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Vol. 14, No. 2 Week of January 11, 2009
Providing coverage of Alaska and northern Canada's oil and gas industry

New Enstar gas record

Cold snap in Southcentral AK causes highest ever delivery of gas to customers

Alan Bailey

Petroleum News

Temperatures dipping to minus 16 on Jan. 3 in Anchorage may have put something of a nip in the air, but things heated up for Enstar Natural Gas Co., the main gas utility for Southcentral Alaska, as customers took to their gas-heated homes to escape from the cold.

At 234 million cubic feet, Jan. 3 saw the largest ever daily delivery of gas to Enstar’s customers, Enstar spokesman Curtis Thayer told Petroleum News.

“The last record was on Jan. 9, 2007,” Thayer said. That previous record was 227 million cubic feet, he said.

After factoring in other gas that Enstar flows through its pipeline network for entities such as electric utilities and the military, Enstar’s total throughput on Jan. 3 was 314 million cubic feet. That compares with a total throughput of 292 million cubic feet on the record setting day in 2007.

CEA record

Chugach Electric Association, one of the two electric utilities that supply Anchorage, delivered power to its customers at a record rate of 485 megawatts on Jan. 4, Chugach spokesman Phil Steyer told Petroleum News. Chugach’s previous record power output of 479 megawatts occurred in January 2007, at about the same time that the earlier Enstar record was set.

Chugach generates 90 percent of its electricity using natural gas. But because the utility’s largest power plant is at Beluga on the west side of Cook Inlet, a large proportion of the gas that the utility uses goes straight to that plant and is, therefore, additional to the gas that Enstar handles through its pipeline network.

The resulting major total utility gas demand on exceptionally cold winter days is referred to as needle-peaking demand and now exceeds the total gas deliverability from the Cook Inlet gas fields. Gas producers Marathon Oil Co. and Chevron operate gas storage facilities that store excess summer gas for use in the winter. But, even with the storage facilities contributing to the utility gas supplies, the needle-peaking demand exceeds total deliverability capacity.

LNG curtailment

To deal with this short-term deliverability problem, the ConocoPhillips and Marathon-owned LNG plant at Nikiski on the Kenai Peninsula reduces LNG production, to divert gas for local utility use.

ConocoPhillips spokeswoman Natalie Lowman confirmed Jan. 7 that the LNG plant has been curtailing production to enable increased gas deliveries to the utilities.

But with the gas fields also running flat out, can the gas transmission network handle the load?

Enstar’s total transmission capacity is almost 400 million cubic feet, a number well in excess of the record-breaking throughput, Thayer said. In addition, Enstar has recently fixed some bottlenecks in the pipeline network, to improve the gas flow from some fields and thus rectify some past gas transportation problems encountered during cold weather, he said.

“Everything was working well,” Thayer said of the record-breaking day.

And Steyer also confirmed that gas supplies have been coming through smoothly to Chugach’s power plants, despite the peak demand levels.

Supply contracts

The other issue when it comes to peak demand is ensuring that there are adequate contracted gas supplies for the utilities — gas deliverability issues have come to a head in recent years as dwindling supplies from the aging Cook Inlet gas fields have come into balance with gas demand in the region. Agrium closed its Kenai Peninsula fertilizer plant in December 2007 because of a shortage of gas feedstock and there has been a raging controversy in recent years concerning appropriate pricing for utility gas.

In December the Regulatory Commission of Alaska rejected new Enstar gas supply contracts with Marathon and ConocoPhillips because the two producers would not agree to an RCA-imposed gas price cap. Those contracts would have filled a shortfall in Enstar’s contracted supplies, starting on Jan. 1, and included provisions for pricing gas at different levels for high winter demand and needle peaking.

Meantime, pending a resolution of the gas pricing issue, RCA is allowing Enstar to plug the gap in its supplies by buying gas through the new contracts, but at a rate below the utility’s average cost of gas.

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