Winter's here; utilities beef up Southcentral energy systems

Photo/Adam Elliott/For the Journal

There’s good news – possibly – about new natural gas discovered in Cook Inlet. But that wouldn’t be in production for two to three years, if Escopeta Oil’s find is proven after more tests and drilling.

Closer at hand, one sure bet is that a new gas storage facility near Kenai will be ready for use next year. It’s in construction now, and it will help the regional utilities insure against cold-weather interruptions in gas supply in 2012.

Likewise, the new Southcentral Power Plant and Fire Island wind projects will be on-line in 2012. Those will significantly reduce the draw on the Southcentral region’s dwindling gas reserves, regional utility managers told the Anchorage Chamber of Commerce Nov. 8 in a joint-briefing on the local energy situation.

The new Southcentral Power Plant will allow Chugach and ML&P to generate power with 25 percent less gas.

“At today’s gas prices the reduced fuel use will save our members $27 million in fuel-use charges in the first full year of the plant operation,” Chugach spokesman Phil Steyer told the Anchorage chamber.

The Fire Island wind project will also result in reduced gas use, about half a billion cubic feet a year, when it is on line in late 2011.

There’s still this winter, however. This year, for the first time, Southcentral Alaska will be without an operating liquefied natural gas plant in Nikiski, which in previous winters diverted gas to the region’s utilities during cold snaps.

Plant owner ConocoPhillips is continuing with plans to mothball the facility in December after making one more shipment of LNG to Asia in late November, according to company spokeswoman Natalie Lowman.

This creates a new uncertainty, one more complication in a delicate regional energy situation. The gas wells that now supply the LNG plant are still available but it’s not as easy to turn them on and off to meet a short-term gas needs for the utilities. When the LNG is operating, the manufacture of the liquefied gas could more easily be turned off, or at least down, and the gas diverted to the utilities.

Some good news for this winter, however, is that the regional utilities have made investments in additional gas compression to beef up the distribution system.

Owners of the Beluga gas field west of Anchorage are investing $90 million in new drilling and compression this year to ensure adequate deliveries of gas, said Jim Posey, general managers of Anchorage’s city-owned Municipal Light and Power, which owns a third of the Beluga field.

About $50 million of the $90 million being spent at Beluga is being invested in compression, and much of the remainder was spent in the drilling of a new production well, Posey said. Beluga field owners, ML&P among them, plan another $258 million in new compression and drilling over the next five years, he said.

The added compression available this winter is important because it will enable the Beluga producers to supply up to 100 million cubic feet a day of gas to customers, Posey said.

In recent years the deliverability of Beluga gas has dropped to 70 million and 80 million cubic feet a day. When it started up three decades ago Beluga was producing up to 200 million cubic feet a day.

Another development is that Enstar Natural Gas Co. has new compression available on its own system and also will have new gas available from independent producers, company spokesman John Sims said. Enstar’s president, Colleen Starring, had spoke to the chamber the previous week.

Enstar’s new suppliers include Anchor Point Energy, a subsidiary of Armstrong Oil and Gas, who will supply about 1.2 billion cubic feet per day, and Buccaneer Energy, who will supply about 1.3 billion cubic feet per day to Enstar in 2012. Enstar also buys gas from long-established Cook Inlet producers Marathon Oil, ConocoPhillips and Unocal, which is owned by Chevron.

Buccaneer and Cook Inlet Energy, which operates the West McArthur River and Redoubt Shoal fields on the west side of Cook Inlet, are also eligible to sell more gas to Enstar under the company’s auction-purchase system.

Armstrong Oil and Gas operates gas wells at the North Fork field east of Homer. Buccaneer Energy has one completed gas producing well near Kenai.

Chugach Electric Association spokesman Phil Steyer said Nov. 8 that if there is a gas supply glitch, the priority among the utilities is to preserve the pressure in Enstar’s gas system because if Enstar’s gas pressure falls below a certain point, the regulators in furnaces kick off and it’s a big problem to get all of them restarted.

Steyer said the electric utilities have options Enstar doesn’t have, like switching some power plants to diesel and purchasing power from Golden Valley Electric Association in Fairbanks.

Energy conservation among consumers and businesses would also be important, he said. The recent “Energy Watch” drill by the utilities and the municipality of Anchorage saw a 1 percent to 2 percent voluntary decrease in use of gas, and in real event the response would be higher, Steyer said.

ML&P’s Posey said voluntary cutbacks by commercial building owners in the Anchorage bowl would be important in a gas supply disruption. In meetings with building owners and managers Posey has urged them to develop an energy conservation strategy.

Joe Griffith, CEO of Matanuska Electric Association, said his utility has a substantial program to upgrade transmission and distribution lines in the MEA service area and is working on engineering and permitting for its own gas-fired power plant, which will be located at Eklutna, north of Anchorage.

11/10/2011 - 10:55am