Kenai votes Wednesday on claiming gas storage space the state wants to lease to ENSTAR

The Kenai City Council votes Wednesday on whether to formally tell the state that the city owns the underground space where ENSTAR Natural Gas Company wants to store natural gas. City Attorney Scott Bloom urged the claim in an Oct. 28 memo.

The space lies partly beneath the Kenai Airport. The state's Oct. 13 preliminary finding proposes leasing it to ENSTAR and calls gas storage rights beneath the airport "exclusive to the State of Alaska." It treats Kenai as the surface owner, which ENSTAR would negotiate with for use of the land.

Bloom wants the council to approve comments asserting the city's ownership. He warned that failing to recognize the city's interests "may lead to significant project delays."

Kenai has claimed underground storage rights before and lost. In 2016, the Alaska Supreme Court ruled that the state and Cook Inlet Region, Inc., as mineral owners, held the gas storage rights beneath city-owned land above a different reservoir, not the city. The court found that "pore space is mineral," meaning the tiny gaps in rock where gas is stored go with the minerals, not the surface.

ENSTAR's nine-well project could move up to 150 million cubic feet of gas a day in or out of storage, the state estimates. Hilcorp applied for the same field, and the state's preliminary finding chose ENSTAR.

Comments to the state are due Nov. 13. ENSTAR also needs approval from the Alaska Oil and Gas Conservation Commission, which has a hearing tentatively set for Nov. 12.