A Southcentral Alaska natural gas shortage unlikely, but still possible

A natural gas shortage that leaves tens of thousands of Alaskans huddling in homes without electricity and heat seemed like a real possibility a few years ago, so much so that utilities and local governments crafted emergency plans to prevent such a scenario.

It called for such things as gas-fed power plants to employ rolling brownouts and for homeowners to voluntarily reduce heat if a perfect storm of events -- including frigid temperatures and an equipment failure -- meant there wouldn't be enough natural gas for Southcentral Alaska.

Those days might seem like a distant memory. Think again.

Things have greatly improved, no doubt. Gas demand is down, thanks to a state program that's made homes more energy efficient. Gas supply is up, thanks to newly producing wells in the Cook Inlet basin. Also, utilities and natural gas producers have beefed up compression so a shortage is less likely. (The topic of Southcentral energy security is on the agenda at the Chamber of Commerce's weekly luncheon at noon Monday in Anchorage.)

But the cruxes of the problem remain. For one thing, Southcentral Alaska can be hellishly cold. And second, Anchorage's gas comes from just one place: Cook Inlet. If a portion of that system fails, Alaska's biggest city could go dark.

Experts agree that's unlikely, but possible.

Some say it nearly happened a few years ago, when a compressor failed at the Beluga River Unit on the north side of Cook Inlet near the village of Tyonek. ConocoPhillips avoided a crisis by bringing the compressor back to life quickly.


Tony Izzo, a natural gas consultant who worked for Enstar Natural Gas five years ago, believes Southcentral came within two hours of a tragedy.

Such a calamity is less likely today, but only somewhat so, he said.

"I think things have in the short-term stabilized, but we're only one failure away from catastrophe," he said. "If there's an interruption to a pipeline or a compressor were to fail and break during a cold snap, we still have no real material backup. That's a concern."

This winter isn't helping. It's been especially brutal, with waves of subzero stretches increasing natural-gas use as Alaskans crank up thermostats.

Through Jan. 26, Anchorage's average temperature for the month was 14 degrees below normal, thanks to a stubborn high-pressure system hanging over mainland Alaska.

With another chilly streak settling over the city last week, the last five days of the month wouldn't bring much relief, said Dan Peterson, a National Weather Service meteorologist in Anchorage.

"And we still have February. That's normally the coldest month," he said.

All of this frigid weather means Enstar Natural Gas has kept a wary eye on its transmission and distribution lines, an underground network that ties into the producer-owned lines and wells that pump natural gas from the Cook Inlet basin.

Does Enstar think a massive failure remains a possibility?

"If someone asked me if we're out of the woods, not hardly," said John Sims, Enstar spokesman.

Ironically, Southcentral's natural-gas crunch stemmed not from a shortage of resources -- Cook Inlet has vast amounts of proven gas reserves -- but of dwindling "deliverability" from aging fields that have lost pressure like a deflating balloon, meaning each field produces less gas than it once did.

Now, brutally cold days strain the system as people call on more heat to stay warm. Like Izzo, Sims worries that trouble could start with a failed compressor or some interruption in gas transmission.

To get an idea for what could go wrong, look no further than New Mexico last February, Sims said. There, natural-gas demand spiked as temperatures dropped well below zero in some towns. Tens of thousands were left without heat, schools shut down, and the governor declared a state of emergency.

Anchorage's coldest daytime high this winter came on Jan. 15. It was the first time the mercury didn't run into positive territory at the National Weather Service offices near the Anchorage international airport, a meteorologist there said. The high there was -2. In some parts of the city, temperatures dropped to minus 20.

Enstar's natural-gas-use reached its second-highest level that day, Sims said. The company bought and transported about 231 million cubic feet of natural gas. The record came on Jan. 3, 2009, when Enstar bought and moved 235 million cubic feet.

Enstar has forecast its peak use in 2012 at 289 million cubic feet, so the system still had some breathing room on Jan. 15, Sims said.

