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Photo by M. Scott Moon
Quintin Hilburn and Mike Cornwell work on an overhead door for the future office of Cook Inlet Gas Storage Alaska’s facility now under construction in Kenai. CINGSA received approval from the Alaska Department of Natural Resources.

CINGSA moves forward

State approves lease and operation for gas storage facility

Posted: July 13, 2011 - 8:00am  |  Updated: July 13, 2011 - 8:48am
Photo by M. Scott Moon
Charlie Martinez, Chris Luttrell and Noe Marquez, all of Hilburn Builders Inc., work on the building that will hold CINGSA’s compressors. Two compressors will move gas from an existing pipeline into a short spur under Bridge Access Road, where it will be injected during summer months nearly a mile underground into a depleted gas reservoir for wintertime use.

Recent decisions from the state of Alaska put a natural gas storage facility on the Kenai Peninsula one step closer to holding gas.

Cook Inlet Natural Gas Storage Alaska, a joint venture between Enstar's parent company Semco Energy and MidAmerican Energy Holdings Co., has been working through the permitting process to create a natural gas storage facility in Kenai.

The state Department of Natural Resources issued a Gas Storage Lease for the project and approved the gas storage plan of operations, two steps required before the storage facility can operate.

"We're very pleased, obviously, with the decision," Enstar spokesman John Sims said.

The facility will take in injected gas into a storage reservoir when more natural gas is being produced than consumers are using, typically in the summer. When the demand for fuel is higher than production, typically in the winter, gas can be taken out of the reservoir and supplied to customers.

Sims said the schedule calls for injection to begin during the summer of 2012. He credited local agencies and municipalities for helping keep the project on track by lending their support.

"We've really gotten outstanding support," Sims said.

In his findings on the lease and plan of operations, DNR commissioner Dan Sullivan noted that the facility will help meet winter gas needs.

"Considering the measures adopted into the plan of operations by the lease applicant, and the relative risk to the environment of gas operations generally, I have determined that on balance, the value of this storage lease to the state, consuming public, and to Cook Inlet regional energy security far outweighs the risk of unforeseeable adverse effects of storage leasing on the Kenai River and its watershed," Sullivan said in his July 1 decision.

The decisions will go into affect Aug. 1 unless the department's commissioner acts on a request for reconsideration that is made by July 21.

The other DNR decision reduces the size of the Cannery Loop Unit, an oil and gas production unit near the mouth of the Kenai River, by terminating one portion of the unit, the Sterling Gas Sands Participating Area. That decision will allow CINGSA to include the Sterling Gas area in its storage facility, and operate the facility separately from the Cannery Loop Unit. Marathon Alaska has been the lease-holder in that unit, but transferred its interest in Cannery Loop Sterling C Pool over to CINGSA effective Aug. 1.

That decision will also go into affect Aug. 1 unless there is a request for reconsideration, but it contains a contingency. CINGSA must acquire all property interests in the storage project area by Aug. 1. If those rights are not acquired, the Cannery Loop unit will not be contracted. The project has had to acquire subsurface and mineral rights for a number of parcels, most of which were acquired through negotiation. The company filed a condemnation action for the remainder, and is hoping a superior court judge will rule in its favor by Aug. 1.

Comments on the decisions, including requests for reconsideration, are due July 21.

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