Alaska's Cook Inlet Faces Looming Natural Gas Crisis

The Cook Inlet natural gas crisis in Southcentral Alaska is expected to worsen this winter as demand outpaces supply. In 2024, almost 60% of Alaskans' energy consumption came from natural gas, with the largest chunk used by utility companies like Chugach Electric and Homer Electric to produce electricity.

Hilcorp Alaska holds a near-monopoly in the region, but its inability to enter new contracts with buyers has set off alarm bells for utilities reliant on its supply. Enstar Natural Gas President John Sims said it's been challenging to replace these contracts, and Cook Inlet is no longer a long-term option.

The shortage isn't due to a lack of natural gas in the inlet but rather the increasing difficulty and expense of accessing it. As production falls, prices rise, with Enstar currently paying close to $11 per mcf of natural gas, while global markets are trading at over $24.