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Gas storage customers Hilcorp Gas Storage signing up users of storage facility in the Kenai gas field
Alan Bailey for Petroleum News
Hilcorp Alaska Gas Storage LLC, the recently formed natural gas storage affiliate of Hilcorp Alaska, has started signing up customers for its gas storage services on the Kenai Peninsula. As previously reported by Petroleum News, Hilcorp has opened up to other businesses the use of depleted gas reservoirs in the Kenai gas field for gas storage. Previously Hilcorp had been the sole user of the storage facilities -- the company has been using the facilities to store excess produced gas production to ensure that it can meet its contractual obligations for gas supplies.
And Hilcorp Alaska Gas Storage's first signed-up customer is Hilcorp Alaska itself, under an arrangement that will presumably enable Hilcorp to continue to use the storage facilities. The gas storage utility has made a tariff filing with the Regulatory Commission of Alaska, asking for RCA approval of the contract with Hilcorp. The contract provides for a maximum storage quantity of 27 billion standard cubic feet of gas, an injection quantity of 80.25 million standard cubic feet per day and a contract withdrawal capacity of 97.5 million standard cubic feet per day.
The contract has an effective date of Feb. 20, 2026, and an initial term of five years, with the possibility of five 12-month extensions.
Contract with Chugach Electric In a Jan. 8 press release Anchorage based Chugach Electric Association announced that it had entered into a five-year firm gas storage contract with Hilcorp Alaska Gas Storage. The electric utility said that the contract will enable Chugach Electric to gradually expand its reserved gas storage over a three-year timeframe, starting with 1.5 billion cubic feet of capacity in 2026, increasing to 3.5 billion cubic feet in 2027 and reaching the full contracted capacity of 5 billion cubic feet in 2028. Under the terms of the contract this full contracted capacity would continue to 2030.
The contract will presumably require RCA approval.
"This phased approach is a key element in ensuring Chugach's natural gas supply for the future, particularly as our current Hilcorp gas (supply) contract ends in early 2028," said Chugach Electric Chief Operating Officer Arthur Miller.
Miller emphasized the success of the Beluga gas field on the west side of the Cook Inlet -- Chugach Electric has a two-thirds working interest ownership in the field, with Hilcorp owning the remaining one third. While continuing development of the field has boosted field production, the new gas storage agreement with Hilcorp Alaska Gas Storage will provide Chugach Electric with enhanced flexibility in storing and accessing natural gas, the utility said.
Supplements CINGSA usage Chugach Electric already stores gas in the Cook Inlet Natural Gas Storage Alaska facility on the Kenai Peninsula. As well as increasing the flexibility of gas storage capacity, access to the Hilcorp gas storage facility will improve the reliability of gas supplies should there be some unforeseen interruption in supplies from gas sources such as the Beluga field or from CINGSA, Chugach Electric said. Differences in the rate structures between the two storage facilities will also enable more cost effective storage options than are available from the single storage facility, the utility said.
Electric and gas utilities in the Alaska Railbelt have long emphasized the critical importance of adequate gas storage capacity, to ensure adequate gas deliverability rates to customers during the winter when gas demand is particularly high. There have been significant concerns about the need for increased gas storage capacity, to handle future declines in gas production from Cook Inlet gas and oil fields.
Chugach Electric said that it currently has 2.1 billion cubic feet of gas storage capacity with CINGSA. Once fully utilized the Hilcorp storage facility will increase that capacity to 7.1 billion cubic feet, with the firm withdrawal capacity increasing to 58 million cubic feet per day, enough to meet the utility's needs during peak winter demand, the utility said.
MEA also seeking storage agreement In a letter accompanying the tariff filing for the contract with Hilcorp Alaska, attorneys for Hilcorp Alaska Gas Storage notified the RCA that the gas storage utility is also working on forming a firm gas storage service agreement with electric utility Matanuska Electric Association.
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