a statehouse reporter for the Columbia Missourian and a graduate of the University of Missouri School of Journalism. You can reach her at aohara@kdll.org
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