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New gas storage facility
Enstar plans to convert a depleted reservoir in Kenai Loop field for storage
Alan Bailey for Petroleum News
Anchorage based Enstar Natural Gas Co. plans to develop a new natural gas storage facility in the City of Kenai on the Kenai Peninsula using a depleted gas reservoir in the Kenai Loop gas field. The gas utility has filed a petition with the Regulatory Commission of Alaska, asking the commission to find the development to be prudent and consistent with Enstar's role as a regulated gas utility. Enstar does not want to risk proceeding with the development without first ensuring that the RCA agrees with the prudence of the project.
Enstar told the commission that it proposes to acquire the depleted Upper Tyonek Pool gas reservoir in the Kenai Loop Field, together with facilities associated with the reservoir, from AIX Energy LLC, the field operator. Following an extensive review of potential locations in the Cook Inlet region for a new gas storage facility, this turned out to be the only viable option, Enstar told the commission.
The utility told the commission that the depleted reservoir site has four existing gas wells, a dehydration unit, a gas compressor and a 6-inch gas pipeline connecting the site to the local gas transmission pipeline system. There are also some other minor operational facilities.
Repurpose existing wells Enstar plans to repurpose three of the existing wells for use for gas injection and withdrawals, with the fourth well being repurposed as a waste disposal well. And the company plans to install any necessary equipment upgrades, to ensure the reliable operation of the gas storage facility, including upgrades to the wells that will be used for gas injection and withdrawal.
The estimated cost of the development project is $240 million -- recovery of this cost would likely increase the price of gas for customers by less than $1 per thousand cubic feet, Enstar told the commission.
Initially the facility will have a storage capacity of 25 billion cubic feet of natural gas. Of this gas, 8 bcf will be required to sustain the necessary gas pressure in the reservoir. The remaining 17 bcf of capacity will be available for the injection and withdrawal of stored gas.
Enstar cited its experience in developing the nearby Cook Inlet Natural Gas Storage Alaska facility in 2011 as reason for confidence in the utility's ability to develop this new facility.
Additional gas storage needed Although Enstar currently uses CINGSA for gas storage, the utility urgently needs additional storage capacity, the utility told the commission. While Hilcorp Alaska currently supplies approximately 85% of the gas that Enstar uses, Enstar's contract with Hilcorp expires on March 31, 2033. In response to declining gas production from the Cook Inlet basin, Enstar is anticipating the delivery of imported liquefied natural gas through a Cook Inlet import terminal. A further possibility is obtaining gas via a gas pipeline from the North Slope that will potentially be constructed. None of these gas sources will work adequately without additional gas storage, Enstar told the commission.
Enstar told the commission that BlueCrest Operating Alaska Inc, operator of the Cosmopolitan unit in the southern Kenai Peninsula, has committed to supply gas to Enstar by the fourth quarter of 2026, if the utility has the capacity to either store or immediately use the gas. Also, Enstar indicated that it will require new storage capacity in 2027 to receive new gas supplies from Furie Operating Alaska, operator of the Kitchen Lights gas field, offshore in the Cook Inlet.
The utility wrote that a comprehensive analysis of its future gas storage requirements had indicated that the utility would need an additional 15 bcf of storage capacity as early as 2027. If future gas supplies come from imported LNG, storage capacity of 24 bcf would be needed, the utility wrote. The utility anticipates transitioning completely to LNG importing between 2033 and 2038, with the possibility of obtaining gas via the North Slope gas pipeline, beginning in 2039.
Storage needs for LNG importing LNG importing will entail the injection of large volumes of gas into storage over short time periods, with large volumes of gas subsequently being withdrawn from storage, as needed, to meet peak winter demand and to counterbalance declining gas production in the Cook Inlet basin, Enstar told the commission.
Also, Enstar anticipates being able to use the new storage facility to replenish its gas inventory in CINGSA, to ensure adequate gas delivery rates during the winter heating season, Enstar wrote. Natural gas is the primary fuel used for the heating of buildings in Southcentral Alaska during the winter.
No other options Hilcorp has recently opened some gas storage capacity in its Kenai gas field for third party use. However, most of that storage capacity has already been subscribed to gas storage customers, including Hilcorp itself -- the remaining available capacity does not come close to meeting Enstar's storage needs, the utility told the commission. In addition, it is not feasible to further expand the CINGSA facility, Enstar wrote.
If the RCA can make a prudence determination by March 1, Enstar would be able to obtain the necessary piping for the project by August, thus enabling the storage facility to go into operation by the fourth quarter of the year, Enstar told the commission. Also, it will take nine to 10 months to acquire the compressor and compressor skid that will be needed to render the storage facility fully functional, Enstar wrote.
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