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Still no gas from Kitchen Lights; Enstar issued default notice
Alan Bailey Petroleum News
Enstar is still not receiving any gas from Furie Operating Alaska’s Kitchen Lights gas field, Lindsay Hobson, Enstar communications manager, told Petroleum News in a Feb. 20 email. As previously reported in Petroleum News, starting in early January Furie began experiencing problems with the Kitchen Lights gas delivery system, apparently as a consequence of hydrates blocking the subsea pipeline from the field’s offshore platform.
In a Feb. 20 email, Scott Pinsonnault, Furie chief operating officer, confirmed to Petroleum News that no gas is being shipped from Kitchen Lights at present because of the hydrate obstruction, but he said that his company is “prepared to open up production very shortly after restoring pipeline utility and going through the proper safety inspections.” He said that Furie had “mobilized a vast array of human and physical resources to address the issues.”
“We take precautions and have procedures in place to mitigate this on a daily basis, but sometimes variables occur outside normal operating parameters that we cannot control, such as climate conditions,” Pinsonnault said, presumably referencing a spell of cold weather at the beginning of January when the hydrate plugging began.
On Jan. 23 Furie sent a letter to Enstar affiliate Alaska Pipeline Co, declaring Force Majeure and saying that it could no longer meet its commitments under its gas supply agreement with Enstar. Hobson said that Enstar has not received any gas from Furie since Jan. 25.
Notice of default On Feb. 11 APC sent a formal notice to Furie, declaring that Furie was in default under the supply agreement. Under the terms of the agreement, the parties involved had 20 days to work out an acceptable means of resolving the issue. Failure to agree on an acceptable solution within that 20-day window would result in termination of the supply contract.
The notice also commented that APC has been very accommodating over the past three years and could have terminated the contract as a consequence of Furie failing to meet deadlines for the drilling of wells and meeting required gas production capabilities. APC attributed the problems to Furie’s lack of funding capacity. Furie missed an October deadline to provide engineering reports and contingency plans. And, from the outset, Furie has had to supplement its Kitchen Lights gas production with gas purchased from third parties, or drawn from storage, in order to meet the terms of its APC supply agreement, the notice said.
Enstar’s supply sources According to Enstar’s current tariff, the utility anticipates obtaining about 23 percent of its base gas supplies from Furie between July 2018 and July 2019. Hilcorp Alaska is expected to meet much of Enstar’s remaining supply needs, but with AIX Energy also supplying some gas.
Hobson said that, with this winter being in general warmer than usual, Enstar has been able to use gas that it had previously stored to compensate for the loss of the Furie supplies. As with other Southcentral gas and power utilities, Enstar uses the Cook Inlet Natural Gas Storage Alaska facility on the Kenai Peninsula to warehouse summer produced gas for use in the winter.
Were the stored gas to prove insufficient to fill the supply gap, Enstar has the option to purchase additional gas through a “call option” in a gas supply agreement with Hilcorp Alaska, Hobson said. Enstar continues to monitor its gas supply arrangements, to ensure that its customers’ short-term and long-term needs are met, she said.
- ALAN BAILEY
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