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Vol. 15, No. 31 Week of August 01, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

CINGSA applies to RCA

Semco forms joint venture with MidAmerican to develop Kenai gas storage facility

Alan Bailey

Petroleum News

With gas utility Enstar Natural Gas Co. wanting to be able to use a planned new gas storage facility on Alaska’s Kenai Peninsula by the summer of 2012, to avert Southcentral Alaska gas deliverability shortfalls during the following winter, the race is on to fast track the Kenai gas storage development.

In a recent flurry of activity, Semco Energy, Enstar’s parent company, and MidAmerican Energy Holdings Co. announced July 28 that they have formed a joint venture to develop the facility and that the joint venture has filed for a certificate with the Regulatory Commission of Alaska. And on July 26 the Alaska Department of Natural Resources issued a notice requesting public comments on its proposal to issue a gas storage lease, a land surface lease, a pipeline easement and land classification orders for the facility.

Semco has said that RCA approval of the project is needed by December, before construction of the facility starts in 2011, to meet the summer 2012 target to bring the facility on line.

Bought work package

TransCanada subsidiary, ANR Pipeline Co., had been working with Semco to build and operate the facility in the Sterling C sands of the Cannery Loop gas field, on the south side of the city of Kenai. But in April, under the terms of a memorandum of understanding with TransCanada, Semco bought out the work package for the project, retaining the name of Cook Inlet Natural Gas Storage, or CINGS, for the company that is building the facility and making CINGS a Semco subsidiary. That Semco subsidiary has now become a joint venture between Semco and MidAmerican under a new name: Cook Inlet Natural Gas Storage Alaska, or CINGSA.

“We are excited to be part of a project to provide improved gas deliverability to the customers in Southcentral Alaska,” said Mark Hewett, president of MidAmerican Energy Pipeline Group, MidAmerican’s natural gas subsidiaries. “This storage facility is an important transaction for MidAmerican Energy Holdings Company and to the ongoing development of energy infrastructure by the MidAmerican companies. We look forward to working closely with our partner to successfully develop this project.”

Semco CEO and President George Schreiber said that CINGSA will prove important to Enstar and the Cook Inlet electric utilities as a factor in enabling the utilities to meet their customers’ needs, especially when gas demand is high during the winter.

“This facility represents a significant commitment by Semco and MidAmerican,” Schreiber said. “For Semco, this investment nearly doubles the size of our business in Alaska.”

The CINGSA project will require an investment of $180 million, Semco and MidAmerican said.

Preliminary surface lease

The July 26 DNR notice says that the Division of Mining Land and Water has published a preliminary decision to issue a seven-acre surface lease with an associated pipeline easement, as part of the package of permits and leases that DNR is processing. The project is also being reviewed for consistency with the Alaska Coastal Management Program. Comments on the DNR package must be submitted by Aug. 24, DNR says.

The design of the new facility involves drilling five wells on a 5.9-acre pad on state land, for the injection and withdrawal of stored gas. A 16-inch pipeline will connect the wells to a neighboring gas compression and conditioning facility on 7.5 acres of land purchased from the University of Alaska. A 20-inch buried pipeline will carry gas between the facility and the nearby Kenai Nikiski pipeline on the Southcentral Alaska gas pipeline network.

The facility will provide gas storage services to third party customers. The RCA certificate application lists Enstar, Chugach Electric Association and Municipal Light & Power as initial customers, with Enstar using 70 percent of the initial storage capacity, Semco and MidAmerican said.

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