Alaska DNR favors Enstar for Kenai gas storage lease

The Alaska Department of Natural Resources (DNR) has issued a preliminary finding favoring Enstar Natural Gas Co. over Hilcorp to develop an underground storage facility in the Kenai Loop Gas Field. The project aims to repurpose the aging field to serve as a reservoir for Southcentral Alaska’s winter fuel supplies.

Division of Oil and Gas director Hakley Paine determined that Enstar’s proposal provided a more thoroughly documented approach to converting the depleted reservoir compared to Hilcorp’s application, which reportedly supplied only about one-quarter of the requested technical information. Enstar’s plan involves a regulated facility capable of accommodating gas from multiple suppliers across approximately 500 acres of state-owned subsurface space.

The estimated project cost is $240 million, though Enstar still faces questions regarding financing and necessary approvals. The development is intended to address tightening natural gas supplies in the Cook Inlet region, where production has struggled to meet winter demand for heating and electricity generation by the Homer Electric Association.