Enstar officials go on high alert during such days, watching the pressure in the lines. If the pressure falls too far as demand rises, there might not be enough gas to fire furnaces. It could happen house by house, Sims said.

"We're checking those (pressure) levels, and when we see them start to get uncomfortably low, we'll start reaching out to utilities and producers to ask for increased deliveries if necessary," Sims said.


Also on watch are electric utilities, who agreed in 2009 to take action to reduce gas use to prevent an emergency, a plan that included drawing on more hydropower or diesel fuel. A second part of the prevention efforts created that year includes Energy Watch set up by Anchorage Mayor Dan Sullivan. The city, utilities and others crafted that plan to help Alaskans avoid a shutdown by dialing down their heat.

The idea is that if gas demand jumps too high, the city could issue two types of warnings. Yellow would call for some voluntary reductions in energy use -- including thermostats at 65 degrees. Red would request even more reductions -- including thermostats set at 60 degrees.

Enstar has 130,000 customers between the Matanuska Valley and the Kenai Peninsula. If enough of them crank down thermostats and warm water, the collective drop in gas use could be enough to avert a crisis, said Izzo, a member of the mayor's Energy Task Force.

Neither a yellow or red warning has ever been issued. And perhaps it won't need to be, at least not any time soon.

Improvements have come

The state's energy efficiency rebate program has reduced some gas use.

Since it began statewide in 2008, more than 10,000 homes in the Enstar region have taken advantage of the program to do such work as seal cracks, beef up attic insulation and replace clunky furnaces with modern systems.

The Alaska Housing Finance Corp., which manages the $200 million program, estimates that participating households reduced their heat use by 33 percent. The state agency has recently launched an effort to verify that number, which is currently based on a computer-calculated estimate, by reviewing gas bills provided by homeowners.

At any rate, thousands of households have reduced their gas use substantially by participating in the program, said Jimmy Ord, an information manager with the agency.


"It's absolutely made a difference," he said.

Enstar's gas supply has also risen thanks to two new contracts.

In spring last year, Anchor Point Energy, an Armstrong Oil and Gas subsidiary, began producing gas near Anchor Point at the North Fork Gas Field. They sell Enstar about 7 million cubic feet per day, Sims said.

And in mid-January, Australia-based Buccaneer Energy began producing natural gas from a new find behind the Wal-Mart in the town of Kenai. Enstar can purchase up to 5 million cubic feet a day from that well, dubbed Kenai Loop #1.

The new fields are a significant help, Sims said. "Any time you have an additional resource for purchasing gas, it's a big deal."

But they still represent a small amount of gas bought and transported by Enstar.

During the sub-zero day on Jan. 15, for example, the fields provided just 5 percent of the gas sold by Enstar.

Cook Inlet could see even more natural gas production in the near future. Esopeta Oil announced in November what it says is a huge find north of Nikiski. But the size of that discovery hasn't been proven. Other explorers, spurred on by the tax incentive, are also hunting for gas in Cook Inlet.

"There's a lot of positive activity, but that activity needs to bring results, which to Enstar means a company that wants to sell us gas," Sims said.

The most important solution to the problem, for now, might be found behind the Kenai Wal-Mart, near Buccaneer's newly producing field.

An underground storage facility -- it was a producing gas reservoir not long ago -- will come on line in fall.

Cook Inlet Natural Gas Storage Alaska, a partnership between Enstar parent company Semco and MidAmerica, will be able to provide up to 150 million cubic feet of gas per day, Sims said.


That would have represented about two-thirds of peak gas demand on Jan 15.

But that doesn't solve the problem completely, Izzo said.

"We're still an island, in that were not connected to any other supply," other than Cook Inlet, he said.

The long-term solution? Gas from another source. That includes a trans-Alaska natural gas pipeline delivering North Slope natural gas -- if one is ever built.

Contact Alex DeMarban at alex(at)

Alex DeMarban

Alex DeMarban is a longtime Alaska journalist who covers business, the oil and gas industries and general assignments. Reach him at 907-257-4317 or