ENSTAR vs HEX: Southcentral Alaska's Gas Supply Outlook in Crisis

The natural gas supply outlook for Southcentral Alaska has grown increasingly precarious due to a dispute between ENSTAR Natural Gas Company and HEX Operating LLC, a major Cook Inlet producer.

ENSTAR claims that HEX abruptly cut off critical 'discretionary' gas deliveries mid-summer, citing a contractual right of first refusal. The utility alleges that HEX violated this agreement by selling gas to a third party willing to pay a higher price.

The dispute comes after the Regulatory Commission of Alaska denied ENSTAR's request for an advance prudence determination on its proposed $240 million Kenai gas storage facility last month.

ENSTAR has continued to accept the higher-priced gas 'under protest' in an effort to maintain supply, but warns that the sudden cutoff has severe implications for Southcentral's winter readiness. The utility had planned to receive approximately 2.6 billion cubic feet of discretionary gas from HEX between July 2026 and March 2027 to rebuild its storage inventory.

ENSTAR is seeking an emergency order in arbitration to force HEX to resume deliveries at the agreed-upon rates, preserving all communication and contract records while the legal battle plays out.