Legislature(2023 - 2024)BARNES 124
02/06/2024 11:00 AM House ENERGY
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| Audio | Topic |
|---|---|
| Start | |
| Overview: Assessing Southcentral Alaska's Energy Resilience, Addressing the Historic Demand on Natural Gas, and Ensuring Sustainable Solutions | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
February 6, 2024
11:00 a.m.
MEMBERS PRESENT
Representative George Rauscher, Chair
Representative Tom McKay
Representative Stanley Wright
Representative Calvin Schrage
Representative Jennie Armstrong
MEMBERS ABSENT
Representative Thomas Baker
Representative Mike Prax
COMMITTEE CALENDAR
OVERVIEW(S): ASSESSING SOUTHCENTRAL ALASKA'S ENERGY RESILIENCE~
ADDRESSING THE HISTORIC DEMAND ON NATURAL GAS~ AND ENSURING
SUSTAINABLE SOLUTIONS.
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
JOHN SIMS, President
ENSTAR Natural Gas
Anchorage, Alaska
POSITION STATEMENT: Co-presented the Assessing Southcentral
Alaska's Energy Resilience, Addressing the Historic Demand on
Natural Gas, and Ensuring Sustainable Solutions Overview.
INNA JOHANSEN, Director
Gas Supply Operations
ENSTAR Natural Gas
Anchorage, Alaska
POSITION STATEMENT: Co-presented the Assessing Southcentral
Alaska's Energy Resilience, Addressing the Historic Demand on
Natural Gas, and Ensuring Sustainable Solutions Overview.
TONY IZZO, CEO
Matanuska Electric Association
Palmer, Alaska
POSITION STATEMENT: Gave invited testimony on behalf of ENSTAR.
ARTHUR MILLER, CEO
Chugach Electric Association
Anchorage, Alaska
POSITION STATEMENT: Gave invited testimony on behalf of ENSTAR.
ACTION NARRATIVE
11:00:41 AM
CHAIR RAUSCHER called the House Special Committee on Energy
meeting to order at 11:00 a.m. Representatives Schrage,
Armstrong, McKay, and Rauscher were present at the call to
order. Representative Wright arrived as the meeting was in
progress.
^OVERVIEW: Assessing Southcentral Alaska's Energy Resilience,
Addressing the Historic Demand on Natural Gas, and Ensuring
Sustainable Solutions
OVERVIEW: Assessing Southcentral Alaska's Energy Resilience,
Addressing the Historic Demand on Natural Gas, and Ensuring
Sustainable Solutions
11:02:41 AM
JOHN SIMS, President, ENSTAR Natural Gas, co-presented the
Assessing Southcentral Alaska's Energy Resilience, Addressing
the Historic Demand on Natural Gas, and Ensuring Sustainable
Solutions Overview. He began a PowerPoint presentation [hard
copy included in the committee packet], with an introduction to
ENSTAR, on slide 2, which listed the following about the company
as follows [original punctuation provided]:
• Established in 1959
• 230 employees
• 152,000 customers
• 25 communities served
• 3,560 miles of pipeline
MR. SIMS turned to slide 4, regarding peak day deliverability
from 2005-2024, and discussed a graph showing average January
daily demand, "design day" deliverability, and actual peak day
deliverability. On slides 5-7, he showed images of Cook Inlet
Natural Gas Storage Alaska (CINGSA), including surface
facilities and well pad. He turned to slide 8 to show a bar
chart depicting the performance of five wells. In response to
Chair Rauscher, he clarified that the chart shows average
performance.
11:09:59 AM
MR. SIMS, moving on to slide 9, discussed a January 14 event
where deliverability was reduced from 150 million cubic feet per
day (Mmcf/d) to 121.5 Mmcf/d from sand in well number three. In
response to Chair Rauscher, he said the company has not been
able to secure somebody to get that work done, as of yet.
Turning to slide 10, he explaining the temperature history of
Anchorage, Alaska, and how this impacted deliverability. He
moved on to slide 11, discussing a 30 percent decrease in
deliverability at well number one, with total capacity reduced
from 150 Mmcf/d 105 Mmcf/d.
11:13:38 AM
MR. SIMS turned to slide 12, which read as follows [original
punctuation provided]:
• Members:
ENSTAR
CINGSA
Power Utilities: CEA, MEA, HEA, GVEA
Pipelines: Harvest, APC
Industrial: IGU, Marathon
Producers: Hilcorp, Furie
• Daily formal coordination meetings during Cold
Weather Event 1/26/24-2/3/24
MR. SIMS explained this event was to ensure maintained pressures
in the transmission line. He showed slide 13, which has a
graphic outlining the energy watch customer action plan, with
three categories: green as stable, yellow as caution, and red
as alert. In response to a question from Chair Rauscher, he
confirmed, "We are still in the green." He then turned the
presentation over to Inna Johansen.
11:15:57 AM
INNA JOHANSEN, Director, Gas Supply Operations, ENSTAR Natural
Gas, as co-presenter, turned attention to the ENSTAR Gas Supply
Forecast 2024-2034, on slide 14, and in response to a question
from Representative Rauscher, she talked about the reasons for
fluctuations.
11:17:36 AM
MR. SIMS, in response to Representative Armstrong, said it is
likely that without subsidies from the state, "everyone can
expect their bills are going to increase." To Chair Rauscher,
he named possible factors for subsidization. He said he thinks
Cook Inlet gas is the most viable at this time but said a tough
question is how much the state is willing to put forward. How
much bills increase is contingent on how much gas is available,
he said.
11:19:29 AM
REPRESENTATIVE MCKAY asked whether the red portion of the bar
graph displayed on slide 13 would be remedied by contracts
currently being negotiated.
