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NEWS BULLETIN

August 19, 2009 --- Vol. 15, No. 60August 2009

Enstar, TransCanada subsidiary working on gas storage facility

Faced with a slowly increasing natural gas demand accompanied by steadily declining Cook Inlet gas deliverability, Enstar Natural Gas Co. is working with Houston-based ANR Pipeline Co, a subsidiary of Calgary-based TransCanada, to establish a new Cook Inlet underground gas storage facility to alleviate a pending gas deliverability shortfall, John Lau, Enstar’s director of transmission operations, told Petroleum News Aug. 17.

The new facility will eventually have a capacity of up to 15 billion cubic feet.

The two companies plan to make a final decision by the end of this year on whether to proceed with construction of the facility, Lau said.

ANR would fund, build and operate the facility as a third-party operator, with Enstar and other utilities paying for storage space.

Enstar has been investigating gas storage options for about three years and had proposed establishing its own storage facilities as part of the terms of two gas supply contracts that the Regulatory Commission of Alaska rejected in 2008, he said. Subsequently, the utility has been considering options for storage that it now believes will be vital to the future of Southcentral utility gas supplies.

“Now we’re looking at what we need in four years, six years, eight years,” Lau said. “… The storage that’s implemented here in the next couple of years, it’ll be used in the Cook Inlet for decades to come.”

And the gas producers will likely need to continue to operate their own storage facilities, to enable them to accommodate utility demand swings under the terms of some gas supply contracts, he said.

Although it would typically take about 36 months to permit, construct and fill a new underground storage facility, Enstar has asked ANR to work out how to make a new facility available to Enstar for the winter of 2011/2012, Lau said.

Editor’s note: See full story in the next edition of Petroleum News, which will be available online at www.petroleumnews.com at noon Alaska-time, Friday, Aug. 21.

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