Gas supplies strained in recent cold spell

File Photo/Melissa Campbell/AJOC

Alaska utility managers told the Regulatory Commission of Alaska that natural gas and electricity supplies were strained during Southcentral Alaska’;s recent cold snap, but the system held together with only a few minor mechanical hiccups.

Still, declining production from gas wells in the region meant that things were right at the edge and a disruption could have caused serious problems.


A container is filled with liquid natural gas. Utilities pulled supplies from the LNG plant during the recent cold spell.
File Photo/Melissa Campbell/AJOC
The commission has asked natural gas and electric utilities in Southcentral Alaska Jan. 12 to develop a coordinated emergency plan to deal with unexpected curtailments of gas supply due to mechanical failure or other mishaps.

Colleen Starring, Enstar’;s senior manager in Alaska, said a joint meeting of utilities is planned for Jan. 15 and that a emergency plan would be developed. Gas and electric utilities have their own internal contingency plans but no formal plan to coordinate responses among all utilities, Brad Evans, CEO of Chugach Electric Association, told the regulatory commission.

“There is a rich history of cooperation between Chugach and Enstar,” Evans said, but he acknowledged there were gaps. An important gap is information from the gas-producing companies about the extent of gas reserves and the ability of gas wells to produce enough to meet peak consumer demand during cold weather, Evans said.

Bob Pickett, chairman of the Regulatory Commission of Alaska, said the hearing was held to get information on gas supply and system reliability during a prolonged cold snap in Alaska that sent temperatures to minus 20 degrees in parts of Southcentral Alaska.

There were 13 days of below-zero temperatures, Pickett said.

The cold snap, which ended Jan. 12, was actually milder than periods of cold weather seen in previous Southcentral Alaska winters, which means regional gas supplies could be strained even more.

Starring told the commission that Enstar’;s gas supplies were tight, but the system held up during the recent cold spell with only a few mechanical hiccups.

However, Mark Slaughter, Enstar’;s gas supply manager, said operators of a liquefied natural gas plant in Kenai, which serves as a gas supply backstop to Enstar, were “scraping the bottom of the barrel” in their ability to divert gas from LNG production to help Enstar offset shortages of gas from producing wells in gas fields in the region.

Under an informal arrangement the LNG plant, operated by ConocoPhillips Alaska Inc., diverts gas to Enstar if the utility runs short during a winter cold snap.

ConocoPhillips would not comment on the status of LNG production from the plant, but other sources said that about 40 million cubic feet per day for LNG production is needed to keep the plant operational. The company was at that point while diverting gas during the cold snap, the source said.

The major problem for the region’;s utilities, and the LNG plant, is that aging gas fields in Southcentral Alaska, most of them discovered and developed in the 1960s, are declining in production. Operators are also facing increasing problems with water encroachment and maintenance on 30-year-old wells.

“In the last two years we have lost 100 million cubic feet in daily deliverability. That’;s a 30 percent decline and it is quite alarming,” Slaughter told the regulatory commission.

As an example, he said that almost all of the gas used for power generation by Chugach Electric Association and Anchorage’;s Municipal Light and Power, Southcentral Alaska’;s two major electric utilities, as well as gas for some of Enstar’;s needs, come from the large Beluga gas field 50 miles west of Anchorage.

“On a good day we can get 60 million cubic feet to 70 million cubic feet out of Beluga. Four years ago we could easily get 100 million cubic feet to 110 million cubic feet,” Slaughter said.

The Beluga field owners, which include ConocoPhillips, Chevron Corp. and the municipality of Anchorage, have new gas development efforts underway in the field but the results are mixed.

“They’;re out there trying, but the success is not what was anticipated,” Slaughter said. “There’;s not a lot more we can pull out of the LNG plant, either.”

ConocoPhillips and Marathon Oil Co. own the LNG plant. ConocoPhillips supplies gas for LNG from its North Cook Inlet field while Marathon supplies gas to the plant from onshore producing fields it owns on the Kenai Peninsula.

What complicates the regional gas-supply picture is uncertainty over the future of the LNG plant. A federal license allowing exports of liquefied gas expires in March, which would result in the plant being closed. While the U.S. Department of Energy is likely to issue an extension of the export permit before March it would be for only two years.

ConocoPhillips and Marathon could request another extension for the export permit, but they must first develop additional gas supplies.

Given its supply outlook, Enstar has embarked on plans to build a 24-inch pipeline to the North Slope, and is in talks with Anadarko Petroleum Corp. on purchasing gas from the small Gubik gas field in the southern part of the Slope.

Anadarko drilled and tested a well at Gubik last winter and plans another test well this winter, but has not yet indicated whether the deposit can be commercially produced.

11/15/2016 - 1:23pm