Citizens Benefit By Keeping LNG Import Option Available

Commentary by

Dave Harbour

Yesterday, Anchorage Mayor Dan Sullivan (NGP Photo), together with his advisory, "Energy Task Force", heard ConocoPhillips executive Dan Clark and Marathon’s Alaska manager, Carrie Lockhart, describe circumstances leading to closing of the 40-year-old Kenai Liquefied Natural Gas export facility.  Still America’s only LNG export facility, the Kenai plant prepared natural gas for delivery to Japan.  

Counterintuitively, the LNG export plant benefited local gas and electric consumers.  While gas supplies are diminishing in Cook Inlet, the biggest challenge utilities face is providing electricity and heat to consumers in Southcentral Alaska on the coldest days of winter.  The peak times of day during those coldest periods is weekdays, when families are getting up, turning up the heat, showering and getting ready for work…and after work, when the washing machines, driers, televisions and lights are all on at the same time.

Until now, the Kenai LNG facility provided a ‘virtual storage’ for those peak, coldest days.  When utilities called Kenai, the plant operators could divert gas otherwise being converted to LNG into Enstar’s gas distribution system.  This would, in effect, make more natural gas available to Enstar customers as well as to Chugach Electric Association (CEA) which uses natural gasto fire its generators.  Matanuska Electric Association (MEA), Homer Electric Association (HEA) and the city of Seward purchase wholesale electricity from CEA.  So…all of Southcentral Alaska (i.e. the most populous part of the state, the financial capital of Alaska, the headquarters capital of the state, the nerve center for state and federal governments, the transportation hub) depends on reliable natural gas and electric utility service.

With the LNG Plant closing, utilities are depending to some extent on a new Kenai underground natural gas storage facility being prepared by Enstar.  It could be operational by next year.  Utilities could buy natural gas in the summer when demand is lowest and store it for winter use.  Until its stored volumes are available, peak deliverability on the coldest days will remain a challenge for utilities.  Even with Enstar’s underground storage capability, cold winter day deliverability could still be a challenge as gas reserves continue to diminish.  Consequently, the utilities are evaluating the potential value of importing LNG for a limited time to assure residents have reliable electric and gas service even during the coldest periods.  

Importing LNG for a short time makes sense because during the months and several years immediately before us 1) a peak shortage could occur anytime–particularly if an unexpected breakdown of equipment occurs (i.e. generators, compressors, etc.) and in the advent of an earthquake, or other natural calamity; and, there is no way a pipeline to the Alaska North Slope or a hydroelectric project can be built in time to make LNG imports unnecessary.

Kudos to Mayor Dan Sullivan for working with the utilities to support reasonable solutions to difficult issues.  Now, it is up to citizens to understand the complexity of this challenge so that together we can assure the best possible outcome.

Task Force member Steve Pratt appeared on a KTVA, Channel 11 news program last night to explain the issue (See clip, below).   Other Task Force Members include Chairman Dan Coffee, Judy Brady, Arden Page, Bill Popp, Bob Stinson, Gary Carlson, Assembly Member Jennifer Johnson, Mary Ann Pease, Tony Izzo, staff advisor Sara Gill, and your author.