rom Homer to Fairbanks, Cook Inlet natural gas keeps homes warm for ENSTAR Natural Gas Company customers and the lights on for Railbelt electric utilities.

However, Cook Inlet gas users—which include Golden Valley Electric Association (GVEA), Interior Gas Utility (IGU), Matanuska Electric Association (MEA), ENSTAR Natural Gas, Chugach Electric Association (CEA), and Homer Electric Association (HEA)—have been warned about a potential lack of natural gas production on the horizon.

In April 2022, Hilcorp Alaska, Cook Inlet’s largest natural gas producer, announced it did not have “line of sight” to produce gas beyond its existing contracts with the utilities, which begin to expire in 2024.

While searching for alternative supplies, utilities are utilizing every tool in their kit to efficiently manage the decreasing gas available. One of these tools is storage.

While producers have their own means of storing natural gas, Cook Inlet Natural Gas Storage Alaska (CINGSA) is Alaska’s first commercial natural gas storage facility.

“Historically, gas fields in the Cook Inlet contained large volumes of gas under high pressure,” explained John Sims in a 2018 regulatory filing. Sims is the president of ENSTAR, which operates CINGSA on behalf of their mutual parent company, TriSummit Utilities.

“As gas fields are depleted, however, the pressure of the fields drops,” Sims’ testimony continued. “The depletion of local gas supply and associated declining gas deliverability raised concerns about the ability of gas and electric utilities with gas-fired generation in the Cook Inlet—primarily ENSTAR—to meet the peak demand of commercial and residential customers. Natural gas storage was identified as a means of addressing the declining gas supply and deliverability and ensuring reliable gas service in the Cook Inlet and surrounding areas.”

Constructed in 2012, CINGSA is designed to hold 11 billion cubic feet (Bcf) of natural gas, approximately one-third of ENSTAR’s annual consumption, according to Lindsay Hobson, ENSTAR’s director of communications and corporate resources. ENSTAR is CINGSA’s largest customer, and CEA and HEA also have firm contracts with CINGSA. With other entities, CINGSA has interruptible contracts, meaning they are not guaranteed either injection or withdrawal quantities, says Hobson.

“Utilities purchase gas from Cook Inlet gas producers,” Hobson explains. “Gas is delivered by natural gas pipeline to various customer locations. On a daily basis, ENSTAR purchases gas on behalf of its customers. If gas delivered is more than ENSTAR’s customers consume, the excess is then injected into CINGSA.” The same holds true for CEA and HEA.

In addition to managing its seasonal purchases, CEA withdraws gas stored in CINGSA to manage its daily peak demand in the mornings and evenings.

During cold days when customer demand for gas is high or purchases from producers are not sufficient to meet customer demand, the three utilities withdraw gas from CINGSA.

“Chugach uses CINGSA to ensure gas deliverability to our power plants throughout the year,” says Julie Hasquet, CEA’s senior manager of corporate communications.

Located on the Kenai Peninsula, CINGSA consists of both subsurface and surface facilities.

Natural gas is stored in five wells penetrating an underground reservoir known as the Cannery Loop Sterling C Pool, approximately 5,000 feet below the Kenai River and surrounding areas. Injections and withdrawals are monitored 24 hours a day, 365 days a year.

Two surface pads are separated by a road: one pad holding wellheads and the other gas compression facilities. A 16-inch pipe passes under the road transporting gas between the two pads, feeding gas into wells for storage and retrieving gas according to customer need.

Most electricity generated by HEA and CEA relies on Cook Inlet natural gas as a fuel source.

Natural gas supplies 85 to 90 percent of HEA’s power to its 25,000 members on the Kenai Peninsula, with the remainder coming from the Bradley Lake Hydroelectric Project near Homer, according to Keriann Baker, HEA’s director of member relations.

CEA’s electrical generation mix is 82 percent natural gas, 15 percent hydroelectric, and 3 percent wind, says Hasquet. CEA also owns a two-thirds interest in the Beluga River gas field, with Hilcorp Alaska the remaining partner.

As contracts expire with Hilcorp Alaska—HEA in 2024, CEA in 2028, and ENSTAR in 2033—utilities are looking for options.

“ENSTAR has agreed to supply HEA with natural gas at the expiration of Hilcorp’s contacts,” says Baker.

The Railbelt electric utilities and ENSTAR Natural Gas, together with the support of the Alaska Energy Authority and the Alaska Department of Natural Resources, have formed the Utilities Working Group to assess future gas supply needs. The working group engaged Berkeley Research Group (BRG) to develop scalable options to the natural gas supply gap.

The Phase I assessment presented to the Regulatory Commission of Alaska (RCA) in June narrowed possible solutions from approximately ten categories to three: further Cook Inlet resource development, importing liquefied natural gas (LNG), and constructing a gasline from the North Slope.

In addition to Southcentral utilities, solutions also must satisfy Marathon Petroleum Corporation, a major industrial user at its Nikiski refinery, and the Interior Gas Utility, which trucks LNG from Cook Inlet to Fairbanks. IGU recently signed a twenty-year contract with pipeline company Harvest Midstream to supply LNG from the North Slope instead of Cook Inlet beginning sometime in 2024.

“Gas production in Cook Inlet field peaked in the mid-2000s at around 200 Bcf per year and has steadily declined to the current annual production of approximately 70 Bcf per year,” reads a background section of the Berkeley report. “Formerly active export facilities of Agrium Kenai Nitrogen Plant and Kenai LNG stopped operating in 2007 and 2015, respectively, due to the shortage and cost of gas produced in the region.”

Idling those industrial-scale users spared the remaining gas supply for utilities, but the shortage hasn’t gone away. Gas consumption in Southcentral totals about 75 Bcf annually; if not for CINGSA bridging the gap between production and demand, the state’s most populous region would’ve spent the last few years in crisis mode.

“We definitely are concerned about what’s available on the market right now,” says Hobson. “That is why we’re being proactive and looking ahead to the future to make sure that when the time comes, there is absolutely a supply of gas ready to go.”

Phase II of the Utilities Working Group report is expected early this year.

To meet increasing demand for storage and maintain a steady supply during winter months, CINGSA filed with RCA in November for approval to expand its storage facility.

The project would drill two new wells, add two new compressors and various above-ground facilities, and increase storage capacity by 2 Bcf, according to the proposal. Anticipated capital costs are estimated at $72 million. CINGSA plans to fund the expansion with a combination of members’ equity and long-term debt.

CINGSA held an open season earlier in 2023 to gauge interest in a potential expansion and understand the magnitude of expansion required to meet the region’s need.

“ENSTAR requires the gas deliverability contemplated in the 2023 Expansion Firm Storage Service Agreement for use during the 2024 to 2025 heating season,” the filing reads.

“The BRG report looks at every possible option for additional natural gas to the Cook Inlet. Each option requires additional storage to continue to serve the region. The expansion of CINGSA’s capacity is critical to maintain energy security for our customers,” says Hobson of the filing.

Service is anticipated to begin November 15, 2024 and remain in effect through March 31, 2044.

“There will be gas,” ENSTAR’s Hobson asserts. “The big question is: What will that source be and how much will it cost?”

HEA’s Baker agrees.

“Gas will be available to HEA and others in Alaska,” says Baker. “The supply of Cook Inlet gas is certainly receiving more public attention, but it is an issue we have been working to resolve for some time.”