MR. SIMS said that there is not a producer who is currently
willing to supply what is needed under a contract.
11:20:10 AM
REPRESENTATIVE MCKAY asked whether Hilcorp would contribute its
gas to fill in the gap at the top of the graph on slide 13.
MR. SIMS replied that Hilcorp has not yet indicated that it
would.
REPRESENTATIVE MCKAY asked whether any company would come to the
table to provide the gas needed to make up the difference.
MR. SIMS answered that Hilcorp has no desire to extend existing
contracts with ENSTAR. In response to further questions from
Representative McKay, he said that there are existing options to
fill the gap on the graph; he noted that there is gas under
contract for 2025. He relayed that the information on the graph
on slide 13 has been available for years and pointed out that
Representative McKay was mistakenly referring to an old graph
that was displaying the theoretical available gas that was
contingent on observations and predictions made at the time.
11:25:21 AM
REPRESENTATIVE ARMSTRONG asked what ENSTAR needs right now to
obtain the gas needed to fill the gap on the graph displayed on
slide 13.
MR. SIMs answered that what ENSTAR needs depends on the
producer.
11:27:00 AM
MS. JOHANSEN resumed the presentation on slide 14, which
displayed a bar graph that described the historical supply and
demand of ENSTAR's gas and continued to slide 15, which
displayed a bar graph that described the deliverability of
ENSTAR's gas from 2023-2024.
MS. JOHANSEN, in response to Chair Rauscher, explained that the
term "APL-14" refers to a contract with Hilcorp, Inc that will
be in place until 2033. She continued to explain the graph
displayed on slide 15. In response to Representative Armstrong,
she explained that the dark line overlaying the graph displayed
on slide 15 rises in 2023, communicating Homer Electric's
onboarding of gas contracts.
11:31:24 AM
MS. JOHANSEN resumed the presentation on slide 16, which
displayed a graph that described the gas demand in the Cook
Inlet Region and the percentage of that demand that has been
supplied by each supplier.
11:32:40 AM
REPRESENTATIVE MCKAY asked about the size and dimensions of the
CINGSA wells and their associated costs.
MR. SIMS replied that the wells are 5,000 feet deep. In
response to further questions, he said that ENSTAR is currently
looking at developing wells in fall 2024; the company is working
to obtain the equipment required to develop the wells in the
Cook Inlet Region.
11:36:09 AM
REPRESENTATIVE SCHRAGE asked whether it is common to have a high
level of sanding at CINGSA wells.
MR. SIMS explained that that each well is different and said
that challenges present themselves differently between each one.
11:37:15 AM
REPRESENTATIVE SCHRAGE asked whether there is any concern from
ENSTAR to reduce its capacity of production to avoid sanding in
the future.
MR. SIMS replied that it is a matter of learning from well to
well. In response to a follow-up question regarding how close
ENSTAR has come to "catastrophic delivery issues," he explained
that he has asked multiple companies in the Cook Inlet Region to
step up their production in recent emergency cases and said that
[January 31, 2024,] was "very close - a lot of sleepless
nights." He further explained that ENSTAR allowed its alert
level to remain in the green to avoid causing any panic.
11:44:11 AM
CHAIR RAUSCHER asked what it would cost ENSTAR to secure enough
gas to ensure operations into the future.
MR. SIMS answered that it would double the cost to ENSTAR to pay
for the gas it needs for itself.
REPRESENTATIVE ARMSTRONG asked why Joint Base Elmendorf-
Richardson (JBER) went to the yellow alert level but everyone
else stayed in the green.
MR. SIMS explained that it was a "voluntary reduction" of the
alert level at JBER.
11:46:10 AM
TONY IZZO, CEO, Matanuska Electric Association, gave invited
testimony on behalf of ENSTAR. He began his testimony by
outlining the gas usage and demand of the Matanuska Electric
Association (MEA) and how it interacts with ENSTAR's gas usage.
He said that his desire is to keep the electrical grid reliable
and offered points to answer to his desire. He emphasized the
fragility of Alaska's critical infrastructure, especially in its
lacking any specific contingencies or backups. He shared his
concern that energy-critical events similar to the one that
occurred on January 31, 2024, will become the "new normal" as
time goes on and energy reserves in Alaska deplete. He offered
his suggestion that companies should build their gas reserves in
the summer months to prepare for the winter months.
11:55:43 AM
CHAIR RAUSCHER thanked Mr. Izzo for his testimony and for his
point of view as a chief executive officer.
11:56:28 AM
ARTHUR MILLER, CEO, Chugach Electric Association, gave invited
testimony on behalf of ENSTAR. He began his testimony by
reiterating Mr. Izzo's point regarding the relationship between
utilities, gas providers, and their overall energy demand. He
emphasized that there should be many other redundancies and
options in place so that a utility shouldn't have to consider
the costly switch to diesel fuel. He said that it is essential
for the state to keep a balance between energy supply and energy
demand. He offered his understanding that it is unsustainable
for a utility to operate on the hope of a gas supply and said
that the energy-critical event that CINGSA experienced on
January 31, 2024, highlighted a need for redundancy in the
system.
12:03:51 PM
CHAIR RAUSCHER asked how the logistics of gas storage work.
MR. MILLER explained how ENSTAR determines, creates. and manages
storage facilities for natural gas.
12:06:41 PM
REPRESENTATIVE SCHRAGE asked whether the color-based alert
system would be revised considering that ENSTAR is reluctant to
use it as it currently is.
MR. SIMS replied that it was a "learning experience."
12:08:32 PM
CHAIR RAUSCHER thanked the invited testifiers for their time.
12:09:07 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 12:09 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| House Energy 02062024 Enstar Final.pdf |
HENE 2/6/2024 11:00:00 AM |
Enstar |