MEA Has Solutions for Decreasing Gas in Short Term

For several years, the railbelt utilities have brought attention to the decreasing gas resources available to supply heat and power. Hilcorp Alaska is one of the major suppliers for those resources to the railbelt utilities, which includes the Mat-Su Borough. At the State’s Joint Resources Committee meeting last week, Hilcorp Alaska Senior Vice President Luke Saugier (SO-Jay) says that without solutions soon, Hilcorp will not be able to meet utility needs beyond 2029.

“Despite the fact that Hilcorp will deliver on all of its commitments, the market needs more gas and without another source of gas supply by winter 2029, be that North Slope gas or LNG imports, there will not be enough gas in the system to meet all the utilities’ needs.”

Saugier notes that Hilcorp and HEX Energy are the only two companies drilling wells in Cook Inlet. Combined, they expect to drill 29 wells this year. He says 14 years ago there were four or five companies drilling new wells in the Inlet. 

And Saugier says Hilcorp continues to increase activity, but the productivity does not match that, though he says Hilcorp will be able to meet their existing contracts. Beyond that point, there will need to be alternatives in place.

“We are very confident come winter 2029, we will need LNG imports or access to North Slope gas.”

Despite the diminishing gas supplies in Cook Inlet, Matanuska Electric Association Chief Strategy Officer Julie Estey says the supply is there for now and they have several ways to keep the lights on. She says MEA has no reason to believe that Hilcorp will not meet their contract agreement. But they do have contingency plans.

“We are also actively storing gas for the future.”

Those stores may be able to provide extra supply if the system needs a boost. Estey says the system is shared with the other Railbelt Utilities in the southcentral region. And the gas system for all the utilities must remain pressurized. If more is pulled out than put in, the pressure drops, affecting all MEA co-op members and other utilities in the system.

Estey says that ENSTAR, the company delivering the gas, indicates there may not be enough for the system this winter, based on forecasts. But she says they have a lot of options beyond that stored gas to keep the system running. 

“We can use more of our hydropower assets that are online. We can draw from Golden Valley’s service territory as they have excess generation that could be online. MEA’s power plant could go to diesel power as well.”

Estey says if this is the case, ENSTAR will pay for the use of those assets so members are not paying additional costs. Though rates increase each year, they are locked in April. Should the system have a shortage, the last resort is rolling service interruptions or blackouts, which Estey says, have not yet happened. But if they are needed, the blackouts would last only 30 to 45 minutes every four hours. That would keep the system pressurized. Estey stresses that it is a last resort.

“We do not foresee that being an issue for this upcoming winter.”