Cook Inlet Gas Storage

By Dave Donaldson

Cook Inlet’s long-term energy prospects are beginning to look better as plans for a year-round natural gas storage facility went before state regulators yesterday.

Semco, the owner of Enstar, Anchorage’s gas utility, and MidAmerican Energy have joined forces to apply for a “Public Convenience and Necessity” certificate to build an underground system that, when filled, will make available 11- Billion cubic feet of natural gas for the region.  The plan is to inject gas into the reservoir when demand is low during the summer and make it available when the need reaches a peak during the winter.

John Sims with Enstar says the company – as well as electricity-producers – will use the winter withdrawals as a way of helping to fill their expected supply gap.

It’s not a complete problem-solver, but it definitely adds a piece to that puzzle.  As wells continue to deplete here, having a commercial storage service will definitely increase the reliability and provide an insurance for SouthCentral consumers and customers of natural gas.

Enstar will use seventy percent of the storage capacity while Chugach Electric and Municipal Light and Power will share the remaining thirty percent. It is designed to allow one hundred fifty cubic feet of gas per day to be taken out – far short of the total projected needs of the companies.

Both Enstar and MidAmerican say their plans came together as a result of the Cook Inlet Recovery Act that the legislature approved unanimously during this year’s session.  That measure was sponsored by Anchorage Republican Mike Hawker – co-chairman of the House Finance Committee.    He says the industry has known for a long time that storage was a critical element of meeting the region’s needs.  And the bill provides the regulatory framework to allow the plan to develop.  However, he agrees with Enstar’s Sims.  There is still work to do.

It is not a panacea.  It’s not the end of our concerns in the Cook Inlet. And the bill recognized that while both promoting storage, it also had very important incentives to attract the well-capitalized independent development companies we need in the Inlet.

Sims says the Regulatory Commission must approve the project and Enstar still needs to contract for suppliers to provide the year-round gas production the company needs.

MidAmerican’s Mike Loeffler says the next step will be getting the Commission’s approval by December first.  MidAmerican is already lining up its contractors to start digging once that approval comes through.  He says the project will be operated by Northern Natural Gas – a MidAmerican-owned company.

We’ve been operating a storage facility in Iowa since 1954 and we have two other storage facilities in the state of Kansas.  So we’ll be able to provide operational expertise.  And of course Semco, with their local connections with contractors and their familiarity with the region – it’s simply a nice fit for the two companies.

The Regulatory Commission has not yet decided whether to grant the companies’ request for an expedited review of the tariff and the application for certification.


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