Time is now to ensure year-round LNG supply 

Editorial By Tim Bradner in the Anchorage Daily News: I listened to a talk by Carri Lockhart, Marathon Oil’s regional manager, to a group of legislators last week, and was rudely reminded that we’re on borrowed time with our Southcentral natural gas supply.

Lockhart discussed Cook Inlet’s gas supply challenges. She mentioned that we have just a few years left until demand in the region exceeds available supply on a year-round basis.

The number of years varies depending on who you talk to. A consultant report funded by local utilities said 2014 is the year annual production falls below annual demand. Whether it’s two, four or even six years, this is a wake-up call.

We’ve heard a lot about winter “deliverability” problems or the difficulties aging gas wells now have delivering gas and keeping up with high demand in cold weather. During cold snaps there are shortfalls in supply, but we’ve kept the heat on with gas diverted from the liquefied natural gas plant near Kenai. The LNG plant is being mothballed, however, so we won’t have that backup next winter.

We’re doing something about winter deliverability with a gas storage project now under construction by Enstar Natural Gas Co. parent, Semco Energy, and its partner, MidAmerican Energy Holdings Co. Let’s give a hand to those companies, and state legislators who passed a bill facilitating this project.

When finished in late 2012, this will give us storage for surplus gas produced in the summer, when demand is low, for use in winter, when demand climbs and exceeds what the wells can produce. With the LNG plant gone, this should take care of us for the winter of 2012-2013, but we are exposed — without the LNG backup — this winter. Let’s hope it’s a warm one.

Gas storage costs money, though. Gas must be pumped in during summer and extracted in winter, and the benefit of that security of supply will add to consumers’ utility bills.

An annual supply deficit is different, however. It means we’ll need more gas overall than can be produced in both summer and winter. At that point, gas must be brought in from somewhere else unless we want to convert our homes and office buildings to fuel oil or coal. Read more

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