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NEWS BULLETIN

March 01, 2016 --- Vol. 22, No. 11March 2016

Enstar reaches new gas supply agreement with Hilcorp

Enstar Natural Gas Co., the main Southcentral Alaska gas utility, has reached a new agreement with Hilcorp Alaska for gas supplies covering the period April 2018 to March 2023. The utility already has gas supplies in place up to the end of March 2018.

The new contract accounts for 70 percent of Enstar's anticipated gas requirements, thus leaving open some space in Enstar's gas supplies for other Cook Inlet gas producers. The weighted average price of gas under the agreement starts at $7.56 in 2018, escalating at some 2 percent year, a price level that is lower than that in the consent decree between the state of Alaska and Hilcorp that has become a something of a benchmark price level in recent gas supply contracts.

"We consider this to be incredibly good news," Moira Smith, Enstar vice president and general counsel, told Petroleum News today. "The contract we signed is the most significant contract we've signed since the Unocal contract in 2001. We think it's huge, in terms of providing stability and security to the inlet, not only on the producers' side but also on the consumers' side, from the point of view of having reasonable, below consent decree prices that will be stable and have some certainty around them, projected out to 2023."

- ALAN BAILEY

See story in March 6 issue, available online Friday, March 4 at www.PetroleumNews.com

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