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Kenai gas storage construction under way CINGSA moves ahead with foundations of surface facility and directional drilling for gas gathering pipeline; drill rig mobilized Alan Bailey Petroleum News
Intent on heading off a potential shortfall in Southcentral Alaska utility gas deliverability in the winter of 2012-13, Cook Inlet Natural Gas Storage Alaska is forging ahead with construction of a new gas storage facility in the Cannery Loop gas field, south of the City of Kenai on the Kenai Peninsula.
In a July progress report to the Regulatory Commission of Alaska, CINGSA said that Conam Construction Co. has now completed the horizontal directional drilling required for placement of the storage facility’s gas gathering line, and that Conam has also welded half of the 20-inch line that will connect the facility with the nearby Kenai Nikiski gas pipeline. Construction of the facility foundations is 70 percent complete and construction of the compressor building is partway complete, the progress report says.
Drilling in August Plans to spud the first well for the facility in early August remain on track, with Nabors Alaska Drilling having mobilized its Rig 105 from the North Slope for the CINGSA project. Reservoir modeling for the facility’s subsurface storage design is almost complete, the report says.
Work is in progress on the engineering of the surface facilities, with CINGSA having awarded the mechanical and electrical construction contract to Anchorage-based Udelhoven Oilfield System Services.
CINGSA has been continuing to seek rights to gas storage interests in the subsurface land required for the storage facility — the subsurface land in the Cannery Loop field involves a complex mixture of state and private ownership, with 45 distinct private landowners. The State of Alaska issued a storage lease to CINGSA for the use of state land in the facility. CINGSA has the right of eminent domain over privately owned subsurface land that it needs to use and has negotiated usage rights with some of the subsurface owners. On July 8 the state Superior Court granted CINGSA possession of all subsurface land interests it had not already obtained. CINGSA continues to negotiate terms with landowners who have not yet settled with the company, with a hearing on land valuation anticipated in late 2011 or early 2012.
Appeals The Superior Court is also considering two as-yet unresolved appeals against CINGSA’s plans by Cook Inlet entities, a group of companies headed by businessman Vincent Goddard. Goddard’s businesses operate on surface land above the storage facility and Goddard has expressed concern about the possibility of gas leakages from the facility. In one of these appeals, an appeal against the City of Kenai’s permit for CINGSA’s surface facilities, briefs are due to the court on Aug. 26. In the other appeal, against the Alaska Oil and Gas Conservation Commission’s gas injection order for the facility, briefs are due in September.
Kenai Landing, another surface landowner in the area of the storage facility, has appealed the Alaska Department of Natural Resources approval of the contraction of the Marathon-operated Cannery Loop unit, a contraction that has transferred required subsurface land tracts from the unit into the CINGSA facility. DNR has turned down that appeal after making some changes to the wording of the unit contraction decision.
Meantime on Aug. 5 Southcentral gas utility Enstar Natural Gas Co. filed a proposed tariff revision with the Regulatory Commission of Alaska, requesting approval to include the cost of usage of the CINGSA facility in the gas costs that Enstar charges its customers.
Critical need With gas supplies from the aging gas fields of the Cook Inlet basin becoming ever tighter as the fields run down, the storage of summer-produced gas for use in the winter when gas demand peaks has become critical to meeting Southcentral Alaska utility gas supply needs. The CINGSA facility will be the first storage facility in Alaska to offer third-party storage to customers willing to rent storage space and pay for gas injection and retrieval — all other Cook Inlet facilities are operated by gas producers for their own use, to ensure the availability of gas to meet the specifications of gas supply agreements.
In addition to assuring the adequate deliverability of gas during peak winter demand, the CINGSA facility will enable the temporary storage of summer-produced gas, thus enabling some gas wells to continue operating year-round while also providing new market possibilities for the sale of summer gas by gas producers. Without the availability of gas storage, the need to shut in gas wells during the summer when gas demand is low poses the risk of the wells not returning to previous production rates when restarted in the winter.
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