ML&P signs agreement for Furie gas

Alan Bailey

Petroleum News

Municipal Light & Power has asked the Regulatory Commission of Alaska to add Furie Operating Alaska LLC to the list of gas suppliers in the ML&P tariff, following the signing of a gas supply agreement between ML&P and Furie. The gas would presumably come from Furie’s Kitchen Lights field, offshore in Cook Inlet. Because the GSA covers a timespan of just under one year, RCA approval of the GSA is not required, although Furie’s inclusion in ML&P’s table of gas suppliers does need commission approval.

The supply agreement is for gas that ML&P may need from time to time to fill in any shortfalls in its other supply arrangements. There is no overall commitment by Furie or ML&P for gas delivery or use, and there is no specified price for the gas - if ML&P wants gas under the new contract it would form a short term agreement with Furie, spelling out the cost, volume and delivery point for that particular gas transaction. ML&P told the commission that the unit cost of gas associated with each transaction would depend on the market conditions at the time that the transaction agreement is made.

The requested tariff change will not adversely impact ML&P’s customers, the utility told the commission.

Furie currently has two gas supply agreements for its Kitchen Lights field: an agreement with Homer Electric Association, and an agreement with Enstar Natural Gas Co. that starts this year. Furie has in the past commented that the gas field is capable of producing substantially more gas than the company has under contract.

The sale of gas by Cook Inlet producers at a workable price is challenging at present because of the small scale of the local power and gas utility market, and because of the mothballing of the ConocoPhillips’ liquefied natural gas plant at Nikiski in response to low global LNG prices.

- ALAN BAILEY