Alaska's energy future is at a crossroads, and the decisions made now could have a significant impact on the state's residents. A controversial plan to build two gas import facilities in Southcentral Alaska has lawmakers and regulators questioning the need and potential costs.
The Regulatory Commission of Alaska (RCA) has opened an investigation to gather details from Enstar and Chugach Electric, the state's natural gas and power companies, about their separate projects to import liquefied natural gas (LNG). But here's where it gets controversial: both companies are proposing to build import facilities, potentially costing hundreds of millions of dollars each, to address the decline in local gas production from the Cook Inlet basin.
Enstar, the natural gas provider, is working with Glenfarne on a new LNG import facility in Nikiski. This project is part of a larger vision for the Alaska LNG megaproject, which aims to deliver gas from the North Slope to urban areas and for export. Meanwhile, Chugach Electric, Alaska's largest power company, is considering purchasing gas from Harvest Midstream, an affiliate of Hilcorp, the leading gas producer in Cook Inlet. Harvest Midstream's project also in Nikiski, involves converting a former LNG export facility into an import operation.
The dual projects have raised concerns among officials and ratepayers. The question on everyone's mind is: "Are we going to pay for two projects?" If only one facility is needed to meet the region's gas demands, the construction of both could result in unnecessary costs of tens of millions of dollars or more.
To address these concerns, Senate Majority Leader Cathy Giessel has introduced a bill to clarify the state regulatory agency's authority over the importation of natural gas. Giessel wants to ensure that the RCA can regulate the price of natural gas coming from LNG import facilities, as the federal agency has jurisdiction over the infrastructure.
Harvest Midstream has already filed plans with federal regulators for its import project, aiming to start operations next year. Sean Kolassa, the company's president, testified that their goal is to repurpose the former Kenai LNG export plant into a cost-efficient import operation. Kolassa believes their project provides speed, certainty, and flexibility, meeting the Railbelt's gas needs in the short and long term.
On the other hand, Glenfarne's proposed LNG import facility, the Cook Inlet Gateway LNG import terminal, is targeting gas delivery starting in 2029. John Sims, Enstar's president, explained that the import project could be converted to support the Alaska LNG project in the future. Lindsay Hobson, a spokesperson for Enstar, emphasized that they are building the necessary infrastructure, much of which can be repurposed for export facilities.
The Glenfarne facility has the capacity to deliver 109 billion cubic feet of gas annually, which is more than enough to meet the Railbelt's current and future needs. However, there are concerns about the project's timeline and the lack of a license from the Federal Energy Regulatory Commission.
In a recent hearing, Sims told the RCA that Enstar will participate in gathering information about the import projects. He stated that the Harvest facility would not meet Enstar's annual needs of about 37 billion cubic feet, while the Glenfarne facility could meet all the Railbelt's needs. Sims highlighted the flexibility of the Glenfarne project to pivot and take advantage of gas from the North Slope.
The RCA will review the reasonableness of the costs associated with the Glenfarne project, including the development costs of nearly $50 million, even if the project is not built. The commission has set a cap of approximately $47 million for these costs, with any additional expenses to be borne by Enstar's shareholders or the developer.
As the investigation progresses, the RCA will assess whether Enstar and Chugach should have considered or chosen the other LNG import facility to meet their gas supply needs. This decision will have significant implications for ratepayers and the overall energy landscape of Alaska.
And this is the part most people miss: the potential for ratepayers to foot the bill for not one, but two LNG import facilities. It's a complex issue with far-reaching consequences, and we want to hear your thoughts. Do you think these projects are necessary, or is there a better way to secure Alaska's energy future? Let's discuss in the comments and explore the possibilities together.
