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SEMCO Energy Inc. has filed for permits to construct a $200 million natural gas storage facility in the Cannery Loop gas field on the Kenai Peninsula, company officials told the Regulatory Commission of Alaska earlier this month.

Applications were made June 18 to the Alaska Department of Natural Resources and the U.S. Army Corps of Engineers, Colleen Starring, president of SEMCO subsidiary Enstar Natural Gas, told the commission.

Enstar is the regional natural gas utility for Southcentral Alaska.

The project is being designed initially to store 11 billion cubic feet of gas with a capability for expansion to 17 billion cubic feet, Starring said.

Enstar and two regional electric utilities, Chugach Electric Association and Anchorage's city-owned Municipal Light and Power, have contracted for all of the initial capacity, she said.

If storage is expanded, there will be capacity made available to other utilities and customers, Starring said.

Additional gas storage is badly needed in Southcentral Alaska because aging gas wells and producing fields in the region can no longer meet daily demand from utilities during winter cold snaps.

Natural gas producers now maintain some gas storage for their own needs, but more storage is needed.

Currently, the utilities have been able to rely on gas diverted from a natural gas liquefaction near Kenai owned by ConocoPhillips and Marathon Oil, but this plant may not be available in the future.

The LNG export license on which the plant depends terminates in March 2011, although ConocoPhillips and Marathon have requested a two-year extension of the license.

Starring said injections of gas into the planned storage facility would begin in early 2012 with the first withdrawals for the utilities in November and December of that year.

The facility will be able to meet all of Enstar's needs to supplement supplies from producing wells through winter 2012 and 2013.

The project will require five new injection wells and related compression and metering equipment to be built in the Cannery Loop field, which is owned and operated by Marathon.

The gas would be stored in the Sterling C reservoir interval. Marathon would continue to produce gas from the deeper Beluga and Tyonek reservoir intervals.

About 4 billion cubic feet of "pad gas" will have to be kept in the reservoir to sustain pressure, Enstar spokesman John Sims said. SEMCO and Enstar had been working with TransCanada subsidiary ANR Storage on the project, but when ANR decided to withdraw from the project earlier this year, SEMCO took it over.