Gas Storage Beneath Cook Inlet

By Dave Donaldson

Governor Parnell yesterday signed a bill designed to encourage Cook Inlet producers to pump gas year-round into underground storage facilities. 

The sponsor, Anchorage Republican Mike Hawker, says SouthCentral utilities – and the public — are concerned about a possible shortage of fuel in the future – especially in times of peak demands during the winter.   He says those within the industry recognize that storage will become a critical component to meet demands.

Production volumes are fairly constant through the year,  however, consumer demands are variable.  They’re very erratic,  in the summer very low demand and in the winter, very high demand.   The need for storage is to reconcile the two.  When you can produce at a level flow over the year, and you can store some of that … you think of a warehouse to put some of that gas in … then on those peak demands in the winter, you have access to the new gas being produced,  but you also can go to your warehouse and pull gas out of that warehouse to meet those peak demands.

The gas would be stored in depleted wells within Cook Inlet.

The bill also establishes a regulatory system for the Department of Natural Resources to use for leasing those wells – and for the Regulatory Commission of Alaska to use to consider the supply need in considering the rates they approve.  Hawker says that in the past, the R-C-A has been seen as more of the problem that of the solution.

Unfortunately the R-C-A has failed to sanction a couple of major long-term contracts.  And by failing to sanction these contracts, it has contributed to the utilities not having adequate gas on hand to deliver on those cold winter days.

He says the bill requires the commission to consider the consequences of any decision to deny a rate request in light of the consumers who might face a lack of a necessary supply of fuel.


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