The disparity between oil and gas operators, utilities, and the state government towards Cook Inlet natural gas volumes leaves residents of Southcentral Alaska caught between the expiring gas contracts and the higher costs of imported liquefied natural gas (LNG). Current prices for Cook Inlet gas hover around $8 per thousand cubic feet (Mcf), according to data from the November 2024 Wood MacKenzie analysis, providing a stable and relatively affordable source for heating and electricity. However, with Railbelt utility gas contracts expiring and utilities diversifying towards renewables, importing LNG could push prices to $12-$14 per Mcf, an increase that would burden households with higher bills.
Alaska vs. The Lower 48: Residential Gas Prices
The distinction between Henry Hub (the U.S. benchmark wholesale price at about $5.07/Mcf) and Cook Inlet prices highlights Alaska’s isolation from the Lower 48 pipeline network. Henry Hub drives commodity costs nationwide but Alaska’s local market keeps residential rates lower at $15.38/Mcf in September 2025, per EIA data. This contrasts with the U.S. average of $24.56/Mcf. Electric power prices, which utilities pass on for gas-fired generation, mirror wholesale trends more closely; in the Lower 48, they’re often near Henry Hub levels, while Alaska’s could rise with imports, straining the customers.
Compared to other states, Alaska ranks fifth lowest in residential gas prices, behind New Mexico ($5.73), Utah ($12.09), Idaho ($12.49), and Montana ($14.33). Texas stands at $33.22 and New York at $26.67— illustrating how southern states face higher markups from distribution and demand.
The LNG Project as Path to Relief
The proposed Alaska Gasline and LNG project provides a path to relief but is still years away. Phase 1, an 800-mile pipeline from the North Slope, is projected to deliver gas at $11.62/Mcf by 2031, competitive with imports at $10.59-$14.24, while the full project drops to $2.31/Mcf, potentially yielding billions in savings.
The majority of the value in the Gasline will come from exporting LNG where a fraction of the total volume has been allocated for instate use. The Trump and Dunleavy administrations have secured various letters of intent and agreements from the governments of Japan, Taiwan, Thailand, and others totaling half of the projects expected gas volume.
Director of Division of Oil and Gas Speaks on the Cook Inlet Resource Management
At the 2025 Resource Development Council Conference, Derek Nottingham, Director of the Division of Oil and Gas, shared a volume forecast of Cook Inlet as recent as July 2025.
Nottingham was enthusiastic when describing how operators in the Cook Inlet are optimizing drilling programs and bringing forward new gas wells in fields where they know there are good gas targets, like the Beluga River field.
“We know there are big, undeveloped gas resources in the Cook Inlet,” Nottingham stated, “this represents the current view of what we have right now which is new gas being brought online in the Kitchen Lights Unit (KLU). Excess gas now has the potential to be stored for the future to curb annual decline and have gas available for use.”
When discussing the demand gap, Nottingham made a point to illustrate that if a renewable project could reduce the electric demand by 10% every other year, roughly equal to 2.5-3BCF per year, it only reduces the electrical demand 25BCF in the next decade.
The main chart still reflects the outcome of the 2022 and 2023 studies where there is no drilling assumed in the Cook Inlet beyond 2030. A stark contrast, made evident by the fact that the operators have more than fulfilled the gap in supply with new wells planned to be drilled in the coming years. This should provide confidence to the utilities to come back to the table and secure new gas contracts to mitigate the risk of higher gas import costs.
“We are going to depend on natural gas in the Cook Inlet for a long time. We absolutely have to find new sources of that,” said Nottingham.
To date, neither Enstar nor the Railbelt electric utility co-ops have signed connection agreements with 8 Star LLC or AGDC for gas offtake from the proposed gas pipeline. This leaves Southcentral dependent on the Cook Inlet operators to continue innovating and bring new volumes to market as a firm alternative to importing LNG.
So, what’s the hold-up? Would it be faster to drill new or more in Cook Inlet or on the Slope? And if the Slope is faster, then can a well not be done before the pipeline goes in to supply Alaskans?
Are companies like Enstar pushing for local gas or not?
Some of us could just opt to burn more wood, coal, etc., I suppose, although that’s more pollutive than natural gas.
The holdup was Harris – Biden cancelling the lease sales in Cook Inlet for 4 solid years. It will take a while for new wells to be drilled following new lease sales. Cheers –
This is a producer issue. The LNG pipeline from slope isn’t economically viable. Marc can’t help but blaming Biden. Broken record.
There has been zero interest in federal Cook Inlet leasing and there will continue to be zero interest. The prime resources in terms of development costs are in State waters (3 miles from the coast). The cost of building a new offshore production platform will kill interest in federal leasing. Great dig though, but it’s Fake News—and I know you are actually well versed in oil and gas, so why the blatant misnomer?
I agree with the writing and wanted to inject that, as explained recently by one of the producers, Enstar and the South Central Alaska power providers are UTILITIES, regulated by the Utility Commission of Alaska. They are NOT allowed to directly contribute venture capital to explore and/or develop new gas resources.
The State of Alaska has also NOT reconsidered it’s withdrawal of supports or focused reduction in royalty or other production assessments for Cook Inlet production.
To support South Central Residents and Businesses long term, both the utilities AND the State of Alaska need to step-up to assist the exploration and development of new gas sources within Cook Inlet fields.
Dream on, to the author! Dream on!! Beating a dead fish again!!
Wow! The numbers just don’t add up for LNG advocates for Alaska! They are proposing a $11.62 price for mcf in 2031, which is substantially below the $15.32 mcf Alaska price currently. That’s great, but is it realistic after deducting financing costs, royalties, taxes and return to investors? Probably, not. But the real kicker supposedly comes when the complete infrastructure comes online – $2.31 mcf gas? C’mon now, that’s one third the price of the cheapest gas available right now in the Lower 48 according to the article! Sounds like a pump and dump PR campaign to me.
Read the actual study put out by Wood Mack, its publicly available. $2.31 is reachable, its just extremely unlikely and no one at Glenfarne is banking on that scenario. “Its no pump and dump PR” campaign. Your questions literally have answers in that report.
I’ll say it again there is no such thing as renewable energy.
Ice breaker LNG vessels is an answer to the problem.
A gas pipeline would be nice but the cost and permit delays its a long way off if ever.
every source of energy requires oil, even so called renewables.
how many car charges would it take if every body drove one, and the wonder of electricity has to come from somewhere and it starts with OIL.
And what port in Alaska can handle the supplies to build a pipeline, now that the railroad dock in Seward is no more.
The marginal price of Cook Inlet gas is new 2026 Furie contract with Enstar of $12.30 per Mcf. Therefore, imported LNG prices are already here. The only difference between imported LNG and North Slope gas via pipeline is that only one of those options has the potential for the price to dramatically go down over time.
Shipping LNG from the North Slope is the only way to make a profit.
By the time the Gasline is built and the infrastructure on the slope and in Nikiski are in place, $40 mcf would barely pay the investment.
While I’m at it, the only way to restore salmon in Upper & Lower Cook inlet will be to purchase as many Cook Inlet Drift and Set Net permits as owners are willing and place a fish trap at the mouth of the Kenai River. Those unwilling to sell their permits would be given the average of 5 or ten years’ catch of Sockeyes.
Doing this would preserve all salmon going to the rivers that are hurting and would also keep Kenai Kings from being intercepted within Cook Inlet.
An unfortunate photo.