Enstar tells legislators it's 18 days short of gas for winter

Enstar Natural Gas, which heats 157,000 homes and businesses across Southcentral Alaska, is roughly 3 billion cubic feet short of gas for the coming winter, and the supply exchanges it is negotiating with two electric utilities would cover only part of the gap, president John Sims told legislators Thursday.

"At this point today, Enstar is 18 days short of gas, which is the equivalent of 3 BCF," Sims said at the Joint Resources Committee hearing in Anchorage. "And that's for normal temperatures." Those 18 days represent midwinter days when the utility could serve no customers at all.

Two supplies Enstar had counted on are not coming through. It expected up to 1.5 billion cubic feet from BlueCrest starting Sept. 1, but Sims said that is no longer possible and BlueCrest does not plan to begin production. And Enstar has received no discretionary gas from HEX since late July, beyond its firm contract volume; it has filed for arbitration seeking additional gas it says its contract entitles it to.

To fill part of the gap, Enstar is working on an exchange with Matanuska Electric for 1.2 billion cubic feet, to be repaid in gas by 2028, and talks have restarted with Chugach Electric on a similar deal. Even if both close, Sims said, "we are still about a BCF short." His larger point: "there is not extra gas in this market."

Sen. Matt Claman asked what a shortage would mean for households. Sims said the utility's rules curtail gas starting with large industrial customers and electric utilities, with residential customers, schools, churches and hospitals cut last. He pointed to a past outage in New Mexico where restoring service, shutting off and repressurizing every meter by hand, took weeks.

Behind the shortage is a storage bottleneck. The region's main storage field is about half full, and there is a limit to how much gas can be drawn out in a single day. Enstar's long-term answer remains an LNG import project with Glenfarn that could later shift to a pipeline, but Sims said it cannot proceed without more storage, and no cheap short-term fix exists. State regulators recently denied Enstar's bid to guarantee its customers would cover the cost of a proposed storage project, and three new Cook Inlet storage applications are under review.

The state is leaning on new drilling to buy time. DNR Commissioner John Crowther said the department agrees Cook Inlet has a supply problem and wants BlueCrest's promised well drilled by March 2027 at the latest, with verifiable progress rather than representations. Officials noted Hilcorp has completed 20 gas wells this year with seven more planned.

Sims said conservation now would not close the gap, because summer demand runs a fraction of the winter peak. Separately, Enstar has said its supply is currently stable and customer service unaffected, a distinction between its situation today and the winter risk it laid out for lawmakers.

The committee took no votes, and has invited Hilcorp, HEX and Chugach Electric to a follow-up hearing Sept. 10.