Vol. 27, No.4 Week of January 23, 2022
Providing coverage of Alaska and northern Canada's oil and gas industry

Demand soars in winter

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Enstar says storage necessary to meet Southcentral peak natural gas needs

Alan Bailey

for Petroleum News

In a Jan. 12 presentation to the Regulatory Commission of Alaska, executives from Southcentral gas utility Enstar Natural Gas Co. described how the utility succeeds in supporting peak gas demand during severe cold winter weather such as in November and early December of last year. A high proportion of buildings in Southcentral, including commercial and domestic properties, use natural gas for heating. And, in addition to the gas that Enstar delivers for this purpose, electric utilities use gas-fired power stations as their primary means of generating electricity. Thus, gas supplies are critical to the wellbeing of residents and businesses in the region. And all of that gas originates from gas and oil fields in the Cook Inlet basin.

Enstar President John Sims told the commission that in 2021, in its 60th year, Enstar had delivered a record volume of more than 35 billion cubic feet of gas.

The need for gas storage

While in the early days of the Southcentral gas industry there was more than enough gas deliverability to support maximum demand, gas production capabilities from the Cook Inlet declined significantly, as major fields matured. Around 2010, when it became evident that peak gas deliverability would fall below peak winter demand within the next few years, plans moved forward for the construction of a major subsurface gas storage facility, south of Kenai on the Kenai Peninsula. The facility, known as Cook Inlet Natural Gas Storage Alaska, or CINGSA, went into operation in April 2012.

The Enstar presentation demonstrated the vital importance of gas storage, CINGSA in particular, to the continuing reliability of winter gas supplies in Southcentral. Essentially, Enstar feeds gas to fill its allotted capacity assignment in CINGSA during the summer, when gas demand is relatively low. The utility can then withdraw gas from CINGSA during periods of peak winter demand, to meet the utilityís peak deliverability needs.

November 2021 cold spell

Inna Johansen, Enstar director of gas supply operations, told the commission during the Jan. 12 meeting that by the second week of November 2021, during the unusually cold weather at that time, Enstarís gas deliveries reached 200 million cubic feet per day. That compared with around 100 million cubic feet per day of deliveries in November 2019, when temperatures were more normal.

When gas demand peaks, Enstar first uses all of its firm gas supplies from Cook Inlet gas producers, Johansen explained. The utility then calls on discretionary supplies under non-firm gas supply contracts. Gas withdrawn from CINGSA is then used to fill any remaining deliverability gap. CINGSA is the only public utility gas storage facility available for utility use. However, some gas producers have their own gas storage arrangements, to help them ensure that they can meet their contractual obligations for gas supplies.

Enstarís winter prioritization of purchasing gas from producers while minimizing its CINGSA withdrawals, ensures that the utility can maintain a maximum CINGSA capacity for use during cold snaps. However, the utility can drop its CINGSA storage volume somewhat after mid-February, Johansen said.

A winter challenge

A challenge from an early cold snap in November arises from the fact that the excessive CINGSA gas withdrawals result in a lower CINGSA gas inventory than Enstar needs to ensure adequate deliverability capacity for the remainder of the winter. This winter Enstar is having to use call options for additional gas from producers to top up the levels of CINGSA stored gas, Johansen explained.

In addition, there are normally spells of relatively mild weather during the winter, when the drop in gas demand enables Enstar to top up its CINGSA stored gas volumes. In fact, an important function of CINGSA use is the ability to balance the highly variable levels of gas demand against the desires of gas producers to maximize gas well performance by maintaining relatively steady rates of gas production, Johansen commented.

Johansen also commented that an exceptionally cold spell in the first week of April 2021 had presented another challenge for Enstar, especially since that cold spell had coincided with the point at which contracted gas supplies transitioned from winter supply levels to the somewhat lower summer levels. With gas demand rising from normal levels of around 87 million cubic feet per day to 163 million cubic feet per day by April 9, Enstar had to obtain 66% of its gas for the day from CINGSA, Johansen said.

Changing gas situation

A comparison of the gas supply characteristics for some peak gas demand days, starting in 1999, shows the changing nature of the Cook Inlet supply situation and the increased need for gas storage. In addition to a decline in field gas deliverability, gas supplies from the west side of the inlet have declined relative to supplies on the east side.

Feb. 3, 1999, before CINGSA was constructed, saw a systemwide low temperature of -19 F, making this the coldest day on record for more than the last 20 years. Enstar had to deal with a total daily gas throughput of about 272 million cubic feet per day, with 183 million cubic feet coming from fields on the west side of the Cook Inlet and 89 million cubic feet from fields on the east side, Johansen said.

Jan. 19, 2017, saw a temperature of -7 F, coupled with record daily gas sales for Enstar. The utility delivered 117 million cubic feet from the west side of the inlet, including 9 million cubic feet from producer gas storage. Gas from the east side amounted to 198 million cubic feet, including 103 million cubic feet from CINGSA and 43 million cubic feet from producer storage.

Maximum CINGSA withdrawals

A cold spell on Jan. 7, 2019, marked Enstarís maximum gas withdrawals from CINGSA. The west side of the inlet delivered 118 million cubic feet, with 4 million cubic feet coming from producer storage. The east side delivered 166 million cubic feet, including 112 million cubic feet from CINGSA and 48 million cubic feet from producer storage.

Nov. 21, 2021, during this winterís early cold weather, saw 120 million cubic of gas coming from the west side of the inlet, including 5 million cubic feet from producer storage. The east side delivered 155 million cubic feet, including 94 million cubic feet from CINGSA and 48 million cubic feet from producer storage.

A comparison of total Cook Inlet gas deliverability, including deliveries for all gas uses, between 1999 and 2021, also provides insights into how the Cook Inlet gas supply situation has changed over the last 20 years or so. On Feb. 3, 1999, total gas deliverability, including gas for a now mothballed fertilizer plant on the Kenai Peninsula, and with no gas storage, amounted to about 763 million cubic feet per day. On Nov. 21, 2021, total deliverability, including CINGSA withdrawal capacity, was 370 million cubic feet per day, Johansen said.

Forward planning

Enstar bases its forward gas deliverability planning on a minimum winter temperature of -22 F. Johansen said that the utilityís current deliverability capability, using all of the utilityís gas supply contracts and its CINGSA capacity, falls a little short of the 293 million cubic feet per day estimated to be needed at that temperature. The expiry on March 31, 2023, of a special contract with CINGSA would also drop Enstarís withdrawal capacity a bit, although the utility plans to extend that contract. The utility also anticipates working with gas producers to ensure that it can meet future deliverability needs, Johansen said.

In the very unlikely situation where Enstar did run short of sufficient gas deliverability in the winter, the extreme practical difficulty of safely restarting individual consumer gas meters after a supply disruption would preclude the utility from actually interrupting the gas supplies. Instead, the utility would request the electric utilities to divert some of their gas supplies to Enstar, with the consequent possibility of reduced electricity supplies in the region. Enstar has been in communication about this with electric utilities Chugach Electric Association and Matanuska Electric Association, and has an emergency agreement with MEA, Johansen said.

Johansen said that she would like to see an additional gas storage facility on the west side of the Cook Inlet, to diversify Enstarís storage options, as a contingency against some unanticipated problem with CINGSA, and to compensate somewhat for decreased gas supplies on the west side. Sims commented that in the short term Enstar will look at how it can increasingly leverage CINGSA to meet deliverability needs. However, in the longer term it is also necessary to look at other deliverability options, he said.

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