Grappling with gas delivery from storage

An important factor for Cook Inlet Natural Gas Alaska’s planned new gas storage facility on the Kenai Peninsula is the ability of the Southcentral Alaska gas pipeline infrastructure to ship gas at a fast enough rate from the facility to wherever the gas is needed during periods of peak demand.

On the assumption that upgrades to the network will be required to achieve the necessary gas transmission speeds, the state Attorney General’s Regulatory Affairs and Public Advocacy Section has raised the question of what it refers to as “induced infrastructure costs,” the infrastructure upgrade costs that the CINGSA facility might trigger and that would end up being rolled into the rates that consumers would be charged for gas and electricity.

RAPA raised the question of induced costs during a recent Regulatory Commission of Alaska hearing into approval of the CINGSA facility.

The CINGSA facility would hook into the Marathon operated Kenai Nikiski pipeline near the city of Kenai, with that pipeline delivering gas into Enstar pipelines either at Nikiski to the north or at a pipeline hub to the south. Apparently there is ample spare capacity on the Kenai Nikiski pipeline to meet the needs of the CINGSA facility, with the main potential bottleneck being the shipping of gas through an Enstar dual pipeline that runs north to Anchorage through the northern Kenai Peninsula.

In testimony to the RCA hearing on certification for the CINGSA facility Mark Slaughter, manager of gas supply for Enstar, said that Enstar will probably have to add compressors to the dual pipeline at an estimated cost of $8 million to $10 million, to accommodate the CINGSA gas. And during cross examination on Nov. 10 Slaughter said that these compressors could lift capacity on the line to 240 million cubic feet per day, with perhaps another $10 million to $20 million required were it to prove necessary to upgrade the line to its theoretical maximum daily throughput of 285 million cubic feet.

The anticipated maximum output from the CINGSA facility is 150 million cubic feet per day, but the Enstar pipelines also need to be able to handle utility gas from producing gas fields on the east side of Cook Inlet.

Enstar’s other gas artery into Anchorage and the Matanuska and Susitna valleys is a pipeline running north from the west side of Cook Inlet. Transferring gas from the CINGSA facility to that pipeline would involve moving gas east to west under Cook Inlet though a pipeline system called the Cook Inlet Gas Gathering System, or CIGGS. But CIGGS is currently configured to only carry gas west to east, although companies involved in the Cook Inlet gas industry have been discussing the future possibility of bidirectional flow through the system.

The modification of CIGGS for bidirectional flow to accommodate CINGSA gas would be technically straightforward and less expensive than upgrading the Enstar line north from the Kenai Peninsula, Slaughter said. However, there are commercial hurdles associated with current CIGGS contractual arrangements for moving gas west to east, he said.

—Alan Bailey