A Texas energy company that uses specialized ships to deliver natural gas said this week that it’s engaged in talks with Southcentral Alaska utilities on a plan to import liquefied natural gas into Cook Inlet.
Excelerate Energy said its working on a plan to procure and deliver natural gas to Southcentral Alaska to address dwindling gas reserves in Cook Inlet, executives with the company said in a call with financial analysts.
Cook Inlet for more than five decades has produced the gas needed to provide heat and power in the region, they said.
But Hilcorp, the basin’s dominant gas producer, has warned Southcentral Alaska utilities that it does not currently have enough gas to provide for future gas contracts, once existing contracts expire.
The warning has raised fears that Cook Inlet’s gas supply could begin running short as early as next year. That has forced utilities to look for potential solutions, including costly imports of liquefied natural gas, or LNG.
Steven Kobos, Excelerate chief executive, said in the call that the company’s plans involve using a specialized floating ship known as a “floating storage regasification unit.” After the liquefied gas has been transported over the ocean, the units convert the LNG into gas that can be transported in pipelines.
Excelerate, based in The Woodlands, Texas, operates one of the world’s largest fleets of those specialized ships.
“Excelerate is in advanced discussions with local utilities in Southcentral Alaska for the development of an integrated LNG terminal in the lower Cook Inlet region,” Kobos said.
Excelerate would obtain the gas and sell it to utilities, Kobos said.
“Excelerate would own the FSRU-based terminal, source the LNG supply that is required, and sell gas to local utilities and other off-takers,” he said in the call. “The start of commercial operations is targeted for 2028.”
Excelerate officials on the call did not name the Alaska utilities they are working with.
Enstar, the natural gas utility in Southcentral Alaska, has provided state regulators with a rough idea of how it envisions gas imports occurring.
Enstar is taking steps to build a $57 million, 16-mile pipeline that can accept future gas imports. The pipeline would accept gas imports in upper Cook Inlet at Port MacKenzie.
Enstar has informed the Regulatory Commission of Alaska that it envisions the use of a “floating storage regasification unit” to import gas.
On Thursday, representatives with large utilities in Southcentral declined to say if they are working with Excelerate.
Enstar is “laser-focused” on finding new gas supplies, Lindsay Hobson, a spokesperson with Enstar, said in a text.
“As part of this process, ENSTAR continues discussions with local producers and LNG import service companies,” she said. “If and when any commercial discussions are finalized, ENSTAR will file agreements with the Regulatory Commission of Alaska for approval and share that information with Alaskans.”
Chugach Electric Association in Anchorage continues to support local gas development, said Trish Baker, senior manager of government and business affairs for the utility, said in an email.
“However, to meet projected future natural gas needs beyond 2028, we will need a bridge fuel to support our transition to a renewable future,” she said. “Imported liquefied natural gas (LNG) has the potential to be that bridge.”
Matanuska Electric Association in Palmer “continues to collaborate with the other Southcentral utilities to solve the gas uncertainty,” said Julie Estey, a spokesperson for the utility, in an email.
That “includes commercial discussions with organizations that are capable and interested in providing viable solutions to meet the needs of our members,” she said. “We are committed to keeping our electric co-op members and communities informed and will share further details as they become available.”
Larry Persily, an oil and gas analyst and former Alaska deputy commissioner of revenue, said the Excelerate option could “make sense” for Alaska utilities.
Excelerate would operate the terminal and reduce the need for capital investments by the utilities, Persily said. Excelerate would also secure the gas and presumably provide it under a long-term lease to the utilities.
“It’s like how some people lease a car instead of buying it,” he said.
Excelerate had said it’s looking at a potential project in the lower Cook Inlet region, but did not provide a specific location.
It’s possible Excelerate is looking at using existing port facilities in Nikiski, in mid Cook Inlet, though a small gas pipeline would need to be built there, Persily said.
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