The natural gas-fired power plant Southcentral Power Project, owned by Chugach Electric, produces power during subzero weather on Jan. 8. (Bill Roth / ADN)
State officials are moving to address concerns that the construction of two gas-import projects will lead to higher utility bills in Southcentral Alaska.
The Regulatory Commission of Alaska recently opened an investigation to receive details from Enstar natural gas and Chugach Electric Association about their interest in separate projects.
The utilities are looking to import liquefied natural gas, or LNG, in the future as local production from the Cook Inlet basin peters out in the coming years.
Enstar, the natural gas company in Southcentral Alaska, has been working with Glenfarne, which is pursuing the construction of a new LNG import facility in Nikiski.
Glenfarne is also the developer of the proposed Alaska LNG megaproject that would deliver gas from Alaska’s North Slope, if it can be built, for delivery to urban Alaskans and exports overseas.
Meanwhile, Chugach Electric, Alaska’s largest power company, has said it’s looking at buying gas from a project led by Harvest Midstream, an affiliate of Hilcorp, the leading gas producer in Cook Inlet. That project, also in Nikiski, would convert a former LNG-export facility into an import operation.
Both projects could cost hundreds of millions of dollars apiece.
“We require Chugach and ENSTAR to file in this docket all information they possess related to LNG import facilities through which they propose to purchase LNG, including the projected costs to be recovered through rates from their customers,” the Feb. 4 order from the state regulatory commission says.
The utilities must file by March 6, the order says.
“While we lack jurisdictional authority over decisions to develop duplicative LNG import facilities, we do retain authority to review costs incurred by utilities using those facilities when those costs are requested to be included in consumer rates,” the order says.
In any review of agreements associated with an LNG facility, the commission will likely assess whether Enstar and Chugach should have considered or chosen the other LNG import facility to meet their gas supply needs, the order says.
‘Are we going to pay for two projects?’
The dual projects have led to concerns that ratepayers could be saddled with tens of millions of dollars in unnecessary costs, or more, if two projects are built when only one could provide enough natural gas to heat and power the region.
Officials with Enstar and Chugach Electric have encouraged the regulatory agency to gather the information, according to the order.
The utilities have also expressed an interest in keeping at least some details confidential.
Also, Senate Majority Leader Cathy Giessel, R-Anchorage, has introduced a one-sentence bill in the Alaska Legislature clarifying that the state regulatory agency has the authority to regulate the importation of natural gas.
“I‘m hearing from consumers, ‘Are we going to pay for two projects? How in the world? Why are two projects going forward?’ ” Giessel said in a Senate Resources Committee hearing discussing her bill last week.
Senate Majority Leader Cathy Giessel, R-Anchorage, speaks during a news conference on Jan. 20, 2026. (Marc Lester / ADN)
The bill will help guarantee “the lowest energy rates for rate payers as Alaska looks to import liquefied natural gas,” a summary says.
It comes in response to language added to Gov. Mike Dunleavy’s carbon sequestration bill that establishes a framework for carbon storage in Alaska, Giessel said. The bill passed in 2024, after it was expanded with additions involving Cook Inlet energy issues.
The added sentence says that the Alaska regulatory commission does not have authority over an LNG import facility that falls under the jurisdiction of the Federal Energy Regulatory Commission, Giessel said.
Giessel’s bill would repeal the language, which “has caused confusion,” she said.
The federal agency has jurisdiction over infrastructure for LNG import projects, she said.
The state agency has jurisdiction over the cost of the gas that the utilities will buy for their customers, she said.
Repealing the language will clarify “the Regulatory Commission of Alaska’s authority to regulate the price of natural gas coming in from the LNG import facility,” Giessel said.
A retrofit plan
Harvest Midstream has filed plans with federal regulators for its import project. It hopes to start bringing in gas by next year.
Sean Kolassa, president of Harvest Midstream, said the company’s goal is repurposing the former Kenai LNG export plant in Nikiski into a “cost-efficient, ratepayer-friendly” import operation, in a House Energy Committee hearing late last month.
Offshore petroleum platforms stand in Cook Inlet beyond the shuttered Agrium fertilizer plant, foreground, and the Kenai liquefied natural gas plant (three white tanks at right), on Monday, July 1, 2024 in Nikiski. The LNG plant ceased operations in 2015. (Loren Holmes / ADN)
The plant, which Harvest Midstream acquired from Marathon last year, exported liquefied natural gas overseas to Asia for over 40 years until it was mothballed in 2017.
“Extensive due diligence with technical experts” shows that the facility has been well-maintained, Kolassa said.
Plans filed with regulators say the plant could deliver up to 20 billion cubic feet of gas annually, about 30% of the amount of gas used along the Alaska Railbelt from the Kenai Peninsula to Fairbanks.
“Our project provides speed, certainty, but also flexibility,” Kolassa said. “The project is scoped to function either as a temporary or long-term solution for Railbelt gas needs, depending on how supply options evolve. Our project provides the most cost-efficient entry for solving the near-term gas supply shortage in Southcentral Alaska.”
