Paul Jenkins: Looming natural gas crisis makes blankets the only sure bet

commentFebruary 16, 2013 

Sometimes, paying attention is not my strong suit. Take this Cook Inlet gas thing, for instance. One minute, everything is fine; the next, "Houston, we've had a problem here."

In recent memory, staying comfortable in Southcentral Alaska has been a snap. Cold? Crank up the heat. Lights? Flip a switch. Hungry? Turn on the stove. We expect gas and electricity at reasonable prices -- and as much as we want. This is, after all, not Fairbanks

Cook Inlet's aging fields are so close, with easily available, inexpensive gas for the taking. You can see the rigs. Everything seems fine. We even shipped some to faraway markets or made fertilizer. But change is coming. Quickly. The Inlet's easily obtainable, cheap natural gas is drying up. It is no crisis but certainly qualifies as "critical," one lawmaker says.

"We do have a serious concern, a very real concern," says Anchorage Republican Rep. Mike Hawker, chairman of the Legislative Council and a House Resources Committee member.

The "Cook Inlet Natural Gas Supply Update" by the consulting firm Petrotechnical Resources of Alaska is scary. It projects demand outstripping supply by as early as late next year (the winter of 2014-15) or certainly by the winter of 2015.

That is not good. Cook Inlet gas provides Enstar with 100 percent of its supply. About 90 percent of Chugach Electric's generation depends on Inlet gas; Municipal Light & Power's, about 88 percent.

It is a political cataclysm of unimaginable proportions waiting to happen. Imagine Anchorage with brownouts over several frigid winter days. Imagine the fallout.

It is little wonder the utilities that hired PRA are antsy. Failure is no option. They must have guaranteed, secure gas contracts for consistent, affordable service or they will be in a hurt of gargantuan proportions. Us too.

One problem? We cannot agree there is a problem because of competing, confusing voices.

PRA and the state Department of Natural Resources each studied the Cook Inlet basin. PRA looked at past drilling rates and how many wells might be drilled in coming years to forecast future gas production -- and projected the 2014-15 shortfall.

The DNR agrees but is more optimistic: that there is plenty of producible gas left in the Cook Inlet basin -- 1.1 trillion cubic feet, and likely more -- not in large pockets but in intermediate fields or smaller, stratigraphic traps. DNR says the problem is that not enough wells are being drilled to meet demand.

The differing approaches? The DNR estimated how much gas could be available -- no matter the effort and cost to retrieve it -- while PRA looked at how realistic, "feasible rates of new gas well drilling might impact the gas production decline." My money is on PRA.

For utilities, the only thing that matters is gas under contract and although new players are arriving in Cook Inlet -- HillCorp, Buccaneer and others -- the reality is that while there may -- or may not -- be enough guaranteed gas later, there is not enough now.

Hawker, an architect of the Cook Inlet Recovery Act that set the stage for the new $180 million natural gas storage facilities in Nikiski, says while storage facilities help utilities through tight spots -- there have been some recently -- they provide no new gas.

There are no silver bullets to get more gas, Hawker says, only silver BBs. Near term? Spot market buys, conservation, redirection, maybe a new well here, maybe one there.

Middle term? Imported liquefied natural gas could provide Southcentral utilities a guaranteed, predictable supply. That will take two or three years to set up and politically is as popular as a sore toe. Talk about coal to Newcastle. But who cares? The Parnell administration says importation is a "last option." In a few years, the last option could be piling on more blankets.

Long term, there is the proposed gas line from the North Slope. Gov. Sean Parnell's deadline for the three major North Slope oil companies' plan was Friday. While some fear it could hamper Cook Inlet exploration, that is unlikely.

If Alaska allows construction of a gas line without a huge state subsidy undercutting the market, Cook Inlet gas could compete and be available for export, and there could be minimal problems. That would be the happiest outcome. But the utilities cannot bet on happy, they have to deal with reality -- and be prepared.

Or, of course, we could end up washing our clothes in the creek. I've got to start paying attention.


Paul Jenkins is editor of AnchorageDailyPlanet.com.

Anchorage Daily News is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service