Enstar Natural Gas plans for its own LNG facility
ny will not join an import project owned by Hilcorp and its affiliate Harvest. Enstar is by far the larg- est utility customer for gas, requir- ing about 40 billion cubic feet of gas annually for its customers. Chugach and Matanuska Elec- tric Association’s requirements are about half of what Enstar needs, al- though the Marathon Petroleum re- finery at Nikiski also needs gas. Without Enstar’s participa- tion, can the Marathon LNG plant conversion work economically? It’s likely, sources involved in the Harvest/Hilcorp project say. But Chugach’s initial purchases of LNG for its power will be relatively small because the company has its own gas supply from the onshore Belu- ga gas field, where it is 60% own- er. Beluga will decline like other gas fields in the Inlet, but for a period, Matanuska Electric and the refinery would be the major LNG buyers. However, one other factor is the MEA may contract for new power from a proposed coal power plant planned in the western part of the Matanuka-Susitna Borough, where a coal mine also would be built. This could reduce MEA’s needs for gas from imported LNG. Meanwhile, while there are no estimates of the Marathon plant conversion. Chugach said its pre- liminary estimates for the cost of gas from imported LNG under the Hilcorp/Harvest plan to be in the range of $13 to $16 per thousand cubic range (mcf), which is in line with earlier forecasts by the Berke- ley Research Group, which is a con- sultant to Enstar. That compares with the $8 to $10 per mcf now paid for gas produced in Cook Inlet.
Site could tie in with Alaska LNG Project in future There are now two projects to import liquefied natural gas into Southcentral Alaska. One project announced involves Harvest Alaska, a Hilcorp affiliate, purchasing the former ConocoPhil- lips LNG export plant at Nikiski. Certain facilities at the plant can be reconfigured for LNG import in- stead of export. The other project, announced previously, is for Enstar Natural Gas and Glenfarne, a New York-based energy project developer, to build a new LNG import facility, also at Nikiski. This would be at the site where the big Alaska LNG Project proposed by the state’s Alaska Gasline Devel- opment Corp. (AGDC) would have its gas liquefaction plant, tanks and dock for exports. An advantage of the Harvest/Hil- corp plan is that its project can be done in time to meet the project- ed 2028 gas shortfalls for Chugach Electric and Matanuska Electric As- sociation, the two largest South- central electric utilities. Chugach Electric CEO Arthur Miller told the Regulatory Commis- sion of Alaska he believes the Har- vest/Hilcorp purchase and conver- sion of parts of the Marathon plant can be done by 2028. The Enstar and Glenfarne proj- ect would take longer because a new dock, LNG storage tank and oth- er facilities would need to be con- structed. Unlike Chugach and MEA, Enstar wouldn’t need the LNG and new gas until 2032 when its current
gas supply contract with Hilcorp ends. One advantage of the Enstar/ Glenfarne project is that facilities that are built could also be used if the Alaska LNG Project to export gas moves forward. If that happens, Alaska LNG would pay Enstar and Glenfarne so consumers don’t bear this cost in their natural gas prices, Frank Richards, CEO of AGDC, told a legis- lative committee in Juneau. While there are now two LNG import projects proposed, it seems likely one, a conversion of existing facilities, could be built faster and likely at less cost than the other, which requires new facilities. There are no capital cost estimates for ei- ther available to the public, but it seems likely only one will be built to serve all the LNG buyers, the South- central utilities. However, Enstar Natural Gas Co. CEO John Sims told the Regulatory Commission of Alaska his compa- Alaska has been dependent on local gas supplies in Cook Inlet for most of its energy since the 1960s.
— Tim Bradner
THE LINK: MARCH 2025
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