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Cook Inlet gas storage
Hilcorp applies for CPCN to open Kenai gas field storage for third party use
Alan Bailey for Petroleum News
Hilcorp Alaska Gas Storage has applied to the Regulatory Commission of Alaska for a certificate of public necessity and convenience to enable the company to provide third-party natural gas storage services using Hilcorp's gas storage facility in the Kenai gas field on the western side of the Kenai Peninsula. Hilcorp has been using depleted gas reservoirs in the Kenai gas field for a number of years to store its own gas, to ensure that it can meet its contractual obligations for gas supplies to customers during cold winter months. However, given the growing challenges in meeting gas deliverability needs in Southcentral Alaska, Hilcorp wants to make its storage facility available for use by other businesses.
Increased gas supply reliability While Hilcorp's customers have asked for more gas storage options, additional gas storage services will increase gas supply reliability and alleviate mismatches between gas supply and demand levels, Hilcorp told the commission. Currently Cook Inlet Natural Gas Storage Alaska provides gas storage services at its location in the northern Kenai Peninsula. However, utilities have expressed concerns over the growing need for gas storage capacity and the dependence on a single storage facility.
From a legal perspective, the provision of third-party gas storage services requires a company to be regulated by the RCA as a public utility. As a consequence, in 2024 Hilcorp established Hilcorp Alaska Gas Storage, its subsidiary that is now applying for a CPCN for operation as a utility. Hilcorp lists a number of entities that would be impacted if the CPCN is granted, including Enstar Natural Gas Co. and the Southcentral electricity utilities.
Operating since 2006 Hilcorp told the commission that the existing facilities in the Kenai gas field have been reliably operated as a gas storage facility since 2006. The gas storage components of the field have 15 appropriately permitted wells linked to compression and dehydration facilities for injection and retrieval of gas. The storage facility is connected to a 20-inch pipeline that can supply sales quality gas from the Kenai gas field, either to customers or into the storage facility. Gas can also be delivered to the storage facility from other areas around the Cook Inlet region using the regional gas pipeline network.
"No new pipeline connection or construction is needed or planned at this time for Hilcorp Storage to provide the proposed storage service contemplated by this application. Third parties will use existing common carrier lines to nominate gas into the KGF storage facilities described in this application," Hilcorp told the commission.
The company told the commission that the storage facility currently has a storage capacity of 38 billion cubic feet of natural gas and a maximum gas delivery rate of 130 million cubic feet per day. The company said that based on past experience it anticipates that the annual operating costs for the facility will be approximately $9.513 million in the first year of operation as a public facility.
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