CINGSA plans upgrades
Requests RCA approval of facility changes to assure gas storage reliability Alan Bailey Petroleum News
Cook Inlet Natural Gas Storage Alaska LLC, or CINGSA, is concerned that its gas storage facility on the Kenai Peninsula is vulnerable to the failure of single item of equipment or of a storage well, a failure that would jeopardize the ability of the facility to support utility gas deliverability needs during cold winter weather. As a consequence, the company has asked the Regulatory Commission of Alaska for approval of some upgrades to the storage facility, to add some redundant features that would guard against single points of failure at times when the facility plays a vital role in underpinning gas supplies for heating buildings and generating power in Southcentral Alaska.
In part, the upgrade requirements result from patterns of gas storage usage that differ from what had originally been envisaged when the storage facility was designed, and from the operating characteristics of the storage wells, CINGSA has told the commission.
The proposed upgrades involve the drilling of two new storage wells, the addition of a string for water management in one existing well, the installation of an additional dehydration train, and the installation of a new turbine gas compressor. The estimated total cost is $41 million.
Seeking certainty Under state statutes, CINGSA does not require RCA approval for the upgrades. However, the company is seeking some level of certainty that it will be able to recover the cost of the upgrades from the fees that it charges its customers. Rate changes resulting from the upgrades will require commission approval and it is possible that the changes could be challenged on the grounds that the upgrades were imprudent.
The commission has issued an order granting CINGSA’s request for an RCA review, with a deadline of Oct. 24 for a decision. Commissioner Paul Lisankie dissented from the commission’s order, saying that there is no statutory authority or clearly defined regulatory process for determining the prudence of a project prior to construction. Commissioner Antony Scott commented that there is no statutory deadline for completing the review but that the commission will endeavor to meet an October target for a decision.
CINGSA told the commission that there is a precedent for this type of review, given that in 2010 the commission had granted a request by Chugach Electric Association for cost recovery assurance for the construction of the Southcentral Power Project power generation facility in Anchorage.
In operation since 2012 The CINGSA facility, to the south of the city of Kenai, went into operation in 2012 in response to challenges associated with declining production from the gas fields in the Cook Inlet basin. The facility injects gas for storage into the depleted Sterling C reservoir sands of the Cannery Loop gas field.
Since starting up, the facility has played a vital role in ensuring adequate year-round gas supplies for Southcentral Alaska. Over the years, although on an annual basis Cook Inlet gas production has remained sufficient to support utility gas demand, the maximum flow rate from gas wells has fallen below the levels needed during peak winter demand, when cold weather drives up the use of gas. However, by storing excess gas during the summer and then releasing that gas from storage during the winter it is possible to maintain adequate winter supplies.
Unpredicted usage pattern However, the manner in which customers use the storage facility has turned out to be different from what CINGSA had anticipated when the facility was designed. John Sims, president of CINGSA, told the commission that at the time that CINGSA was implemented the expectation was that customers would operate on a predictable, seasonal basis, simply injecting excess gas into the facility during the summer and then retrieving the gas during the winter. Instead, injections and withdrawals of gas take place on a daily basis throughout the year, with the injection and withdrawal rates varying greatly.
John Lau, vice president of operations for CINGSA and for Enstar Natural Gas Co., told the commission that CINGSA’s customers use the storage facilities for many purposes, to fit their business needs. Sometimes they switch from injection and withdrawal and back again on a daily basis, and even during the course of a day, Lau said.
This usage pattern impacts the operation and efficiency of the storage facilities, in particular the gas compression equipment, and increases the wear and tear on the equipment. At the same time CINGSA’s customers have become increasingly reliant on the storage facility in meeting Cook Inlet gas demand, Sims said.
Concerns about technical failure In part because of the varying and unpredictable nature of the use of the CINGSA facilities, CINGSA has become concerned about the potential impact of some technical failure at the storage site. As a consequence, the company commissioned an update by Petrotechnical Resources of Alaska Inc. to a previously published study into Cook Inlet gas supply and demand, and also commissioned a Cook Inlet gas supply risk assessment. The outcome is the proposed redundancy upgrades, Sims said.
Lau said that the risk assessment had evaluated all aspects of the Cook Inlet gas delivery system, including gas production and storage wells; field and production equipment; and the gas pipeline system, including the various gas compressors around the system. He said the PRA supply and demand study had concluded that, at current rates of gas well drilling, supply would continue to support demand until at least 2021. In the absence of new drilling activity, there could be a shortfall in supplies as early as 2019.
A consequence of declining production rates from Cook Inlet gas production wells would be an increase in the shortfall in deliverability of the wells during periods of peak gas demand. This would require higher flow rates from gas storage wells. Under this scenario any equipment failure would cause a gas deliverability shortage.
Well performance And, although CINGSA’s five storage wells initially achieved target gas deliverability rates of 150 million cubic feet per day, the wells do not perform uniformly, with delivery rates from individual wells now ranging from 3.6 million to 66.3 million cubic feet per day. With the rate from the well with the highest output in that range representing about 44 percent of CINGSA’s total deliverability, damage to just that one well would cause considerable disruption to the storage facility’s gas delivery capability, CINGSA told the commission.
The drilling of two additional wells would provide the necessary level of protection against potential well failures, CINGSA thinks.
The proposed string to be installed in one of the existing wells would also improve the performance of that well by reducing well bore water accumulations.
CINGSA also wants to introduce a level of redundancy into its gas dehydration system by installing an additional dehydration train. Gas withdrawn from the storage tends to contain water, which must be removed before the gas can be delivered into the region’s gas transmission system.
Injection flexibility The unanticipated need for CINGSA’s customers to inject gas into storage quite often during the winter months forms one of the reasons for CINGSA’s proposal to also install a new turbine-driven compressor in the CINGSA facility. The facility currently has two reciprocating engine powered gas compressors, used in particular for injecting gas into the storage reservoir. Based on the original concept for customer use of the facility, CINGSA had planned to conduct engine and compressor maintenance in November and December, when little or no gas injection was anticipated. However, in practice customers have requested injection services on 61 percent of the days in those months.
The proposed new compressor will ensure that there is a backup compressor available when one compressor is out of action for maintenance. Moreover, the proposed type of compressor could by itself meet CINGSA’s operational requirements on 80 percent of the days when gas is being injected. The use of the new compressor would also reduce vibration levels and be more energy efficient, CINGSA told the commission.
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