Chugach Electric Association filed a gas supply contract with state regulators on May 12.
The seven-year contract with ConocoPhillips covers various needs through 2016.
The roughly 66 billion cubic foot contract covers 100 percent of the electric utility’s unmet gas needs through April 2011, about 50 percent of its unmet needs between June 2011 and December 2015, and about 25 percent of its unmet needs in 2016.
Chugach said about 90 percent of the gas “will be priced off of a basket of Lower 48 Production Area price points.” This “Production Area Composite Index” has averaged out to be 9 percent less than Henry Hub over the past four years, according to Chugach.
“The pricing formula in the contract will result in the most competitive price, on average, of any price formula presented to (the Regulatory Commission of Alaska) during the past decade for a major gas contract,” Chugach said in a statement.
With the contract, ConocoPhillips fulfilled the final term of a 2008 agreement to get state support for an extension of the export license at the Nikiski liquefied natural gas plant.
Chugach originally appealed the U.S. Department of Energy’s decision to extend that license to 2011 from 2009, but is now withdrawing that appeal because of the contract.
The contract is the result of several years of negotiations, Chugach said. The Regulatory Commission of Alaska must now approve the contract for it to become effective.
See story in May 17 issue, available online at noon, Friday, May 15 at www.PetroleumNews.com