Enstar agrees to continuing AIX gas supply

Enstar Natural Gas Co. has requested Regulatory Commission of Alaska approval for a new gas supply agreement with AIX Energy LLC, operator of the Kenai Loop gas field. The new contract commits AIX to continue supplying gas to Enstar for another three years after the completion of gas sales through an existing contract that ends around June 2018.

The new contract involves the firm supply of 1.370 billion cubic feet of gas between July 1, 2018, and March 31, 2019; 1.464 bcf between April 1, 2019, and March 31, 2020; and 1.095 bcf to 1.825 bcf between April 1, 2020, and March 31, 2021. Gas would be delivered at a continuous rate of 5 million cubic feet per day during the first year of the contract, 4 million cubic feet per day in the second year and 3 million to 5 million cubic feet per day in the third year. Uncertainties in the delivery volumes in year three reflect the possibility that AIX may inform Enstar by Sept. 1, 2019, of the availability of additional gas from Kenai Loop.

The price of the gas is $6.35 per thousand cubic feet in the first year of the contract; $6.44 in the second year; and $6.54 in year three. Enstar would be committed to the purchase of the gas.

Although the AIX supply under the contract only represents about 5 percent of Enstar’s total gas needs, the AIX contract helps ensure diversity in the gas utility’s gas supply sources at reasonable pricing, Enstar told the commission.

“This is important to ensure the safe and reliable delivery of gas to our customers and could encourage further exploration in the Cook Inlet,” Enstar said.

AIX acquired the Kenai Loop field in the city of Kenai in 2014, as part of the fallout from the bankruptcy of Buccaneer Energy Ltd., the previous field owner. The field has four wells, two of which are producing gas. AIX has not conducted any new drilling in the field but has been considering the addition of gas compression and the return of one of the dormant wells to production.

- ALAN BAILEY