Alaska Selects Enstar for Kenai Loop Gas Storage Lease
State regulators named Enstar the preferred applicant for a new gas storage facility in the Cook Inlet region.
Updated on Oct. 15, 2026 in Oil and Gas
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The Alaska Division of Oil and Gas issued a preliminary finding awarding a gas storage lease at the Kenai Loop field to Enstar over competitor Hilcorp. Regulators determined that Enstar provided a more comprehensive plan for the site, which is intended to meet regional energy storage needs in the Cook Inlet.
Why it matters
This decision addresses an identified, immediate need for additional underground gas storage capacity in the Cook Inlet. The state favored Enstar because it demonstrated how to utilize existing infrastructure without causing unreasonable interference with the current oil and gas lessee.
Enstar proposes operating the field at a pressure of up to 5,395 pounds per square inch to achieve a peak withdrawal rate of 150 million standard cubic feet per day. The project would include reusing three existing production wells and potentially adding six more.
The players
Alaska Division of Oil and Gas
This state agency manages the leasing and development of oil and gas resources on state lands in Alaska.
Enstar
This energy company provides natural gas utility services to customers across southcentral Alaska.
Hilcorp
This private exploration and production company is a major operator of oil and gas assets in the Cook Inlet region.
The details
Enstar plans to utilize existing AIX Kenai Loop infrastructure and expand the facility with new compressors and buildings to support its operations. While Hilcorp also sought the lease, the Division of Oil and Gas noted Hilcorp failed to provide a contractual agreement to avoid interference with the existing lessee.
Timeline
October 13, 2026: Division of Oil and Gas issued preliminary lease finding.
November 13, 2026: Deadline for public comments on the preliminary finding.
Second half of 2027: Proposed start of Hilcorp drilling.
2028: Proposed start of Hilcorp surface facility construction.
Late 2028: Proposed start of Hilcorp commercial operations.
Market Landscape
This lease award fits into the broader trajectory of utility consolidation in the Cook Inlet by prioritizing companies that can leverage existing infrastructure. It positions Enstar to lead critical storage development while highlighting the state's preference for proposals that minimize conflict with current operators.
The development of additional gas storage capacity is designed to secure regional energy supplies for utility consumers in the Cook Inlet area. Residents and local businesses may see improved long-term energy reliability as the state moves to expand infrastructure at the Kenai Loop field.
The takeaway
The state's preference for infrastructure reuse suggests a focus on operational efficiency for future energy projects. Integrating new storage into existing sites can accelerate project timelines while minimizing the footprint of energy expansion.
What happens next
The public comment period for the preliminary lease finding remains open until November 13, 2026, which will precede any final regulatory decision on the contract.
Further reading
Find more information on state energy projects in the Alaska Oil and Gas section.
More information
View official updates regarding the lease process at the Division of Oil and Gas newsroom.
Source note: This article includes information reported by Petroleum News.
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