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Cook Inlet Natural Gas Storage Alaska

Bringing CINGSA on-line for Railbelt utilities

Aerial photo of the CINGSA gas storage station (foreground) and the well pad (background), taken in August.

Aerial photo of the CINGSA gas storage station (foreground) and the well pad (background), taken in August.

PHOTO: By Robin Barry, ENSTAR

The specter of natural gas demands exceeding supply during Southcentral Alaska’s coldest, darkest months has been averted in the short term with the construction of the state’s first commercial storage facility in Kenai. The Cook Inlet Natural Gas Storage Alaska (CINGSA) facility began pumping gas into an underground storage reservoir with a capacity of 11 billion cubic feet (Bcf) on April 1 of this year. CINGSA will release gas to buffer the supply from Cook Inlet producers when the heating and electrical generation demands peak in winter.

Construction began on the facility located on the eastern side of Cook Inlet within the City of Kenai in March of last year following the issuance of a Certificate of Necessity and Public Convenience from the Regulatory Commission of Alaska on Jan. 31, 2011. CINGSA also obtained an additional 56 permits from more than a dozen local, state and federal agencies for the $161.4 million project, and worked with a host of surface and sub-surface mineral rights owners.

Early work on the project started in May of 2009 when SEMCO Energy, ENSTAR’s parent company headquartered in Port Huron, Michigan, approached TransCanada Corp. of Calgary, Alberta, to develop preliminary engineering and design documents. Initially, TransCanada was going to own the facility, but SEMCO bought out the Canadian company’s interest. CINGSA is part of ENSTAR’s Alaska operations as a natural gas supplier to residential customers and electrical utilities.

The purchase brought to Alaska the expertise of two chemical engineers who had been involved in the preliminary work at TransCanada. Here, they continued their work on the facility as project managers for CINGSA. Richard Gentges and Ed Scarpace brought more than 60 years of combined experience on the design and construction of underground natural gas storage fields to the project in Kenai. They have worked together on 10 similar projects over the last 30 years. On this project, Scarpace managed construction of the facility’s surface elements while Gentges oversaw development of the reservoir and storage wells.

 

Critical Factors

Pinpointing the proper location for CINGSA was critical. Factors considered were the size of the reservoir, proximity to existing infrastructure, environmental impact, and overall estimated cost. “We looked at 50 different sites initially, cutting it to the top 10 and then the top three before making the selection,” Gentges says. “It’s essential to do screenings on depleted gas fields to find one that is the right size and has the right level of depletion.”

The Kenai site chosen was an 85 percent depleted gas field that serviced a single Marathon Oil Corp. gas well from October of 2000 until July 2011, producing 23 Bcf during its operational life out of an initial gas-in-place volume of 26.5 Bcf.

 

Meticulous Construction Planning

Three major buildings were part of the construction at the CINGSA station facility on a 10-acre site in an industrial area of Kenai; the total project footprint including the well pad is 16 acres. The largest is a 70 by 100 foot structure that houses two Caterpillar engine compressor units rated at 2,370 horsepower each. The auxiliary building occupies a footprint 50 feet wide by 80 feet long and provides space for air compressors, a hot water boiler, emergency generator, a motor control center, and switching gear for electrical power. The structure that houses the offices, conference room and equipment maintenance shop is 40 feet wide by 120 feet long. Also on site is a metering building that houses instruments that measure gas on both injection and withdrawal from the reservoir.

Also built was a 1,500-foot-long, buried 20-inch pipeline to connect the station to the source of Cook Inlet gas, Marathon’s Kenai-Nikiski Pipeline. The project also included construction of an underground well header and a second 16-inch, high pressure buried 1,400-foot pipeline that links the station to the well pad.

Because of Alaska’s distant location from many of the parts suppliers on a project like CINGSA, the construction planning had to be more meticulous, according to Scarpace. “There were millions of pieces that had to be engineered, procured and transported to Alaska,” he says. While most of the parts came from US or Canadian suppliers, items like the low-temperature pipe came from Italy and Argentina. “Part of the challenge on this project was logistics. Getting everything to Alaska on time was critical. We couldn’t have contractors waiting on parts,” Scarpace says.

