The Alaska Journal of Commerce and the Alaska State Chamber of Commerce organized a lunchtime panel of experts to provide details about the coordinated emergency response plan in place to keep natural gas flowing for heating and electricity on the coldest days this winter.

Panel members were Kurt Gibson, Department of Natural Resources; Jim Posey, Municipal Light and Power; Tony Izzo, energy consultant; Carri Lockhart, Marathon Oil; Colleen Starring, Enstar Natural Gas Co.; Phil Steyer, Chugach Electric Association; and Dan Sullivan, Mayor of Anchorage. Dan Fagan moderated the forum at the Dena'ina Civic and Convention Center Nov. 5.

After Jeff Jones, Alaska Journal's publisher, began the forum by explaining its purpose and panelists introduced themselves, Izzo presented an overview of the near- and long-term challenges associated with meeting the region's natural gas needs.

Natural gas is the source for 60 percent of the region's heat and 90 percent of its electrical generation, he said.

More deliverability is needed in the system now to meet demand on the coldest days, and within the next 10 years, Izzo said more natural gas is needed to meet the region's anticipated annual demand.

It is important to understand the difference between supply and deliverability: Supply is the gas in the well. Deliverability is the amount of gas that can be produced and is "available" to meet daily demand.

Projects like a proposed bullet or spur line can't happen fast enough to solve the near-term deliverability needs for more natural gas on peak days, Izzo said.

Marathon Oil's Lockhart said the fastest way to bring more gas to market is by exploring and developing Cook Inlet, which geologists say is underexplored.

She said there is little incentive for producers to explore Cook Inlet because producers have no guaranteed market or pricing mechanism.

"I agree with Tony and Kurt; there are opportunities in Cook Inlet. But who is willing to go and get it if you can't monetize it?" Lockhart asked.

In case of emergency

Steyer, from Chugach Electric, explained the three-step plan that has been in place the past several years to deliver gas on winter's coldest days when demand exceeds deliverability.

On most days, the natural gas system can meet its daily demand of 90 million cubic feet, he said. But danger lurks if a compressor fails during a string of minus 10-degree or colder days, when daily demand for natural gas quadruples.

The system's maximum daily deliverability is 440 mmcf, counting 60 mmcf that's held in producers' storage systems and requires compressors to deliver.

Step one of the emergency plan diverts all of the natural gas from the Nikiski LNG plant, and some gas from Chugach, ML&P and Enstar. So far, this step has been sufficient to increase deliverability briefly to meet demand on the coldest days.

Step two asks customers to reduce usage through weatherization, turning off surplus lights, using the microwave instead of the stove for cooking and lowering thermostats.

Anchorage Mayor Sullivan said an October test produced voluntary public reductions of 2 percent to 4 percent usage.

Step three diverts natural gas from power plants at 30-minute intervals, essentially shut-offs.

"It's important for customers to understand that rolling brown outs are the last resort," Styer said.

Sullivan said if the natural gas system does go down for an extended period beyond the 30 minutes homes would have to be restarted one by one. "That is the worst case: People could be without heat for days or weeks."

However, panelists agree that the system isn't likely to fail this winter.

Posey said ML&P, which owns one-third of the Beluga River gas field, has made significant investments to reduce the likelihood of a system failure. Other partners, such as the state, also have invested heavily to help people retrofit their homes to use less energy, he said.

Panelists mentioned several projects on the horizon that will add new gas to the system, including:

RCA approved a new contract Nov. 5 between Anchor Point Energy and Enstar for up to 10 billion cubic feet of natural gas beginning in Jan. 1, 2011.

Chugach and ML&P are partnering on a new gas plant that would use less gas to produce a kilowatt hour of electricity.

Marathon Oil and Chevron Corp. have installed gas storage facilities, and Enstar is working on a project with TransCanada subsidiary ANR Storage Co. to build more natural gas storage in Southcentral.

Cook Inlet Region Inc. is planning Fire Island wind and Beluga coal gasification projects that would generate electricity without using natural gas.