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RCA approves new Beluga pipeline tariff Accepts settlement agreement for fee arrangements that include the booking of capacity on key part of Cook Inlet gas infrastructure Alan Bailey Petroleum News
The Regulatory Commission of Alaska has accepted a settlement agreement for a new tariff for the Beluga gas pipeline on the west side of Alaska’s Cook Inlet. The pipeline is a key link in the pipeline network that carries gas from Cook Inlet gas fields, with the tariff on the line being of great importance in determining how gas producers and utilities transport gas to market.
Radical change In December 2010 Beluga Pipe Line Co., a subsidiary of Marathon Oil Co., proposed a radical new tariff involving fees to book capacity on the pipeline rather than charging shippers for the volumes of gas actually transported. Although the new tariff allowed shippers to move some gas using a traditional throughput based fee, a new very high rate for that service would have pushed customers into using the capacity reservation system. Beluga Pipe Line said that the line was not viable using throughput based tariffs because shippers were only using the line during periods of peak utility gas demand.
Cook Inlet gas shippers expressed concern the that new tariff could lock them into pipeline capacity reservations in excess of their actual needs, and all stakeholders in the tariff issue entered into negotiations, seeking an acceptable tariff arrangement. The resultant settlement agreement, which RCA has now approved, retains the principal of shippers paying to reserve pipeline capacity but includes terms that accommodate some use of unreserved capacity and that allow some flexibility in how the reserved capacity is used.
Fee structure Under the newly approved tariff shippers can book guaranteed capacity in the line for a fee of 25.44 cents per thousand cubic feet per day. Shippers will also be able to ship gas through the line for a fee of 25.44 cents per thousand cubic feet without pre-booking but without a guarantee that space will be available for that gas. Shippers who have booked guaranteed capacity will be able to carry forward and accumulate any unused capacity for use later in the same contract year that the capacity was booked.
However, gas producers whose gas fields connect directly into the line, who have no other means of shipping gas to market and who are selling their gas to utilities will have priority use of the line, thus presumably enabling these companies to ship utility gas without having to pre-book capacity. And any need to ship gas in support of some gas supply emergency will take overall precedence for pipeline capacity usage.
If Beluga Pipe Line receives more than a specified level of revenue during a contract year from the pipeline operations, shippers who have booked capacity on the line will be entitled to a refund of a share of the excess revenue as compensation for any reserved capacity they did not use.
Also as part of the settlement agreement Chugach Electric Association and gas utility Enstar Natural Gas Co. have signed five-year contracts reserving pipeline capacity. Chugach has reserved 21 million cubic feet per day for each year, while Enstar has reserved 4 million cubic feet per day in year one, declining to 2 million cubic feet per day in year three and reserving no capacity in years four and five.
Series of changes The new Beluga pipeline tariff comes amid a series of changes to the Cook Inlet basin gas infrastructure, as gas producers and utilities figure out how to deal with declining production from the local gas fields. As part of these changes, the Cook Inlet Gas Gathering System, or CIGGS, is being reconfigured to allow gas to flow east to west under Cook Inlet — previously the line has only carried gas from the west side of the inlet to the east side.
Gas flowing east to west through CIGGS from the Kenai Peninsula would travel from CIGGS through the Beluga pipeline to Chugach’s gas fired power station at Beluga. From Beluga gas could also move north through an Enstar gas pipeline to the Matanuska and Susitna valleys and Anchorage.
And Cook Inlet Natural Gas Storage Alaska is in the process of building a new gas storage facility near Kenai in the northern Kenai Peninsula, with that facility coming on line in the spring of 2012.
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