Another challenge was weather related. Construction continued through last winter and during the season’s coldest temperatures, some equipment literally ground to a halt. “Some of the equipment just wouldn’t run at 30 below,” Scarpace says.

 

Drilling Challenges

Drilling the CINGSA’s five storage wells and bringing the reservoir up to operational status presented other challenges for Gentges. The reservoir is located at a depth of 4,900 feet below the surface of the Kenai River, varies in width from one-half to three-quarters of a mile, is 1.5-miles long, and is some 240 feet thick.

Storage reservoirs like CINGSA are pressurized underground gas containers that result in a certain amount of gas that is permanently embedded in the formation. In addition to this physically unrecoverable gas, there is base or cushion gas that must remain or be injected to provide pressurization in the reservoir. The working gas is the volume that is available for withdrawal. CINGSA capacity can be expanded to store up to 17 Bcf.

The five storage wells were drilled to a vertical depth of about 4,900 feet. However, all five wells are near-horizonotal within the reservoir, so the total depth ranges from 8,600 feet to 11,100 feet. On the surface, the five storage wells are located about 50 feet from each other on a north-south axis.

“Careful assessment and analysis of the size and shape of the reservoir was most challenging relative to other similar projects, with the drilling itself presenting the greatest challenge,” Gentges says. “There are 12 other producing wells in the area of the reservoir, and we had to be careful not to intersect those wells.”

To do that, the drilling team created a three-dimensional map of the existing wells and tailored the drilling program based on that map. “The technology in directional drilling has improved dramatically in the last 20 years. You’re steering the drilling assembly from a laptop computer loaded with sophisticated software,” Gentges says.

Crews accomplished drilling on the five wells at drilling rates of up to approximately 2,000 feet per 24 hours. The overall drilling time was 26 to 27 days per well from a 5.5 acre well pad. Well facilities are on property owned by the State of Alaska.

 

Facility Operations

CINGSA staffs operation of the facility on 12-hour shifts, 24-hours per day. “The control system is automated and we have dual process controllers, a hot one and an on-line backup,” Scarpace says. “The system is continually polling all of the instruments to make sure they are operating correctly and we have a program that tells the equipment how it should be operating under any given circumstance.”

Gas quality is one of the critical elements monitored in the operation of the facility. “The system is designed to ensure the gas is of correct quality for injection and withdrawal. We filter the gas for condensates and particulates before sending it to the compressors, to make sure we do not harm the compressor cylinders,” Scarpace says.

The facility is designed so that eventually it can be operated from Enstar’s offices in Anchorage. That shift will occur when everyone is comfortable with the operation of the system. “You always have a learning curve, even for experienced personnel. The change will happen once they get familiar with all of the nuances of a new facility,” Gentges says.

Financing for the project came from four different sources. SEMCO Energy owns a 65 percent interest in CINGSA. MidAmerican Energy of Des Moines, Iowa holds a 26.5 percent interest while CIRI and First Alaskan Capital Partners each have a 4.25 percent share. The sale of SEMCO Energy and its holdings to AltaGas Ltd., a Calgary, Alberta-based energy infrastructure business, is pending based on regulatory approvals in both Michigan and Alaska.

The sophisticated gas control system provides for switching from injection to withdrawal within a three-hour timeframe. This gives CINGSA the ability to provide gas to its customers quickly. That customer base consists of Southcentral Alaska utilities including ENSTAR, Chugach Electric Association and Anchorage’s Municipal Light & Power. Homer Electric Association will become a customer in November of next year. Between them, these utilities heat and electrify a vast majority of the state’s population.

Declining supplies of natural gas from the Cook Inlet region and the uncertainty of adequate new supplies coming on line drove the development of CINGSA. In a Cook Inlet Gas Study commissioned by the utilities, Petrotechnical Resources Alaska said in March 2010 that “the utilities must develop gas storage to assure deliverability on the coldest days and optimize gas production throughout the year.” That was one of several action items recommended for utilities to be able to supply current customers and accommodate future growth.

