Is gas storage natural?

Unocal's plan to store fuel in refuge stirs land use debate

Posted: Sunday, February 20, 2005

 

  An oil industry production facility is pictured October 1, 1998, in the Kenai National Wildlife Refuge near Soldotna, Alaska. Companies have been removing oil and gas from the ground below the refuge for decades; now Unocal Corp. wants to store gas there as well. AP Photo/Peninsula Clarion, M. S

An oil industry production facility is pictured October 1, 1998, in the Kenai National Wildlife Refuge near Soldotna, Alaska. Companies have been removing oil and gas from the ground below the refuge for decades; now Unocal Corp. wants to store gas there as well.

AP Photo/Peninsula Clarion, M. S

Some say Southcentral Alaska utilities could have a hard time with some operations on the coldest and darkest days of winter as early as next year if something is not done.

Unocal Corp., which is a significant natural gas supplier to utilities in Southcentral Alaska, wants to use part of the Swanson River oil field to store gas allowing for quick delivery on the days when demand is at its peak. The utilities use gas to power the turbines that generate electricity.

The proposed gas storage would take place in the Kenai National Wildlife Refuge. On Wednesday, Unocal submitted a proposal to the refuge for storage.

Advocates say storage is necessary to manage declining gas reserves in the region. Opponents say it will promote more industrial use in a wildlife refuge and is a ploy by Unocal to get a higher price for its gas.

While there is about a 10-year supply of proven gas reserves in Cook Inlet, there can be problems delivering on the peak demand days making storage important, said Bill Popp, oil and gas liaison for the Kenai Peninsula Borough. Unocal would store gas during the summer and use it as a cushion to meet shortfalls on peak demand days in the winter, he said.

"(Gas storage) is an issue that affects us all," Popp said.

At this point, Anchorage utilities may be the first to experience shortages, he said. In the future, the Kenai Peninsula also could be at risk, he said.

Joe Griffith, CEO of Chugach Electric Association, said Chugach would not allow a brownout to happen but that storage is important. Without storage, it is difficult to get the gas out of the fields fast enough to heat the homes, he said.

There have been times in the past where the demand for gas was so great on some days that Chugach and other companies have been in a tight spot, he said.

"It's important to anybody that heats their homes and turns on their lights in the Railbelt," Griffith said.

Joe Gallagher, spokesperson for Homer Electric Association, said deliverability is not a problem for Homer Electric customers.

"We're not in any imminent situation where we're facing a brownout," Gallagher said, adding that he does not think it will be a problem in the near future.

Unocal already has conducted pilot gas storage programs in the Swanson River oil field — some of which have been successful and some not, said Kevin Tabler, manager of land and government affairs for Unocal. He said the company wants to expand its storage capacity. Unocal plans to use the existing infrastructure for this project but may have to drill new wells, he said. The company hopes to be ready for more storage by this summer, he said.

Unocal has had an ongoing dialogue about storage with federal agencies for more than a year, Tabler said.

Unocal is the only company studying storage, he said.

Federal law requires a compatibility determination and an environmental assessment study any time there is a proposal for new use of a national wildlife refuge. Kenai National Wildlife Refuge officials said they could not comment on the project's compatibility until those assessments are complete.

There will be a public comment period later this month.

Bringing gas into the field for storage may not fall under the current permits which allow for oil production, said Colleen McCarthy, deputy director for energy and solid minerals for the Alaska Bureau of Land Management. She said the U.S. Fish and Wildlife Service is trying to find a solution that allows gas storage without violating Fish and Wildlife Service regulations.

While not against gas storage, Fish and Wildlife does not want any agreements that would extend the life of the Swanson River field beyond however long other industrial activities are going on there, McCarthy said.

"It benefits everyone to be able to store gas," she said. "The ability to store gas is a pretty significant thing to the economy of the Kenai Peninsula."

Lois Epstein, senior engineer for Cook Inlet Keeper, a community-based nonprofit watershed protection organization, said her group opposes using the Swanson River field for gas storage. Right now the land has a limited industrial life because the oil and gas will eventually run out, but storing gas in the field could extend its industrial life indefinitely, she said.

"It's contrary to the nature of a refuge," she said. The understanding is that one day the area will go back to being used exclusively for a wildlife refuge, she said.

Epstein said she believes Unocal wants storage so it can supply gas to Anchorage at a higher rate than what it would be paid by Agrium.

Agrium plans to close its North Kenai fertilizer plant later this year because it is unable to secure a cheap supply of natural gas. Agrium declined to comment for this article.

Tabler, of Unocal, said gas storage has been identified as a critical need by the U.S. Department of Energy, the Alaska Department of Natural Resources and the oil and gas producers in Cook Inlet. Unocal wants to use gas storage to help manage the volatile nature of deliveries in Cook Inlet, he said. Although Agrium is just one of a number of customers, Unocal's gas storage program is not specifically designed for any one customer, he said. Instead, the gas storage is to manage the declining gas reserves in the region.

"You cannot escape the fact that Southcentral (Alaska) needs storage," Tabler said.



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