City of Kenai v. Cook Inlet Natural Gas Storage Alaska, LLCAnnotate this Case
The issue this case presented for the Alaska Supreme Court's review arose from competing claims of right to the pore space in a large limestone formation about a mile underground. Cook Inlet Natural Gas Storage Alaska, LLC (CINGSA) had leases with the holders of the mineral rights, the State of Alaska and Cook Inlet Region, Inc. (CIRI), that allowed it to use the porous formation as a reservoir for storing injected natural gas. But the City of Kenai, which owned a significant part of the surface estate above the reservoir, claimed an ownership interest in the storage rights and sought compensation from CINGSA. CINGSA filed an interpleader action asking the court to decide who owns the storage rights and which party CINGSA should compensate for its use of the pore space. On summary judgment CINGSA argued that CIRI and the State owned the pore space and attendant storage rights because of the State’s reservation of certain subsurface interests as required by AS 38.05.125(a). The superior court granted CINGSA’s motion. The City appealed both the grant of summary judgment and the superior court’s award of attorney’s fees to CIRI. After review, the Supreme Court affirmed, finding that the State and CIRI indeed owned the pore space and the gas storage rights, and that it was not an abuse of discretion for the superior court to award attorney’s fees to CIRI.