The study also addressed the regulatory and market conditions that needed attention to encourage exploration and development of Cook Inlet reserves. While there is activity in those areas, the long-term natural gas picture is not yet sufficiently clear.

While CINGSA makes the predictability of a peak season gas supply more certain in the short-term, it does not resolve the long-term uncertainty. What is certain, according to the PRA study, is that, “in the future, Cook Inlet utility customers should expect to pay more for the gas used by Cook Inlet utilities to generate heat and electricity.”

 

Multitude of Contractors for Multimillion Dollar Project

CINGSA credits success for its project to the contributions and cooperation of local contractors, material suppliers, construction and support services, and governmental agencies. Since 2009, more than 50 Alaska companies participated in the project, infusing more than $33 million into the local economy out of a total capital budget of $161.4 million.

The participating suppliers, construction firms and service organizations included:

PIPE, VALVE AND FITTINGS SUPPLIERS
Tubular Solutions Alaska (Drill Pipe)
Puget Sound Pipe and Supply (Anchorage and Kenai)
FMC Anchorage (Wellheads)
Dowland Bach (Well Safety Panels)
Alaska Energy Resources (Well Materials)
Alaska Tent & Tarp (Liners)
Alaska Instrument Co.
Alaska Industrial Hardware
Arctic Petroleum Products
Ferguson Enterprises
Alaska Valve and Fitting
Arctic Office Supplies
Aurora Engineered Systems
Crescent Electrical Supply Co.
Engineered Equipment Co.
FMC Inc
Graybar Electric Co.
Industrial Instrument SVC Co. (Kenai)
NC Power and Machinery Co.
Oil and Gas Supply Co.
PCE Pacific
North Coast Electric
Paramount Supply Co.
McJunkin Redman
AK Supply
Industrial Boilers and Controls (Anchorage)
Halliburton Energy Services
SteelFab Alaska (Anchorage)
NANA Construction
Alaska Energy Resources
Kenai Welding
Metailizing (Kenai)

MAIN CONSTRUCTION FIRMS
Udelhoven Oilfield System Services (Mechanical & Electrical)
Nabors (Well Drilling)
Kiewit Construction (Foundations)
Conam (Pipeline and Gathering)
Foster Construction (Site Work)
Team Industrial Services (Radiography)
Northstar Paving (Water & Sewer lines)
Superstructures (Warehouse)
Baker Hughes (Directional Drilling Services and Coiled Tubing Services)
Schlumberger (Well Cementing, Perforating and Coiled Tubing Services)
Weatherford International (Casing Crews and Well Testing Services)
M-I Swaco (Drilling Mud Services)

SUPPORT SERVICES
A & L Construction (Snow Plowing)
Alaska Communications (Telephone)
AIMM Technologies
Air Liquide (Nitrogen)
Alaska Industrial X-Ray (Weld Inspection Services)
Alaska Pacific Environmental (Trash Services)
Alaska’s Best Water (Water)
Big G Electric (Electric Services)
Bluestone (Water)
CIC (Tree Clearing and Site Grading)
Dave Demster Woodworks (Wood Walkways, Stairs)
Dukowitz Machine (Millwright Services)
Emerald Alaska (Waste Disposal)
ERA Aviation
Fastners And Fire Equipment
Homer Electric (Electric Power Installation and Service)
Kenai Self Storage (Parking)
KraxBerger Drilling (Drill Pipe Supports and Water Well)
Lynden Transport (Freight for Equipment & Materials)
McLane Consulting (Engineering and Survey Services)
Peninsula Pumping (Septic Pumping)
Pollard Wireline Services (Down Hole Testing)
Rain for Rent (Storage Tank Rentals)
S&R Enterprises (Sand for Station/Well Pad)
United Rentals (Equipment Rentals)
Woodcock’s Hydroseeding (Hydro-Seed Berm)

 

Gene Storm, a writer living in Anchorage, has covered Alaska business 41 years.

 

This article first appeared in the September 2012 print edition of Alaska Business Monthly magazine.

 

 

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