The project is “a practical solution to help meet Southcentral Alaska’s near-term gas needs while preserving optionality for future export opportunities should a North Slope gas line ultimately move forward,” Kolassa said.
Julie Hasquet, a spokesperson with Chugach Electric, said the effort by the state regulatory commission to gather information about the LNG import projects will be helpful.
“We think the discussion about the benefits and costs of each project with the RCA will be a good way to have facts come to light that give lawmakers and the public a chance to see the differences and what will ultimately benefit Alaskans in general,” she said.
Chugach Electric’s gas supply contract with Hilcorp ends in 2028 while Enstar’s ends in 2033, she said.
“It shouldn’t have been a surprise to anyone that we couldn’t work with a project that didn’t bring gas until the early 2030s,” Hasquet said, adding that she was referring to the original timeline for the Glenfarne project.
The new-build project
Glenfarne is currently targeting delivery of gas at its proposed LNG import facility, the Cook Inlet Gateway LNG import terminal, starting in 2029.
That project would be built on the same site where the giant Alaska LNG export project would be built. The import project could be converted in the future to support the Alaska LNG project, John Sims, Enstar president, said in a presentation to lawmakers last month.
John Sims, president of Enstar Natural Gas, speaks to the Alaska Senate Resources Committee in Juneau on Jan. 24, 2025. (Marc Lester / ADN)
“We are building infrastructure we need and a lot of it can be repurposed for export facilities that will be required,” Lindsay Hobson, a spokesperson with Enstar, said Tuesday.
The Glenfarne facility would have the capacity to deliver 109 billion cubic feet of gas annually, Hobson said.
That’s about 55% more than is used along the Railbelt, providing capacity for future growth.
Longtime RCA commissioner Bob Pickett said in a meeting last month that the Glenfarne project has not applied for a license from the Federal Energy Regulatory Commission, raising serious questions about whether its timeline can be met.
“We will apply for any permits needed for this project,” Tim Fitzpatrick, a Glenfarne spokesperson, said in a prepared statement Tuesday.
[Lawmakers skeptical as developer of Alaska LNG megaproject sets rapid construction timeline]
“Glenfarne is committed to delivering energy for Alaskans, and is developing the Cook Inlet Gateway LNG import terminal in connection with the Alaska LNG project as part of our broader energy security strategy for Alaskans,” Fitzpatrick said. “The Cook Inlet Gateway is the only project capable of delivering enough energy to meet the needs of all Railbelt utilities at a competitive cost, and together with Alaska LNG, the only proposed project with the potential to reduce energy costs for Alaskans long term.”
“Glenfarne’s strategy avoids requiring ratepayers to fund significant infrastructure costs that will be unnecessary with the full Alaska LNG project,” Fitzpatrick said.
Sims told the state regulatory commission last month that Enstar will “happily participate” in the effort to gather information about the import projects, including how Enstar arrived at its decision to work with Glenfarne.
Sims has said the Harvest facility will not be enough to meet Enstar’s annual needs of about 37 billion cubic feet, in testimony in December to the state regulatory commission.
Meanwhile, the Glenfarne facility could meet all the Railbelt’s needs, he said.
He said the Glenfarne import project “has the flexibility to pivot and take advantage of gas coming down from the North Slope.”
Sims told the commission that the Harvest facility could be upsized to meet all the utility’s needs.
But at a “pretty significant” cost, he said.
“We’ve done a confidential analysis, and I understand the numbers very well,” Sims said.
Asked in the hearing if Enstar could buy gas from the Harvest project if it can be upsized, Sims said, “it depends on the conditions.”
The Glenfarne facility that’s being designed can meet the needs of all the utilities, plus future loads, Sims said.
“So my answer to that question is after two years of diligence, and almost $5 million of analysis, study, research, design, we’re going to go with the one that we selected, because it makes the most sense for the state of Alaska,” he said.
The commission in an order last year said “we were concerned” to hear Sims say, “there is no world in which ENSTAR will participate in a project that has a Hilcorp-owned entity as the importer of natural gas.”
Enstar will not rely on an entity that “provides Cook Inlet gas, Cook Inlet storage and the importation of LNG, full stop,” Sims said in the order, referring to Hilcorp’s dominance in the Cook Inlet gas market.
”We cannot do that from a long-term strategic perspective, from a planning perspective,” Sims said, according to the order. “That is way too much risk for our customers.”
Adding to concerns about the potential cost of LNG import projects to ratepayers, Enstar is asking the state regulatory commission to allow it to apply close to $50 million to future customer rates, for development costs for the Glenfarne project, even if the project is not built.
The commission will review “the reasonableness of those costs” at a future date, and ”whether they were within our jurisdiction to consider or not,” Steve DeVries, an RCA commissioner, told lawmakers in the Senate Resources hearing last week.
The commission said last year it will cap the amount it will consider at about $47 million.
“If development costs exceed these caps, the additional costs will be borne by ENSTAR’s shareholders or by the developer,” referring to Glenfarne, the order said.