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Enstar, Hilcorp agree on delivery schedule Colder than normal weather in Southcentral Alaska pushes gas supply volume toward upper limit of Hilcorp’s annual commitment Alan Bailey Petroleum News
In what appears to be another indication of tightening gas supplies from Alaska’s Cook Inlet basin, Enstar Natural Gas Co. and Hilcorp Alaska have agreed on a procedure for the delivery of Hilcorp gas to Enstar for the last couple of weeks of this year.
According to a notification sent by Enstar to the Regulatory Commission of Alaska on Dec. 14, colder than normal weather in Southcentral Alaska has caused Hilcorp gas deliveries to approach the contracted limit for 2012 of 20.5 billion cubic feet. In the absence of warmer weather, the supplies would reach that limit during the last week of December. Hilcorp is unwilling to exceed the contracted supply ceiling for fear that the delivery of extra gas in December would compromise the company’s ability to meet its gas delivery commitments in the first quarter of 2013, Enstar told the commission.
Schedule set Instead, the two companies have agreed on a daily delivery schedule beginning on Dec. 15 that will ensure the continuity of Hilcorp gas supplies through to the end of the month without exceeding the annual gas supply ceiling. If these daily supplies fall short of what Enstar needs, Enstar will obtain additional gas either through its daily gas bidding system or by withdrawing gas that the utility has stored in the Cook Inlet Natural Gas Storage Alaska storage facility, known as CINGSA, on the Kenai Peninsula, Enstar wrote.
“Had Hilcorp and Enstar not modified the delivery methodology … and had Enstar reached the 2012 ceiling prior to Dec. 31, 2012, Enstar would have been forced to withdraw 100 percent of the replacement gas … out of CINGSA on each day after reaching the ceiling,” Enstar wrote. “This would have very rapidly depleted Enstar’s CINGSA balance and may have exceeded CINGSA’s performance on any given day, causing serious disruptions throughout the system.”
Enstar initiated its gas bidding system in early 2011 to allow the company to cover a growing shortfall in gas supplies committed under contract. The bidding system enables gas producers to bid to meet the shortfall on a day-by-day basis.
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