Aurora Power drops commercial customers

The Regulatory Commission of Alaska said Nov. 13 that Aurora Power Resources has notified its commercial customers that it will stop supplying them with natural gas as from Dec. 1. Enstar Natural Gas Co., the main Southcentral Alaska gas utility, has said that it can provide these customers with gas in December but that it may not have sufficient gas to continue this service after the end of the year.

Enstar has been saying for some time that it has insufficient contracted gas supplies to meet all of its anticipated customers’ demands from Jan. 1 onwards. The company has been seeking RCA approval of new contracts with Marathon Oil Co. and ConocoPhillips Alaska, to meet the 2009 shortfall in supplies. RCA has approved the contracts provided that the gas price specifications in the contracts are modified to comply with an RCA price cap. The price cap would be indexed to a basket of gas prices in North American gas production basins (see “Gas price cap” in the Nov.9 issue of Petroleum News at www.petroleumnews.com/pnads/807854698.shtml).

In announcing the pending cessation of the Aurora Power supplies, RCA said that Enstar’s new supply contracts would enable the company to continue to serve Aurora Power’s ex-customers in 2009.

“Once Enstar files the required (price) amendments, it will have sufficient gas under contract to continue service to these commercial customers after Jan. 1, 2009,” RCA said. “The commission will continue to monitor the situation.”

In October Enstar filed a document with RCA that included an e-mail from Aurora Power saying that Cook Inlet gas producer Aurora Gas was “actively involved in negotiations that may result in the reduction or elimination of gas available to Aurora Power over the next several months” and that as a result Aurora Power’s volumes of gas transported through Enstar’s pipeline system might be reduced or eliminated.

—Alan Bailey