Providing coverage of Alaska and northern Canada's oil and gas industry
December 2017

Vol. 22, No. 53 Week of December 31, 2017

Cook Inlet tariff, pipeline, storage issues

Kristen Nelson

Petroleum News

Recent filings with the Regulatory Commission of Alaska address pipeline, tariff and storage issues in the Cook Inlet area of Southcentral Alaska.

Kenai Beluga Pipeline, a Harvest Alaska subsidiary, has applied to RCA for permission to temporarily suspend natural gas transportation service on the Kasilof Extension of the former Kenai-Kachemak Pipeline, now owned and operated by KBPL.

The Division of Oil and Gas terminated the Kasilof unit agreement Oct. 17, 2016, and the lease for the Kasilof production pad expired Jan. 31, 2017.

In a notice of the application RCA said KBPL stated in its application that the Kasilof production pad is no longer in service.

“There are currently no other projects in the area that might use the Kasilof Extension,” KBPL said. “The Kasilof Extension may be needed for future projects, but such projects are not likely to arise for several years or more.”

The company said maintenance crews will continue to monitor and maintain the Kasilof Extension “so it can be restarted quickly if and when a future project arises which requires natural gas transportation in the area.”

Tariff increases

Harvest Alaska has applied for two tariff increases, one for the Swanson River Oil Pipeline and one for the Cook Inlet Pipe Line from Granite Point or Trading Bay to the Drift River Terminal.

On the Granite Point/Trading Bay to Drift River line, the request is for an increase to $4.59 per barrel from the current $3.35 per barrel.

Glacier Oil & Gas, identifying itself as the only shipper on the line other than CIPL’s upstream affiliate (Hilcorp Alaska), has requested that RCA suspend the requested tariff increase and “investigate fully Harvest’s justification for the various elements that make-up the proposed rate” in the tariff. Glacier notes that Harvest has said it will permit and construct a pipeline across Cook Inlet, and said as Harvest “undertakes this significant infrastructure development project and the resulting change in service, understanding the complexities of the parent-subsidiary relationship and how cost are allocated between the two is essential to forming a baseline for future rate-making associated with that significant change in service.”

Harvest’s proposed tariff increase for the Swanson River Oil Pipeline is from 42 cents per barrel to $3.04 per barrel. In its application the company told RCA: “The major reasons for the increase are lower volumes, the costs arising from the full integration of SROP into the Harvest Alaska, LLC pipeline inspection and maintenance program, and the full allocation of costs that were not included in the previous 42 cents per barrel settlement rate.”

Enstar change in cost element

Enstar Natural Gas Co. has applied to RCA for a change in a cost element for its gas cost adjustment relating to its firm storage service agreement with Cook Inlet Natural Gas Storage Alaska. RCA said Enstar and CINGSA have an agreement to amend Enstar’s firm storage service agreement to increase its maximum daily withdrawal quantity. Enstar is requesting that RCA approve the revised cost element with the same effective date as the proposed amendment, Feb. 1, 2018.

Enstar recovers CINGSA firm storage service reservation and capacity fees through its gas cost adjustment. Enstar is proposing to increase its maximum daily withdrawal quantity from 91,000 mcf per day to 102,900 mcf per day.

Enstar told RCA the increase will help it “ensure reliable peak day supplies for all gas sales customers” served under its tariff.

Enstar said the change will address costs associated with peak deliverability - adequate natural gas on the coldest days - and compared the cost of increasing its maximum daily withdrawal quantity, estimated at $1.13 million per year, with the $3 million it pays currently for an annual needle peak call option which allows it to purchase up to an additional 20,000 mcf per day on up to 25 days.

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