Alaska’s Energy Future: Regulatory Scrutiny of Proposed LNG Import Projects

State officials in Alaska are examining the potential costs to consumers as two separate projects aim to import Liquefied Natural Gas (LNG) into Southcentral Alaska, a region facing declining local production from the Cook Inlet basin. The Regulatory Commission of Alaska (RCA) recently launched an investigation to gather detailed information from Enstar Natural Gas and Chugach Electric Association regarding their plans and associated costs.

Competing LNG Import Proposals

Enstar is collaborating with Glenfarne, the developer behind the proposed Alaska LNG megaproject, to construct a new LNG import facility in Nikiski. Meanwhile, Chugach Electric, Alaska’s largest power company, is considering purchasing gas from a project led by Harvest Midstream, an affiliate of Hilcorp, which would repurpose a former LNG export facility in Nikiski into an import operation. Both projects are estimated to cost hundreds of millions of dollars each.

Regulatory Concerns and Ratepayer Impact

The RCA’s order, issued on February 4th, requires both utilities to disclose all information related to the LNG import facilities, including projected costs that may be passed on to customers. A key concern is whether building two import facilities is necessary, given that one project might be sufficient to meet the region’s natural gas needs. Lawmakers and regulators are questioning whether ratepayers could be burdened with unnecessary expenses if both projects proceed.

Legislative Action and Clarification of Authority

Senate Majority Leader Cathy Giessel has introduced a bill to clarify the RCA’s authority to regulate natural gas importation. The bill aims to address confusion stemming from language in a 2024 carbon sequestration bill that appeared to limit the RCA’s oversight. Giessel’s legislation seeks to ensure the lowest possible energy rates for Alaskans as the state transitions to importing LNG.

Project Details: Harvest Midstream and Glenfarne

Harvest Midstream plans to repurpose the former Kenai LNG export plant, aiming to begin importing gas as early as next year. The facility could deliver up to 20 billion cubic feet of gas annually, roughly 30% of the Railbelt’s total consumption.

Glenfarne’s Cook Inlet Gateway LNG import terminal, with a proposed capacity of 109 billion cubic feet annually, is designed to potentially support the larger Alaska LNG export project in the future. However, concerns have been raised about the project’s timeline, as it has not yet applied for a license from the Federal Energy Regulatory Commission (FERC).

Chugach Electric’s Diversification Efforts

Beyond LNG imports, Chugach Electric Association is similarly pursuing hydroelectric projects to reduce its reliance on natural gas. The company has filed preliminary permit applications with the Federal Energy Regulatory Commission (FERC) for four potential hydroelectric sites: Canyon Creek (6 MW), Godwin Creek (16 MW), Boulder Creek (12 MW) and Caribou Creek (18 MW). These projects are part of Chugach’s broader decarbonization goals.

Looking Ahead

The RCA’s investigation and ongoing legislative discussions will play a crucial role in shaping Alaska’s energy future. The decisions made regarding these LNG import projects will have significant implications for ratepayers and the state’s overall energy security. The utilities are expected to file detailed information with the RCA by March 6th.