ANCHORAGE, Alaska—Anchorage natural gas provider Enstar and other local utilities are about to break ground on a new gas storage facility. They say it will help keep the lights on and heat homes during very cold winter days, but it comes at a cost of $180 million.
In an update sent to lawmakers Wednesday, the utilities say they plan to start building the storage facility next month. It will take shape underground near the mouth of the Kenai River, run by the joint venture Cook Inlet Natural Gas Storage Alaska.
The storage facility will look much like others found in the Lower 48. The plan is to drill five wells into a mostly depleted gas reservoir, then pump excess gas into it during warm months when supplies are strong. The basin will hold the gas until winter, when demand peaks on very cold days and the supply runs short.
Project managers seem confident the gas should allow Southcentral Alaska to avoid an energy emergency. What they're less certain of is what the cost of the project will do to customers' gas bills.
“The impact to the customer should be relatively neutral, depending on that commodity cost and how we're able to buy the gas,” said Enstar president Colleen Starring. “If we can buy the gas in the summer, competitively when production of the wells is relatively steady and there isn't a market for it, there's excess capacity -- we may be able to achieve a far better price than we are now.”
Another challenge is state oversight. Some lawmakers have expressed concern that there are too many overlapping permits and regulations -- something the state Division of Oil and Gas says it's trying to streamline.
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