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Some storage challenges
Enstar will need more gas storage to address future gas supply arrangements
Alan Bailey for Petroleum News
In a Nov. 12 Regulatory Commission of Alaska public meeting executives from Anchorage based Enstar Natural Gas Company talked about the challenges that the utility faces in its future gas storage needs. The utility will need more gas storage capacity for ensuring the reliability of gas supplies to its customers.
Currently the utility uses the Cook Inlet Natural Gas Storage Alaska facility on the Kenai Peninsula to store gas during the summer, when gas demand is low, to ensure adequate gas supplies for the utility's customers in the winter, when gas demand is high and when gas deliverability rates, the rates at which gas needs to be supplied to customers, peak.
The ability to maintain firm and reliable gas supplies to its customers is a key component of Enstar's duties as a public utility. Consequently, Enstar needs some combination of firm gas supplies and appropriate gas storage facilities.
More storage needed Inna Johansen, Enstar vice president of regulatory and gas supply, told the commission that, as the gas supply situation evolves, Enstar anticipates needing additional gas storage, starting in 2027.
Moreover, the means whereby gas is stored in the future will depend to some extent on how the gas is obtained, taking into account factors including the variability of gas deliveries and the total volume of gas that may need to be stored at some point in time.
"Once we combined all this information together it became very clear that we do indeed have storage requirements that we need to figure out how to fill in the future," Johansen said.
Hilcorp Alaska, the primary supplier of natural gas from the Cook Inlet basin, has indicated that it will not be able to extend its existing firm gas supply contracts with its customers. Enstar has said that, as a consequence, it will need alternative sources of gas, beginning in 2032 or 2033 -- the company is working with Glenfarne Energy Transition on a potential liquefied natural gas import terminal on the shores of the Cook Inlet. An alternative possibility would be to obtain gas from a proposed natural gas pipeline from the North Slope.
Hilcorp has recently made some gas storage reservoirs in its Kenai gas field available for use as a public utility. However, the characteristics of the Kenai gas field facility differ from those of CINGSA, presumably because of differences in the gas reservoirs used. Essentially, providing the exceptionally high gas delivery rates required in the winter requires gas storage reservoirs than can maintain relatively high gas pressures. And the maximum pressures that can be achieved depend on the commercial ability to store sufficient volumes of base gas for maintaining that pressure.
Gas storage capabilities Essentially, CINGSA has the capability to both store the excess gas needed to support winter demand and to provide the needed high deliverability rates in winter. The Kenai facility, on the other hand, can provide value for the storage of gas for seasonal load balancing and for stockpiling gas obtained when gas prices are low. However, the facility cannot deliver gas rapidly enough to support peak deliverability rates or for ensuring supply reliability in the event of an unforeseen supply problem, Johansen said.
In addition, the characteristics and scale of the future storage requirements differ significantly, depending on future gas supply arrangements, she said.
The current storage arrangements support the use of gas produced from gas and oil fields in the Cook Inlet basin. Gas is produced year-round, with a significant portion of the summer produced gas being placed in storage, for use in the winter, to supplement the produced gas when demand is high.
Storage for LNG importing However, if gas is imported as LNG, the gas would be supplied as a series of LNG tanker cargoes. Johansen said that Enstar anticipates the potential need for 10 or 11 LNG deliveries per year to support its needs, including its contractual obligations to supply gas to Homer Electric Association on the Kenai Peninsula.
If Chugach Electric Association or Homer Electric Association requires gas through the planned import terminal, the number of LNG deliveries would be higher. And each LNG cargo would likely have to deliver around 3.8 bcf of gas very quickly into the Cook Inlet gas delivery system, Johansen said.
On the basis that the LNG import terminal would need to act as a kind of insurance policy against some problem with Cook Inlet gas supplies, the projected LNG delivery rate assumes that it could be necessary for all of Enstar's gas to be imported.
Given the high cost of LNG in the winter and difficult ice conditions in the Cook Inlet at that time of year, LNG deliveries would probably run from April through October, Johansen suggested. Thus, there would be a series of regular high peaks in gas storage needs when LNG cargoes are delivered, together with the need for adequate storage capacity to ensure sufficient gas supplies over the winter.
Gas pipeline delivery The delivery of gas through a gas pipeline would have a very different profile, given that the contractual arrangements for the gas supply would likely involve a relatively constant daily rate of delivery from the pipeline year-round.
Thus, in a similar manner to what happens at present, it would be necessary to have sufficient gas storage capacity to store gas in the summer for use in the winter. It would also be necessary to hold sufficient stored gas to mitigate the impacts of weather fluctuations around the year, Johansen said.
John Sims, president of Enstar, commented that Enstar has spent multiple years looking into both how to ensure the availability of the volumes of gas needed annually and how to solve issues relating to daily gas demand.
"There's been a ton of work and effort on this -- we're close to presenting a solution," Sims said.
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