Alaska Produces a Ton of Gas. Soon, Its Biggest City Might Not Have Enough.
Visuals by Nathaniel Wilder
Reporting from Anchorage and a natural gas production platform in Alaska’s Cook Inlet
For almost as long as it has been a state, Alaska has been powered by the natural gas buried beneath Cook Inlet, an estuary on its southern coast.
The gas used to be so plentiful that Alaska not only used it to heat homes and make electricity, it shipped tankers of the fuel overseas.
Now, most of the drilling companies have gone, and the Cook Inlet gas is dwindling. Officials expect that, in the next several years, they may not have enough of the fuel to keep all the lights on in Anchorage, the state’s biggest city.
Any shortfall would most likely come in the dead of winter, when temperatures routinely fall below zero. First, the utilities would ask people to turn down their thermostats and put off washing clothes. Then, darkness. Temporary power shut-offs would envelop one neighborhood, then another. If that still were not enough, businesses would be forced to go without gas.
The prospect of running short on energy would be daunting anywhere, but it is a particularly bitter pill in Alaska, which has built its economy on oil and gas.
Alaska still produces a lot of gas. The problem is that most of it is being harvested some 800 miles away from Anchorage, from a remote slice of Arctic tundra called the North Slope; currently there is no pipeline to transport it to Anchorage.
How one of the most energy-rich states found itself on the precipice of a gas crisis is in some ways a uniquely Alaskan story. Anchorage is an isolated city of fewer than 300,000, defined by the water and mountains that surround it. Many solutions that might make sense in bigger, more connected places are not feasible here.
It has not helped that there is no single plan to address the state’s impending shortfall.
Gov. Mike Dunleavy, a Republican, is backing a plan for a giant pipeline from the North Slope. But, he said in an interview, the state could switch to coal, which it has a lot of, if the pipeline doesn’t pan out.
The local utilities agree they will most likely need to buy gas from overseas, at least for a while, but are pursuing different import projects.
At its core, though, Alaska’s predicament is a reminder of the economic risks inherent to building energy systems around fossil fuels, as the Trump administration is urging the United States and its trading partners to continue doing. Local supplies can run low. And when they do, energy costs often rise.
“All of these resources — oil and gas, coal — are finite,” said Chris Rose, founder of the nonprofit Renewable Energy Alaska Project. “The volatility that the Anchorage area is about to see when we start importing gas is going to startle people.”
‘A Crisis Coming’
Anchorage is already an expensive place to live, partly because of energy costs. As of 2023, utility bills in the metro area were 6.7 percent higher than the national average, according to the U.S. Bureau of Economic Analysis.
Utilities are preparing to buy fuel from other countries starting around 2028, and have estimated that importing gas could cause electricity and heating costs to rise between 10 and 40 percent.
“It’s rather daunting when you’re looking at the price of everything else living here,” said Friederike Cook, 61, a retired state employee.
Ms. Cook lives on a pension of about $4,000 a month from her former job as a manager for Alaska’s Department of Revenue, plus her fiancé’s wages as a sanitation worker. She tracks her utility bills closely, particularly when the nights are long and bitterly cold. Last winter was relatively warm, and even so, it cost more than $500 to heat and power her 2,000-square-foot home in January, she said.
“It’s a frustrating situation,” Ms. Cook said. “You know there’s a crisis coming.”
There have already been close calls, most recently last year, when glitches in the gas storage system meant the region almost ran short. As January turned to February, the temperature plunged some 18 degrees below zero, unseasonably cold. The utilities eked by, but not before the governor called a military base — the one where President Trump recently met President Vladimir V. Putin of Russia — to ask it to conserve gas.
“It was extremely close,” John Sims, president of Enstar Natural Gas, a utility that supplies the city, later told state lawmakers.
Officials have been warning for more than 15 years that Cook Inlet’s supplies were running low. But for a variety of reasons — inertia and the belief that gas producers would figure something out, as they always had — utilities continued to invest in the fuel.
It became clear three years ago just how pressing the problem had become. Hilcorp Energy of Houston, which produces most of the Cook Inlet’s gas, convened Mr. Sims and his counterparts at other utilities in a conference room in midtown Anchorage. Hilcorp could not guarantee future gas supplies at the same levels, company executives told them. Once its deals with the region’s two largest electric cooperatives expired in March 2028, the utilities would need to secure energy elsewhere. Enstar, the gas utility, had until 2033.
The Gas Line
Of all of the proposed solutions to Anchorage’s energy problem, none has captured political imaginations quite like a decades-old idea of building an 800-mile pipeline from the North Slope.
The concept dates to at least the 1970s, when companies banded together to build an oil pipeline to Valdez, a town east of Anchorage that would become famous for the oil Exxon spilled nearby in 1989.
Jeff Lowenfels, a retired lawyer, is among those who tried to do something similar for natural gas. At home in Anchorage this summer, he unfolded an oversize brochure for that project, printed sometime in the 1990s.
That proposed pipeline, the brochure said, would “transport Alaska’s immense North Slope natural gas reserves” to “customers — primarily very large electric and gas utilities — in Japan, South Korea and the Republic of China on Taiwan.”
For Mr. Lowenfels, seeing the idea of a pipeline pick up steam yet again “is like Groundhog Day. Groundhog Day in the truest sense of the word.”
The pipeline remains unbuilt, though no less tantalizing.
Among those fond of such a project is Mr. Trump, who boasted earlier this year that his administration was “working on a gigantic natural gas pipeline in Alaska, among the largest in the world.” A White House spokeswoman, Taylor Rogers, later said Mr. Trump had also prioritized the project in trade negotiations.
