Preparing for a winter fuel emergency Alaska Journal of Commerce Alaska State Chamber of Commerce

Cook Inlet gas producing wells have declined to the point that, in the event of an equipment malfunction, there could be an emergency shortage of natural gas during a cold snap. The Municipality of Anchorage, Chugach Electric Assoc., Municipal Light & Power and Enstar Natural Gas are working together on a coordinated emergency response plan. The Challenge:The Response:

Annual production of gas may fall below requirements by 2013 to 2018 The future of the Kenai LNG plant, which now serves as a gas supply backstop to regional utilities in winter, is uncertain after 2011 Marathon Oil Co. and Chevron Corp. have installed gas storage facilities and Enstar is studying establishment of gas storage for its customers Geologists believe Cook Inlet is under-explored for oil and gas, but high costs and limits to the local market impede new exploration. Permit requirements on federal land are extensive. The state of Alaska and the Alaska Natural Gas Development Authority are studying a bullet pipeline from the North Slope or a spur pipeline off a larger gas pipeline, if it is built. These are long-term solutions. The Longer-Term Challenge:

Current Actual 88 BCF/yr DNR est Utility Demand 2006 Cook Inlet Natural Gas Production

Cook Inlet Peak Day Comparison

Daily Gas Peak Requirements & Potential Curtailments Utility Daily Demand (mmcf/d) % Curtailment ML&P Chugach Enstar 38,000 95, ,000 ~75% ~10% ~28,000 ~70,000 ~27,000 Curtailment (mmcf/d) Total: 403,000~125,000~31%

What’s the Problem? Supply Gap in the Near Future Largely Under- explored Region Minimal Rig Count