Enstar buying ANR Pipeline out of CINGS

Local gas distribution firm couldn’t reach commercial agreement with TransCanada subsidiary; will go it alone on gas storage

Kristen Nelson

Petroleum News

Enstar Natural Gas Co. began working with Houston-based ANR Pipeline Co. last year to develop gas storage in Cook Inlet. Enstar and ANR, a subsidiary of TransCanada, were to make a final decision by the end of last year on whether to proceed with construction of a storage facility.

By early April, however, the companies had been unable to reach commercial agreement and Enstar exercised its option to buy the assets and work product developed under CINGS, Cook Inlet Natural Gas Storage LLC. CINGS was the entity formed by ANR for the Southcentral storage project.

Some gas storage exists in Cook Inlet, but it is proprietary storage, owned and operated by natural gas producers and used by them to manage gas deliverability between low-volume needs for heating and electricity in the summer, and high-volume needs in the winter.

John Sims, corporate communications and customer service manager for Enstar, told the Senate Resources Committee April 5 that Enstar has “notified TransCanada that we would like to exercise our option to purchase the asset and work product” of Cook Inlet Natural Gas Storage.

He said Enstar wasn’t “able to reach an agreement on commercial terms” with TransCanada, “but it is our job and we’re going to move forward with the project and hopefully have storage here in the near term.”

Sims said 2012 is the target date to have storage under way. He said 2012 has been identified as the earliest date that the project could be under way.

Sims told Finance Resources Co-Chair Bill Wielechowski, D-Anchorage, that he couldn’t speak to any specifics such as the size of the facility because while Enstar has “notified TransCanada we would like to exercise our option to purchase the assets and work product, we haven’t actually seen those documents yet, so I can’t get into specifics as to their project until that transition takes place.”

Sims told Petroleum News that he couldn’t talk about why the companies couldn’t reach commercial agreement but said Enstar exercised its option to purchase the assets and work product the week ending April 2.

He said TransCanada is going to work to ensure a smooth transition and Enstar will be moving forward and completing the storage project.

When Enstar discussed the project with Petroleum News in August the company said ANR would fund, build and operate the facility and Enstar would pay for storage space. At that time the company discussed an underground gas storage facility with an eventual capacity of up to 15 billion cubic feet.