Cook Inlet burns more gas than it produces, and the state is deciding where to store more

The Department of Natural Resources puts Cook Inlet's annual gas demand at roughly 70 billion cubic feet: about 35 Bcf for gas utilities, 25 Bcf for electrical utilities and 10 Bcf for field and industrial use. The state is weighing three applications for new underground storage.

ENSTAR President John Sims said at an Aug. 3 press conference: "We have to have more storage to be able to store gas so that when we get into those colder temperatures, we can pull it from there because the production in the Cook Inlet isn't high enough to meet the demands of everyone."

Two of the applications are from Hilcorp. Its Kenai Loop project covers about 1,330 acres of state-owned subsurface reservoir in the Tyonek sand, and comments closed July 7. Its Beluga River project, about 36 miles west of Anchorage, targets the Sterling sands across about 6,100 acres, and comments closed July 8. ENSTAR filed separately at Kenai Loop. Each Hilcorp project also needs a storage injection order from the Alaska Oil and Gas Conservation Commission.

Cook Inlet has three active gas storage facilities, two of them regulated: Kenai Pool 6 and Cook Inlet Natural Gas Storage Alaska.

The Regulatory Commission of Alaska denied ENSTAR's petition for an advance determination of prudence on Kenai Loop, finding the company had not met its burden of proof. The commission cited an insufficient factual record, unresolved timing questions and the investment costs customers would carry. That ruling decides who pays for the investment, not whether storage is approved.

Commissioner John Crowther and Division of Oil and Gas Director Haley Paine presented the applications Thursday to the Legislature's Joint Resources Committee. They reported Hilcorp completed 20 gas wells through August 2026, with about seven more planned by December. BlueCrest Energy's Cosmopolitan unit has been in default since May 23, 2025, and an Aug. 14 commissioner's letter requires the company to file a development plan showing rig readiness and financial capacity to start gas production by March 31, 2027.

The division asked commenters, including Kenai-area residents, whether the lease serves the state's best interests. Only those who filed written comments may appeal the division's final written finding.