Hilcorp, ENSTAR file Cook Inlet gas storage applications

Hilcorp and ENSTAR have applied to develop natural gas storage facilities in Cook Inlet. The proposals aim to help Southcentral utilities meet winter demand as local production declines.

Hilcorp Cook Inlet Alaska, LLC filed two applications with the Alaska Department of Natural Resources Division of Oil and Gas. One would develop subsurface storage in the Sterling A1, A2, and A3 Sands at the Beluga River Unit. The other would develop utility-scale storage at the Kenai Loop Gas Field. ENSTAR Natural Gas Company, LLC filed a third application to convert the gas-producing horizons of the Kenai Loop field into a storage reservoir.

The Division of Oil and Gas issued public notices of the applications on June 5 under AS 38.05.945. The division is accepting written comments on the proposals, which were submitted under AS 38.05.180(u) and 11 AAC 83.500-520.

ENSTAR serves most residential and commercial customers in Anchorage, the Kenai Peninsula, and Mat-Su. Underground storage in depleted or partially depleted reservoirs has been promoted by state task forces as a key tool to manage seasonal demand peaks and improve reliability of Cook Inlet gas supply for Southcentral Alaska.

The storage applications arrive as the Alaska State Legislature debates Governor Mike Dunleavy's LNG volumetric tax bill. The governor has framed both the Alaska LNG Project and near-term Cook Inlet solutions, including storage and potential LNG imports, as critical to the state's energy security. The legislature has until June 19 to agree on a bill that would provide the tax structure the administration says is needed to move the LNG project forward.

A July 2023 Cook Inlet gas forecast presented to the Alaska Energy Security Task Force projected declining production and potential future shortfalls for Southcentral customers. The forecast highlighted gas storage expansion as a key mitigation strategy.

The Division of Oil and Gas is accepting written comments on the storage lease proposals as it evaluates the applications. Interested parties can submit feedback to the division.