The concept is simple: Move North Slope gas south, use some of it to supply Anchorage and sell the rest to Asia.
Today’s iteration is called Alaska L.N.G., short for liquefied natural gas (the form the fuel takes when it is shipped overseas).
Glenfarne, the project’s lead developer, aims to decide by early next year whether to move forward with the pipeline portion, said Brendan Duval, the company’s chief executive.
“We have every star aligned from the federal government,” Mr. Duval said. “We’ll have gas flowing in 2029.”
Wood Mackenzie, an energy consulting firm that studied the project before Glenfarne took it over, said at the time that 2031 would be more realistic.
The hope is that if Glenfarne can sell gas to customers in places like Taiwan and Japan, it will be able to deliver fuel to Anchorage for less than what utilities pay now for Cook Inlet gas.
A lot would have to go right first.
Even if the developer can get gas flowing by 2029, the region may be out of time by then, with the electric utilities’ gas contracts expiring in 2028.
“While I’m really optimistic, cautiously, that this will happen, I can’t just put that on my chart, my timeline, and say, ‘Problem solved,’” said Tony Izzo, who leads the region’s second-largest electric cooperative, the Matanuska Electric Association.
‘A Fickle Market’
Piping gas from the North Slope is not the only way for Anchorage to get the energy it needs. But other options face similar challenges: The city is small, meaning there is not enough demand to justify big investments. And it is remote.
Think about it this way: If New York City uses less gas than expected, companies can send the excess to nearby cities that might need it, or put it back underground for later. Anchorage needs only so much gas, and any extra has few places to go.
“It’s a fickle market,” said John Hendrix. At 68, with tanned skin and the kind of loud hometown pride that some here think suggests he may run for political office, Mr. Hendrix is part of a dying breed of Alaskan oilmen.
Cook Inlet’s oil output had already peaked by the time Mr. Hendrix got his start in the industry in 1980. But the region, which extends some 200 miles inland from the Gulf of Alaska, cradled between snow-capped mountain ranges, remained hot for many years.
While there is still gas here, retrieving it is expected to be increasingly expensive, possibly much more so than bringing in gas from another country like Canada. That is because companies have already extracted the most accessible fuel.
In a sign of how unattractive the inlet has become, Hilcorp has been the lone bidder in the state’s recent lease sales.
Mr. Hendrix is one of the few stepping into the void. He bought a local gas producer out of bankruptcy in 2020, a gamble partly inspired by his son, a professional poker player. The scarcity has allowed him to raise prices: With Hilcorp pulling back, his company, HEX, has charged Enstar about 50 percent more than what the utility pays Hilcorp, records show.
“We’re trying to do big things in a world that most major companies don’t even want to invest money in,” said Mr. Hendrix, whose company drilled two new wells this year.
From a multistory production platform about 15 miles offshore, those tendrils descend more than 9,000 feet through brackish water and beyond. They are targeting the gas trapped in layers of sandstone deposited three million to 12 million years ago.
HEX now generates around 14 percent of the Cook Inlet’s daily output. Within three years, Mr. Hendrix thinks he can fulfill as much as a quarter of the region’s gas needs.
But he is wary of committing to contracts that would penalize him for not hitting production targets. As a result, the utilities are not sure they can count on him.
‘We Didn’t Need to Be Here’
With a projected energy shortfall just a few years away, it is too late for alternatives to natural gas to really take hold. The fuel heats most of the homes here and generates most of the electricity, too.
Water is plentiful, and Alaska has flirted with harnessing more of it to make electricity, but such projects would take years or decades to build. Wind and solar power, which are nascent here, are facing new obstacles from the federal government.
Residents who can afford to are hedging against the risk of rising energy costs by installing solar panels at home or, like Dusty Reed, signing up for Alaska’s first community solar program.
Mr. Reed, 34, and his partner will pay $27.63 a month to rent three solar panels. The electricity from those panels will offset whatever the couple use in the single-story home they rent in Anchorage.
“We don’t think we’re going to save money right now, but even so we’re happy to support it,” said Mr. Reed, who works for an arborist. If electricity gets more expensive, “it may work out to save us money,” he said.
But for the region as a whole, nearly everyone agreed that the most politically unpalatable option — importing gas — is most likely the only practical short-term solution. (A federal law known as the Jones Act effectively blocks Alaska from buying gas from elsewhere in the United States.)
That is about where the consensus ends.
To get L.N.G. off tankers, Alaska will need an import terminal. Enstar is backing a terminal that Glenfarne, the Alaska L.N.G. developer, hopes to build. Chugach Electric Association, the power company that serves most of Anchorage, is in talks with a Hilcorp affiliate about another terminal proposal. In case neither pans out in time, Matanuska is preparing to burn diesel, which it could source in-state but would cost about three times as much as gas and pollute more.
Whichever import project wins out — if one does — the utilities face a trade-off: They can sign shorter, likely more expensive contracts that let them shift to alternatives like renewable energy or gas from Mr. Hendrix’s company. (Hilcorp also said it would continue producing gas locally.) Or they can lock themselves into cheaper, longer-term deals and limit their options for years.
The governor said that if the gas line fell through, rather than relying on imports long term, “we would begin the process of fast-tracking coal plants.”
Coal, however, could feasibly replace only the portion of the gas that is used for electricity.
Whichever way Anchorage goes, energy prices will almost certainly rise, at least for a while. Alaska waited too long to confront a known risk.
“An energy-rich state that has self-imposed an energy crisis,” said Mr. Izzo, the Matanuska executive. “We didn’t need to be here.”
Rebecca F. Elliott covers energy for The Times.
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