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Vol. 18, No. 47 Week of November 24, 2013
Providing coverage of Alaska and northern Canada's oil and gas industry

CINGSA is ready

Southcentral utilities have stored sufficient natural gas to meet winter needs

Alan Bailey

Petroleum News

As temperatures drop and residents of Southcentral Alaska start to dust off their ski gear for the winter season, the Cook Inlet Natural Gas Storage Alaska facility, or CINGSA, on the Kenai Peninsula is brim full of gas, ready to ensure that winter gas supplies in the region can meet winter gas demand, keeping buildings heated and the lights on.

The storage facility’s three initial users — Enstar Natural Gas Co, Chugach Electric Association and Municipal Light & Power — have all confirmed to Petroleum News that they have succeeded in meeting their storage targets for the winter and that they have sufficient gas, both under contract and in storage, to meet their anticipated winter needs.

Homer Electric Association, whose contract with CINGSA activated Nov. 1 in support of the utility’s plan to start its own gas-fired power generation in 2014, began injecting its gas into the facility on Nov. 6 and anticipates having its contracted volume of gas in storage by the end of November, Homer Electric Public Relations Coordinator Joe Gallagher told Petroleum News in a Nov. 18 email.

High pressure

The process of storing summer gas in CINGSA for winter use may actually have been a little too successful. On Nov. 13 Colleen Starring, president of CINGSA, sent a letter to the Regulatory Commission of Alaska informing the commissioners that during a pre-winter shut in of the facility between Oct. 28 and Nov. 4 CINGSA had determined that the facility’s reservoir pressure exceeded its permitted level. Apparently CINGSA had notified the Alaska Oil and Gas Conservation Commission of the discrepancy. AOGCC has told CINGSA to use one of its wells for pressure monitoring and not to inject any further gas into the reservoir until the pressure has dropped to a level at or below 1,700 pounds per square inch, Starring’s letter says.

By contrast, at this time last year CINGSA had not fully met its storage goals for base gas, the gas used to maintain reservoir pressure, with the company saying that it had lost out to some of the demand for gas exported as liquefied natural gas to Japan from the Kenai Peninsula. Ultimately, relatively mild weather at times during the winter resulted in some periods when further gas could be injected into the CINGSA reservoir: The utilities successfully negotiated the winter without any gas shortages.

Plenty of gas

This year with the liquefied natural gas facility mothballed, there has been plenty of gas available from Cook Inlet gas fields during the summer, when utility gas demand is quite low.

Moira Smith, vice president and general counsel of Enstar Natural Gas Co., told Petroleum News on Nov. 15, that Enstar had easily been able to obtain all of the summer gas that it had planned to store.

“We did not have a difficult time at all getting the gas,” Smith said. “All of our firm gas suppliers performed as expected and we were within five percentage points of our storage plan all of the injection season.”

Although the utilities enjoyed a plentiful supply of gas during the summer, their contracted winter supplies from declining Cook Inlet gas fields are no longer sufficient to deliver gas rapidly enough to meet high needs during cold winter weather, when buildings need high levels of heating and power demand also increases. The utilities still have enough gas under contract to meet total annual demand and, were that demand to be constant year round, would be able to use gas directly from the gas fields. But, given the huge spike in demand during the winter, the utilities must store summer gas in CINGSA for winter use.

Withdrawals started

Smith said that Enstar had already started withdrawing gas from CINGSA in response to cold weather in early November.

“We’ve been withdrawing pretty significant amounts over the past couple of days,” Smith said. She said that a few days earlier, with Enstar’s customers burning gas at a rate of 140 million cubic feet per day, the utility had been pulling about 30 million cubic feet per day from storage. But this gas withdrawal was consistent with Enstar’s plan for CINGSA usage and the utility anticipates having enough gas to see it through the winter, she said.

At the end of the summer and fall injection period Enstar had stored 6.4 billion cubic feet of gas in CINGSA, a volume representing about one fifth of Enstar’s total demand for the year, Smith said.

“So we’re very comfortable with having that balance in there,” she said.

Winter injections

It is possible that, as last year, Enstar will add to its stored gas through further gas injections during periods of warm winter weather. But, given that excess stored gas remaining at the end of the winter represents a cost to Enstar’s customers, judging exactly how much gas to keep in storage is a tricky question, John Sims, Enstar’s director of business development, explained.

“So there’s an interesting accounting balance that goes on as well. That can be challenging at times,” Sims said.

Started spring 2012

CINGSA first went into operation in the spring of 2012, following an approximately one-year, fast-track construction project which ensured the facility’s ability to store gas during the summer of 2012 for use in the following winter. The winter of 2012-13 was the first winter in which the utilities faced a shortfall in gas deliverability. The storage facility, located to the immediate south of the city of Kenai, uses a depleted sand reservoir in the Cannery Loop gas field.

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