Enstar aims to store gas
Enstar President Colleen Starring said the utility is coordinating with ANR Gas Storage Co., a TransCanada subsidiary, on the development of a possible gas storage facility in Southcentral Alaska region that would help the utility meet peak winter needs.
Southcentral utilities are concerned about the decline in production of aging gas wells in Cook Inlet basin, as well as the ability to meet mid-winter peaks in gas and electricity demand.
No plan would come in time to deal with short-term gas supply shortages that might occur this winter. However, if Enstar works with ANR to develop a gas storage facility, it would help meet winter gas "deliverability" needs in the medium-term, two to three years out, Starring said.
Long-term solutions to the region’s natural gas needs include more drilling and gas discoveries in the Cook Inlet basin or gas delivered from the North Slope by pipeline, she said.
The deal with ANR Storage involves the company working with the utility to find and develop a storage facility, most likely a depleted gas reservoir, to supplement production from producing gas wells in the region, which are declining in productivity.
"A number of reservoirs are available. ANR is investigating which one is the most suitable for our needs," Starring said. "This could be a solution to our winter deliverability needs, but we are still looking at a shortfall in annual supply between 2012 and 2014 if more gas is not found in the region."
Enstar is looking for a facility with a capability of storing at least 10 billion cubic feet of gas.
The utility is also in discussions with ConocoPhillips Alaska Inc. on ways the liquefied natural gas plant near Kenai could help the utility meet gas supply needs, although this is a long-term option.
So far the talks are informal. ConocoPhillips operates the plant and owns 70 percent of it, with Marathon Oil Co. as a minority partner. The plant exports LNG to Japan.
Starring said Enstar also has legal counsel in Washington, D.C., to consider issues with the Federal Energy Regulatory Commission, or FERC, if the LNG plant is used for some other purpose than exports, Starring said.
Possibilities being discussed by Enstar and ConocoPhillips include the utility relying on the plant as a gas source in peak supply times, and in the longer term, using the plant to import LNG if regional supplies are lacking. Imports are considered a last resort, Starring said.
"Our preference is to use Alaskan resources," she said.
Dan Clark, ConocoPhillips’ manager of Cook Inlet assets, said his company is investigating several possibilities for the plant, including applying for an extension of the LNG export license, which expires in March 2011.
Starring said the longer term solution for the region’s gas needs, if new gas discoveries are not made in Cook Inlet, is to bring gas from the North Slope. The utility is working with the state of Alaska on studies of a 24-inch pipeline from the North Slope to Southcentral Alaska.
The Alaska Natural Gas Development Corp., a state authority, is working separately on a plan for a spur line that would connect with a large gas pipeline if one is built through Interior Alaska to the Lower 48.
Neither project could be built before 2018 or 2020, and the Southcentral utilities need gas before that.
Starring also said Enstar has retained Petrotechnical Resources Alaska, a local consulting firm, to do its own assessment of remaining gas reserves in producing gas fields in the Southcentral region. The utility is doing its study in cooperation with the state Department of Natural Resources, which is doing a similar assessment of reserves.
Kevin Banks, director of the state Division of Oil and Gas, said his agency hopes to have a new estimate of remaining recoverable gas reserves in Cook Inlet fields within a few weeks.
Enstar’s immediate need: on New Year’s Day 2011, the utility is one-quarter short of its gas needs.
"Neither a bullet line or LNG imports will meet those needs in time. They are only potential long-term solutions to the problem," Starring said.
Enstar is pursuing new sources of supply with gas producers in the region, but the Regulatory Commission of Alaska must approve the contracts.