RCA approves Furie gas supply for CEA

The Regulatory Commission of Alaska has approved Chugach Electric Association’s new gas supply agreement with Furie Operating Alaska.

The agreement, which ends on March 31, 2033, entails an interruptible supply that goes into effect immediately and a firm supply of about 1.8 billion cubic feet per year starting on April 1, 2023. The firm supply guarantees a minimum daily rate of 5 million cubic feet of gas per day. Under the agreement, Chugach Electric has the option of increasing the firm supply by up to 1.8 billion cubic feet per year. And the utility can purchase additional firm deliveries of up to 2 million cubic feet per day, beginning in year seven of the contract.

The minimum price of gas under the interruptible supply would increase from $5.75 per thousand cubic feet in year one of the contract to $6.25 per mcf in 2033. The price of firm gas supplies would start at $7.16 per mcf in 2023, increasing to $7.98 in 2033.

The gas would presumably originate from Furie’s Kitchen Lights gas field, offshore in Cook Inlet. The gas would be delivered from the gas field to the Kenai Beluga Pipeline on the Kenai Peninsula, or from gas that Furie holds in storage in the Cook Inlet Natural Gas Storage Alaska facility.

In approving the gas sales agreement, the commission said that the agreement is consistent with the commission’s statutory obligation to recognize the benefit of a utility achieving a diversified portfolio of gas supplies with different pricing mechanisms from different suppliers. Currently Chugach Electric obtains most of its gas from Hilcorp Alaska. Moreover, the Furie agreement is consistent with a need to assure the public of a reliable service by the utility, the commission said.

“The Furie GSA has the effect of diversifying Chugach’s gas supply while retaining flexibility as to gas volumes and pricing,” the commission said.

- ALAN BAILEY