Alaska Awards Kenai Loop Gas Storage Lease to Enstar

The state's selection of a comprehensive storage plan aims to boost regional gas availability for area businesses.

Updated on Oct. 15, 2026 in Oil and Gas

Isometric editorial illustration of industrial steel gas wellheads and interconnected pipelines situated on a tundra, illustrating gas infrastructure storage. — The Alaska Division of Oil and Gas awarded a gas storage lease at the Kenai Loop field to Enstar, aiming to bolster regional supplies. AI Illustration. Upload story photo >

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The Alaska Division of Oil and Gas has issued a preliminary finding awarding a gas storage lease at the Kenai Loop field to Enstar. The decision favors Enstar over competitor Hilcorp, citing a more comprehensive proposal to address regional gas storage needs in Cook Inlet.

Why it matters

Operators in the region rely on stable gas supplies, and this move aims to address an identified immediate shortage of underground storage capacity. Enstar successfully secured the lead by demonstrating an existing infrastructure agreement that minimizes interference with current oil and gas production.

Enstar proposes a peak injection and withdrawal rate of 150 million standard cubic feet per day, significantly higher than Hilcorp’s proposed 20-30 million cubic feet. The state-evaluated plan includes 20.5 billion cubic feet of working gas volume and 8 billion cubic feet of cushion gas.

The players

Alaska Division of Oil and Gas

The state agency responsible for managing and leasing Alaska's mineral estate for energy production and storage.

Enstar

A natural gas utility provider focused on infrastructure development and storage solutions in the Cook Inlet region.

Hilcorp

A major independent oil and natural gas exploration and production company with significant operations in the Alaska market.

The details

Enstar’s winning proposal focuses on leveraging existing AIX infrastructure, including the reuse of three production wells and plans to add six more. The operator intends to achieve higher flow rates by recompleting existing wells with larger tubing sizes and operating at pressures up to 5,395 pounds per square inch. Unlike the competing Hilcorp bid, Enstar provided a contractual agreement to ensure the new storage operations do not disrupt the activities of the current field lessee.

October 13, 2026: The Division of Oil and Gas issued the preliminary lease finding.
November 13, 2026: Deadline for public comments on the preliminary finding.

Market Landscape

This decision highlights the state's ongoing effort to manage Alaska's state-managed mineral estate leasing regulations amid a tight supply environment. It follows a pattern of prioritizing infrastructure integration to accelerate storage availability in the Cook Inlet market.

Operators reliant on Cook Inlet energy supply should track the final lease approval as a signal for potential capacity expansion. Procurement managers should prepare for potential shifts in local gas availability timelines based on the progress of Enstar's storage development.

The takeaway

The state is prioritizing infrastructure efficiency to resolve immediate regional gas storage deficits. Operators should monitor the November 13 comment deadline for any further regulatory adjustments to the lease agreement terms.