Harvest Alaska, an affiliate of Hilcorp Alaska, said Thursday that it is proposing to acquire and convert a shuttered natural gas export facility in Nikiski to start receiving imported gas.
The imported gas could start being received at the Kenai Peninsula facility as early as 2026, according to Harvest Alaska.
Chugach Electric Association — the state’s largest electric utility — said it is in talks for the potential purchase of imported gas from the Nikiski plant.
Southcentral Alaska utilities and cities are scrambling to plan for an anticipated shortfall of gas from Cook Inlet, which has supplied the region for decades. Railbelt utilities have gas contracts with Hilcorp expiring over the next few years, and Hilcorp, the region’s largest gas producer, has warned it cannot meet upcoming demand beyond those contracts based on production from the Inlet.
Last year, Chugach Electric warned that imported gas could see power prices rise by roughly 10%.
Under the proposal announced Thursday, the other four Railbelt utilities could secure gas supplies from the Nikiski plant.
The Nikiski LNG plant operated for over 40 years and was mothballed in 2011.
Marathon Petroleum acquired the plant from ConocoPhillips Alaska in 2018, and then announced plans to convert the facility for exports.
Enstar — Southcentral Alaska’s natural gas utility — last month announced its own plans to construct an imported gas facility. The utility told state regulators that it had signed an exclusivity agreement with Glenfarne — a New-York based company — to advance those plans.
It’s unclear whether Southcentral Alaska will end up with two gas import facilities in the end, or just one, or none at all.
The two projects are both in the early phases.
Chugach Electric Association does not see the Harvest and Enstar projects as competing endeavors, said Julie Hasquet, a spokesperson with the utility.
Chugach Electric needs gas in March 2028, she said.
That’s when the utility’s gas supply agreement with Hilcorp, its primary gas supplier, comes to an end.
“This is the first project that’s come to us that can bring us gas in 2028, so we see it as a near-term solution,” she said.
Other projects on the table would not make gas available until later, she said.
Enstar’s gas supply contract with Hilcorp ends in 2033.
Enstar has presented a timeline to the Regulatory Commission of Alaska for its effort with Glenfarne.
That project would begin importing gas into Alaska in 2029, according to the proposal.
John Sims, president of Enstar, said that the natural gas utility is working in the coming months with Glenfarne to determine if its project will advance.
He said the timeline for first gas is a conservative estimate.
“There’s still a lot of work that needs to be done to determine the actual start date,” he said.
Southcentral Alaska utilities have worked together over the past three years, studying different projects together and individually, Hasquet said.
“We have different needs,” she said. “We have different timelines.”
The gas needs are vastly different between an electric company that can supplement its gas fuel with renewable power, and a natural gas company that requires all gas, she said.
“But we’re at a point now where nobody has brought a project forward that meets Chugach’s timeline until this one,” she said.
Republican state Sen. Cathy Giessel, co-chair of the Senate Natural Resources Committee, and Democratic state Sen. Bill Wielechowski both expressed concern Thursday about Harvest Alaska’s plans.
The two senators last year asked the U.S. Federal Trade Commission to investigate Hilcorp’s “virtual monopoly” over Cook Inlet gas production.
Giessel and Wielechowski said Thursday’s announcement amplified their concerns about Hilcorp.
”They’ll have a fully integrated monopoly all up and down from import to production to storage,” Wielechowski said.
”That’s a lot of eggs to have in one basket with one company whose owner lives in Texas,” Giessel said.
This is a developing story. Check back for updates.
[Correction: An earlier version of this article incorrectly reported that Chugach Electric Association had already agreed to purchase gas from the import facility.]