A gas ring is seen on a stove powered by natural gas. (Photo Illustration by Christopher Furlong/Getty Images)
An energy firm affiliated with Hilcorp Alaska will buy an unused natural gas export terminal on the Kenai Peninsula and convert it to an import facility, the company announced Thursday.
The deal is significant for Southcentral Alaska, which is expected to run short of available, domestically produced natural gas before the end of the decade. The new agreement promises to bring imported gas to the region years sooner than alternative proposals.
Under the terms of the agreement, Harvest Midstream — a company owned by Jeff Hildebrand, the owner of Hilcorp — will buy the terminal from Marathon Petroleum. The terminal has not operated since 2011, but Marathon had begun preliminary work to convert it into an import facility, going so far as to obtain a federal permit to do so.
The cost of the deal was not disclosed on Thursday.
Marathon will continue to own and operate a nearby oil refinery, which will become a customer for the import terminal’s gas. Chugach Electric Association, the largest electric cooperative in Southcentral Alaska, said in Thursday’s announcement that it is also interested in buying gas through the terminal.
Julie Hasquet, a spokesperson for Chugach, said the utility needs to have a firm contract to buy natural gas at the end of the first quarter of 2028. Harvest, which expects to begin delivering some gas in 2026, is the first to meet Chugach’s deadline.
“We’re just excited that this is an opportunity to get gas when our customers need it,” she said.
Harvest’s deal is the second involving a proposed import terminal in recent months.
In December, Enstar signed an agreement with Glenfarne Energy Transition LLC to develop an import terminal on the Kenai Peninsula. That terminal would be located at a site envisioned for the export end of the proposed trans-Alaska natural gas pipeline.
That import project isn’t expected to become operational until the end of 2029, however. That’s beyond the end of most Southcentral utilities’ natural gas contracts with Hilcorp, the current No. 1 supplier.
A trans-Alaska natural gas pipeline isn’t expected to become operational until 2031 at the earliest, and that project still lacks firm financing.
Kenai Peninsula Borough Mayor Peter Micciche said timing isn’t the only thing to consider — price for the consumer is also a factor. Until both the Enstar and Harvest facilities — and AKLNG — go through engineering studies, there won’t be any estimates on how much their gas will cost. Global markets will also be a factor.
“I’m going to hold off until I see their determinations on a cost structure. … One of them will rise to the top,” he said.
Sen. Cathy Giessel, R-Anchorage, said she has concerns about Alaska’s increasing reliance on Hilcorp.
“It feels like we’re being dominated by one company. It’s concerning,” she said.
Giessel said she’s also concerned by the fact that Chugach appears to have broken away from working with other utilities collaboratively.
Rep. Cathy Tilton, R-Wasilla, said that Alaskans would prefer to drill for their own natural gas, but there is no alternative to imports in the short term.
“I would love to come out and say we will have no imported gas. We feel that way and the public feels that way,” Tilton said. “But, we have to look at short-term, mid-term and long-term solutions, and if, unfortunately, we have to bring something in in the short term, that might be what we have to do to get us to a mid-term and long-term solution.”
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