Alaska Online Public Notices #AS 38.05.180(u) and 11 AAC 83.500-520

Alaska Considers Lease for Hilcorp Utility-Scale Natural Gas Storage Facility in Kenai Loop

The State of Alaska is considering a major lease to Hilcorp Cook Inlet, LLC for the development and operation of a large-scale underground natural gas storage facility in the Kenai Loop area. - Government Buyer: - State of Alaska, Department of Natural Resources, Division of Oil and Gas - OEMs and Vendors: - Hilcorp Cook Inlet, LLC (applicant and proposed owner) - Hilcorp Alaska, LLC (operator) - Products and Services Requested: - Lease of approximately 1,330 acres of state-owned subsurface gas storage reservoir - Development and operation of a utility-scale underground natural gas storage facility - Construction of four storage wells targeting the Tyonek 91-2 Sand formation (approx. 9,700-9,800 feet TVD) - Installation of three injection compressors (1,000-1,200 HP each) and three production compressors (1,600-1,800 HP each) - Two glycol dehydration modules (TEG units, 15-20 MMcf/day each) - Two produced water storage tanks (200-barrel capacity each) - Construction of a 12-inch diameter, 1-mile pipeline (API 5L Grade X52 or X60 carbon steel, 1,440 psi design) - Unique or Notable Requirements: - Facility designed for seasonal injection and withdrawal cycles to support regional energy reliability - Initial storage for Hilcorp's own gas, with potential expansion to third-party storage as a regulated utility - Estimated capital investment of $100 million (including $20 million for well drilling and $80 million for surface facilities and equipment) - Projected to support over 50,000 residential customers and more than 500 MW of gas-fired electric capacity - Lease includes fee and surface damage provisions, and must not interfere with existing oil and gas leases - Requires regulatory approvals from agencies such as the Alaska Oil and Gas Conservation Commission - Public comment period to determine if the lease is in Alaska's best interests, informing stipulations and mitigation measures - No specific part numbers provided, as this is a lease and infrastructure development proposal

Description

The Department of Natural Resources, Division of Oil and Gas, has received an application from Hilcorp Cook Inlet, LLC to develop and operate a utility-scale natural gas storage facility in the Kenai Loop area. The facility will utilize subsurface pore space in the Tyonek sand formation to store natural gas owned by Hilcorp and may be converted to a regulated utility for third-party gas storage in the future. The project includes acquiring pipeline right-of-way and requires approvals from relevant agencies. Comments are invited on whether issuing the gas storage lease is in the best interests of the state, with a comment deadline of July 7, 2026.

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