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Need regulatory clarity CINGS wants to know if RCA will regulate new Cannery Loop gas storage facility Alan Bailey Petroleum News
Anxious to move forward with the development of a new natural gas storage facility in Alaska’s Cook Inlet basin, to support declining winter utility gas deliverability, on Dec. 21 TransCanada subsidiary Cook Inlet Natural Gas Storage petitioned the Regulatory Commission of Alaska to rule that the commission will not regulate the new storage facility. Enstar Natural Gas Co., the main Southcentral Alaska gas utility, has been working with CINGS to fast track the development of a new storage facility to head off what Enstar sees as a pending deliverability shortfall in the winter of 2011-12.
And CINGS now says that it plans to build the new 11 billion-cubic-foot facility using a depleted underground gas reservoir in the Cannery Loop unit, near Kenai on the northern Kenai Peninsula.
Critical step But both CINGS and Enstar see achieving regulatory clarity over the new facility as a critical early step in the aggressive two-year project timeline to bring the facility into operation. During a December RCA technical workshop on natural gas storage the companies expressed concern that any required regulatory approval for the facility would need to be in place prior to the 2010 summer construction season.
“CINGS respectfully requests a declaratory ruling on the threshold issue of commission jurisdiction in order to determine how to best move forward with the project in the most expeditious manner,” said CINGS attorney Tina Grovier in the company’s Dec. 21 petition. “CINGS does not want to presume it is unregulated only to later find out it needs to apply for a certificate of public convenience and necessity, nor does it want to apply for a certificate of public convenience and necessity only to have it dismissed for lack of commission jurisdiction.”
And in a separate motion for expedited consideration of the petition, Grovier requested that the commission issue a decision by Jan. 22.
On Dec. 24 RCA issued an order setting a schedule for considering CINGS’ petition and requiring CINGS to file a concise list of material facts relating to the case. The deadline for public comments on the petition is 4 p.m. Jan. 8, while the deadline for legal briefs is 4 p.m. Jan. 15. The statutory deadline for a final order in response to the petition is June 19, 2010, but the commission said that it will deal with the petition as expeditiously as possible.
“We understand CINGS’ interest in obtaining a timely decision on the question of our jurisdiction over its proposed facility and will endeavor to render a decision as soon as practicable, consistent with the protection of the interests of the public and interested persons,” RCA said.
Site specified The petition brings to an end some recent speculation over where CINGS might build its proposed gas storage facility.
“CINGS proposes to construct independent, third-party natural gas storage facilities in a nearly depleted natural gas reservoir in the Cannery Loop unit near Kenai, Alaska,” the petition says. “Once the project is operational, CINGS’ customers will be able to store pipeline quality natural gas they have purchased (also known as working gas) in the reservoir until needed, most notably to meet peak Alaskan demands in the winter.”
To establish adequate reservoir pressure in the facility CINGS will purchase gas to supplement any gas that remains in the depleted Cannery Loop reservoir. The company anticipates that the facility will then be able to store up to 11 billion cubic feet of working gas, with gas injection and withdrawal rates maxing out at 150 million cubic feet per day.
CINGS anticipates drilling new injection and withdrawal wells into the facility reservoir, and the facility infrastructure will include a compressor station, gas dehydration units, gas withdrawal heating elements and gas measurement equipment. Pipelines will connect facility wells to the compression station via a 1,350-foot-long, 2,200-pound-per-square-inch common gathering header.
Enstar subsidiary Alaska Pipeline Co. will build and operate a pipeline that will connect the storage facility to gas transmission pipelines on the Kenai Peninsula, the petition says.
In the December RCA workshop CINGS said that a customer that wants to store gas in the new facility would have to pay fees based on the amount of storage capacity that the customer reserves and the rate at which the gas needs to be delivered from the facility. And customers will be entirely responsible for the transportation of their gas to and from the gas storage facility boundary through Alaska Pipeline Co.’s new pipeline, the petition to RCA says.
Clear demarcation That clear demarcation point between the boundary of the storage facility and the pipeline that transports gas to and from the facility forms the basis of CINGS’ claim that RCA does not have jurisdiction over the facility. Because customers’ gas for storage will be delivered and later picked up at the same facility boundary, CINGS will not transmit or distribute gas to the public, the petition says. So, under state statutes, CINGS will not be a regulated utility, it says.
And because the facility itself is not a pipeline CINGS should not be regulated as a pipeline carrier either, the petition says.
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