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Gas storage facility safety debated: Board hears request to add condition to permit

Posted: Wednesday, December 15, 2010

The Kenai Board of Adjustment is considering Vincent Goddard's appeal of the City of Kenai's conditional use permits for a proposed natural gas storage facility off Bridge Access Road.

The city's planning and zoning commission issued two conditional use permits to Cook Inlet Natural Gas Storage of Alaska (a subsidiary of Enstar Natural Gas Co.) for the facility. One is for a natural gas storage facility, the other for a related well-pad. They require that the entity complies with all applicable permits and regulations before creating a natural gas storage reservoir. In total, CINGSA is working through the permitting process with 14 different agencies.

The proposed reservoir is currently a mostly-depleted oil field. It would be injected with natural gas in the summer, when production at local gas fields exceeds demand. Natural gas would be extracted in the winter, when gas use increases because of chilly weather.

Complicating the permitting process are 13 abandoned wells in the area.

At the board's Monday evening meeting, Goddard asked the board to add a condition to their permit requiring that CINGSA properly seal the well underneath his Kenai fish processing plant. "What we are primarily concerned with in this appeal is two factors," he said. Those factors were safety and the value of his facility.

Goddard's company, Inlet Fish Producers, operates a fish processing plant in Kenai. They lease the land for that facility from the city. Beneath the land is an exploratory well that was drilled and abandoned in the 1960s. Whether or not that well will be affected by the reservoir is a matter of debate.

CINGSA's attorney, Don McClintock, said that the Alaska Oil and Gas Conservation Commission had heard Goddard's concerns and determined that the well did not need any work. The agency did require CINGSA to do work on three other wells before they inject the reservoir with gas, he said.

But Mike Staley, Goddard's attorney, told the council that the AOGCC has never permitted a storage facility in a town to act as a public utility. "This is a different animal," he said.

Goddard's concern was partially that a seismic event could change the pressure in the reservoir and cause the plugged well to fail. If that happened, his facility would be at risk for a fire. Staley said CINGSA's reason for not doing any work on the well was financial, not technical. The first white paper CINGSA released about the well had a 50 percent risk of something going wrong, he said. In the second, the risk had decreased to one percent. Goddard said the study changing the risk was just three days of e-mails.

During CINGSA's testimony, company engineer Edward Scarpace countered that three days of professional analysis is a significant piece of work.

CINGSA also defended the technical details of the project to the council. Scarpace said the reservoir would have an extensive monitoring and emergency shut down system.

Thomas Walsh, a geophysicist consulting for CINGSA, said that the risk of seismic activity, let alone any resulting failure, is low. There are no active faults within 25 kilometers, he said. And most of the wells are reliably shut.

"These well bores are pretty bullet proof," he said.

Scarpace said the risk associated with the well was actually an economic concern. Cross flow between two reservoirs open to the well could mean that some gas escaped from one reservoir and another entity would benefit from CINGSA's gas.

Goddard's appeal was also based on the decline in his business's value due to the increased risk associated with the well.

Board member Brian Gabriel did not participate in the hearing because of a financial interest in both sides of the issue. He sells his fish to Goddard's company, and has had an offer from CINGSA to buy a parcel of land he owns.

The board meets again to make its decision, which will then be drafted and released in about 30 days.

Molly Dischner can be reached at molly.dischner@peninsulaclarion.com.



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