DNR opens comment on three Cook Inlet gas storage applications

The Alaska Department of Natural Resources opened public comment Friday on three separate applications to convert Cook Inlet gas fields into storage facilities, a step toward building out storage infrastructure as declining production increases focus on winter supply reliability for Southcentral Alaska.

ENSTAR Natural Gas Company filed to develop a storage facility at the Kenai Loop Gas Field by converting gas-producing horizons into a storage reservoir. Hilcorp Cook Inlet filed a separate application for the same field, proposing a utility-scale facility using subsurface pore space. Hilcorp Cook Inlet Alaska filed a third application to develop a storage reservoir in the Sterling A1, A2, and A3 Sands at the Beluga River Unit, about 36 miles west of Anchorage, using dual-purpose injection and production gas wells and existing facilities near Beluga.

DNR issued the Beluga River notice as a corrected notice addressing a township error in the original notice published June 5.

Cook Inlet's gas fields have historically served as the primary source of natural gas for utilities and industrial users in Southcentral Alaska, but maturing fields and declining production have prompted increased focus on storage, new supply, and long-term import or LNG solutions.

"Additional storage is critical," ENSTAR president John Sims told legislators in January. "Whether it's additional Cook Inlet supplies, LNG imports or the pipeline coming down from the North Slope, we have to have additional storage."

The three applications represent the next procedural step for storage proposals the companies filed earlier this year. Under Alaska Statute AS 38.05.180(u), DNR may issue gas storage leases to allow conversion of subsurface reservoirs into natural gas storage, separate from traditional oil and gas production leasing. AS 38.05.945 requires public notice and an opportunity for public comment before issuing such leases. Under state regulations, gas storage leases may not interfere with existing oil and gas leases and must include protections for existing leasehold interests.

The Division of Oil and Gas is accepting written comments through 5 p.m. July 7. Comments will inform a best-interest finding by the Division of Oil and Gas director, who determines whether issuing the lease would be in the state's best interests.