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RCA allows Tesoro intervention
The Regulatory Commission of Alaska has reversed an earlier decision denying a request from Tesoro Alaska Co., operator of an oil refinery on the Kenai Peninsula, to intervene in a commission investigation of a proposal by Cook Inlet Natural Gas Storage Alaska LLC to sell some excess “native gas” that the gas storage operator found in its storage reservoir. Tesoro uses natural gas as a fuel for its refinery operations.
The native gas issue arose from a 2013 discovery by CINGSA that unexpectedly high gas pressures in its storage reservoir resulted from an isolated pocket of gas that had not been developed when the reservoir formed part of the Cannery Loop gas field. The reservoir had been presumed to have been depleted of gas prior to CINGSA obtaining the right to use it for gas storage.
Although CINGSA has subsequently determined that it can use a substantial portion of the native gas for pressure maintenance in the storage reservoir, the gas storage company also figured out that it could dispose of as much as 2 billion cubic feet of the gas. The company has proposed selling the gas to the benefit of its investors, who, CINGSA says, underwrote the business risk of developing the storage facility and have yet to recover much of their investment.
The state attorney general and others have objected to the sale of the gas, arguing that the facility’s ratepayers should benefit from any financial gain accrued from the native gas windfall. However, while allowing participation in the investigation by various gas and power utilities that use the CINGSA facility, the commission originally denied a petition by Tesoro to intervene. The commission said that Tesoro was not a customer of CINGSA and that the involvement of Tesoro in the case “would unduly delay the conduct of the proceeding.”
Tesoro protests But Tesoro protested the commission’s decision, saying that the resolution of the native gas question would impact the cost of fuel gas for the Kenai Peninsula refinery. In a May 22 filing with the commission Robin Brena, attorney for Tesoro, also argued that, with Enstar Natural Gas Co., CINGSA’s largest customer, being an affiliate company of CINGSA, gas ratepayers cannot rely on Enstar to protect their interests - CINGSA and Enstar are both owned by the same parent company.
“Tesoro is the only party that is in a position to protect the interests of Enstar’s ratepayers in this docket,” Brena wrote.
Brena also said that Tesoro would not delay the proceedings in the case and would rely on evidence discovered by other parties, rather than conducting its own evidence discovery activities.
In a June 15 order, a majority of the commissioners agreed to allow Tesoro to intervene, with the commissioners saying that they accept Tesoro’s undertaking not to delay the proceedings and to follow the procedural schedule that has been established. Commissioners T.W. Patch and Norman Rokeberg dissented from the majority decision, saying that Tesoro had failed to demonstrate that the earlier denial of intervention was unreasonable and also commenting that the reversal of the commission’s earlier decision “does violence to our regulations and our need to protect orderly process for all those who appear before us.”
Commissioner Stephen McAlpine, in concurring with the majority decision, said that Tesoro had “been most vociferous” over the question of who owns the native gas and that he would not be comfortable in making a decision over the matter without a more fully developed record.
- Alan Bailey
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