Five Kenai Peninsula Borough mayors have joined a coalition of other Southcentral mayors that aims to assess how to meet the region’s energy needs as customers in Alaska Railbelt communities face a potential shortage of natural gas supply in Cook Inlet.
The group, called the Southcentral Mayors’ Energy Coalition, was started by Anchorage Mayor Dave Bronson and includes Kenai Peninsula Borough Mayor Peter Micciche, Soldotna Mayor Paul Whitney, Kenai Mayor Brian Gabriel, Homer Mayor Ken Castner and Seward Mayor Sue McClure. Other members include Matanuska-Susitna Borough Mayor Edna DeVries, Wasilla Mayor Glenda Ledford and Palmer Mayor Steve Carrington.
In a press release announcing the coalition, Bronson said the group “will consider the energy needs of Southcentral Alaska and explore options to meet those needs, while assessing costs and the availability of natural resources.” The goal of the group, Bronson’s office said, is to maintain close communication between member communities, utility companies and state lawmakers.
The move comes as the Southcentral region grapples with a potential energy shortage.
The Alaska Department of Natural Resources in January reported demand for Cook Inlet gas could outpace supply as early as 2027 without additional development in the basin’s active fields.
As a way to incentivize new operations in the inlet, Gov. Mike Dunleavy in October announced his plans to introduce legislation that would lower the state’s royalty rate for oil and gas companies operating in the area. Dunleavy said during a press conference announcing the proposed legislation that new development would come online within the next two to three years if lawmakers pass his proposal this session.
The Alaska Department of Natural Resources earlier this month celebrated what it called “promising” results from the state’s most recent oil and gas lease sale, as part of which the state offered royalty-free leases.
The sale made available, across 832 tracts, 3.3 million acres of state-owned land in Cook Inlet. A preliminary sale summary released Dec. 13 showed that six tracts, covering about 15,000 acres, drew six bids — three from Hilcorp Alaska, LLC and three from HEX, LLC.
Hilcorp accounts for about 85% of gas production and about 78% of oil production in Cook Inlet, and during last year’s state lease sale was the only company to bid on Cook Inlet tracts. HEX, LLC is also an existing operator in Cook Inlet.
“It’s also promising to see two Alaska-focused companies pick up new, highly competitive Cook Inlet leases – but the lack of large new bidders or positions emphasizes the need for Alaska to take action to stimulate more natural gas production in the Inlet,” Dunleavy is quoted as saying in a press release announcing the results of the lease sale.
Because the state offered royalty-free leases for its 2023 sale in Cook Inlet, the Alaska Department of Natural Resources cautioned against comparing 2023 results to those from other years.
Micciche during a Dec. 12 meeting of the Kenai Peninsula Borough Assembly said he had joined the mayors’ coalition and called a lack of energy and the high cost of energy in Alaska “an obstacle to economic development.”
“Our goal is to work with the utilities, the agencies and the industry on short-term, mid-term and long-term solutions to the energy issue facing Southcentral,” Micciche said. “ … We are a couple of years away from impacts that are pretty negative, we’re three or four years away from potentially having significant impacts, and our job collectively is to avoid those impacts.”
Gabriel read for Kenai City Council members last week the group’s mission statement and said members are expected to meet next in mid-January.
“Once I did get a little background on what they were trying to do, it looked like it was something that we should be involved with because there is going to be an issue with Cook Inlet gas here,” he said. “It’s on the horizon.”
Reach reporter Ashlyn O’Hara at ashlyn.ohara@peninsulaclarion.com.
