Alaska Backs Enstar Lease for Kenai Gas Storage

The state issued a preliminary finding favoring Enstar Natural Gas to repurpose the Kenai Loop field for storage.

Updated on Oct. 22, 2026 in Oil and Gas

Isometric editorial illustration of an industrial gas storage facility set against a minimalist, snow-covered Alaskan landscape. — The Alaska Division of Oil and Gas has issued a preliminary finding supporting Enstar Natural Gas's proposal to repurpose the Kenai Loop field for energy storage. AI Illustration. Upload story photo >

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The Alaska Division of Oil and Gas has issued a preliminary finding supporting a lease for Enstar Natural Gas to convert the Kenai Loop gas field into a storage facility. This project aims to address declining gas production in the Cook Inlet basin and secure capacity for winter heating demand.

Why it matters

Securing this storage capacity is essential for managing regional energy demand profiles, especially as gas production in the Cook Inlet basin continues to decline. Enstar needs a formal determination of prudency from regulators to finalize necessary project financing.

The proposed investment in the Kenai Loop facility totals $240 million. State regulators noted that Enstar provided more robust technical information for its application compared to a competing proposal from Hilcorp Cook Inlet.

The players

Enstar Natural Gas Co.

This natural gas utility company is seeking to expand storage capacity in Alaska to stabilize regional energy supplies.

Alaska Division of Oil and Gas

This state agency is responsible for the management and leasing of Alaska's oil and gas resources.

Regulatory Commission of Alaska

This state body regulates public utilities and is currently reviewing the prudency of the proposed investment.

Hilcorp Cook Inlet

This energy company submitted a competing application to use the Kenai Loop reservoir for gas storage.

AIX Energy LLC

This entity entered a purchase and sale agreement to transfer the Kenai Loop field to Enstar.

The details

Enstar plans to utilize the depleted Upper Tyonek Pool reservoir along with existing oil field facilities for the storage project. The company has already entered into a purchase and sale agreement with AIX Energy LLC to acquire the Kenai Loop field.

October 22, 2026: The state issued its preliminary lease finding for the facility.

Market Landscape

This project represents a critical shift in the Cook Inlet energy market as regional production wanes and infrastructure needs evolve. It underscores the competitive scramble between energy firms to control essential storage assets in a basin facing long-term supply constraints.

Residents in the region may see more reliable heating fuel availability as the project aims to stabilize supply during high-demand winter months. Consumers should monitor upcoming regulatory commission updates, as the project's financial approval will directly influence the facility's construction timeline.

The takeaway

Reliable winter energy depends heavily on expanding storage capacity to offset the ongoing decline in regional gas extraction. Future energy stability will increasingly require upgrading older reservoirs to store reserves for peak demand periods.