Enstar doesn't have contracts for all the gas it needs

That's the first time the company has ever been short in that way, said Enstar spokesman John Sims.

And it's significant for local residents, because Enstar has 95 percent of the space heating market in Southcentral Alaska.

The amount of Enstar's forecast gas need for 2011 that is not under firm contract is not large, Sims said, about 1 billion cubic feet out of a total of more than 30 billion cubic feet.

By 2012 that unmet need -- forecast gas not under firm contract -- will be about 1.5 billion cubic feet.

The unmet need is larger in 2013, about 10 percent of supply needed.

Enstar has options to purchase extra gas from Cook Inlet producers if its forecasts are right, Sims said.

But Enstar is not sure what the costs will be for gas in excess of firm commitments, he said. There is a ceiling in most of Enstar's contracts for excess gas, but Sims said Enstar doesn't anticipate that the cost will be that high.

A study done earlier this year by Petrotechnical Resources of Alaska for Enstar, Chugach Electric Association and Municipal Light & Power -- all big natural gas buyers -- concluded that gas producers would have to drill an average of 13.6 successful new gas wells per year in the Cook Inlet basin at a cost of some $2 billion, to extend adequate gas supplies through 2018.

But, Sims said, there were only eight successful gas wells this year, so next year the required number would be closer to 20 wells. "And the problem keeps compounding," he said.

House Bill 280, sponsored by state Rep. Mike Hawker, R-Anchorage, and passed last year, offered incentives and there is some activity and some interest, Sims said, "but the problem is that it takes more than one-two years to get those leases and the production to market."

What about meeting those immediate needs that aren't covered by firm contracts?

Sims said importing liquefied natural gas, or LNG, has been a topic of conversation, but last year Enstar started "actively seeking out some information from companies."

While the gap in the company's supply is significant in 2013, "it's probably not realistic to get LNG here in 2013," Sims said, because Federal Energy Regulatory Commission approval is needed, and that's a six-month pre- application process and then an 18-month process once the application is submitted.

Sims said about planning for LNG imports, "It's better to be prepared than panic."

Enstar could get 12 months of work into how to bring LNG in, "and then somebody will find something out in the Cook Inlet and it will all go away," he said.

And as for discoveries from a jack-up rig offshore in Cook Inlet, Sims said Enstar is estimating it could be four to six years before that gas comes to market.

The best case, he said, "is there's some additional drilling at existing fields: That would be a quicker turnaround."

Sims said the only real options in the short term are current exploration and LNG.

A bullet line piping natural gas from the North Slope or a spur line off a main pipeline to Canada or Valdez won't help in the midterm.

Enstar is working on storing summer Cook Inlet gas production for use during winter peak demand.

Additional gas in the short term is from the North Fork field on the southern Kenai Peninsula.