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HEA signs gas deal with Furie
Homer Electric Association has signed a natural gas sale and purchase agreement with Furie Operating Alaska.
HEA said Sept. 16 that its generation and transmission subsidiary, Alaska Electric and Energy Cooperative, will receive natural gas from Furie beginning April 1, 2016. The contract terminates Dec. 31, 2018, and includes two one-year options which can extend the term through Dec. 31, 2020.
HEA said the gas will be used to fuel its plants in Nikiski and Soldotna.
The utility is currently purchasing natural gas from Hilcorp under terms of a contract which expires March 31, 2016. HEA said it contacted known Cook Inlet natural gas producers to secure supplies beyond that date, and negotiated with those that expressed an interest and the ability to provide natural gas under the terms of a utility based natural gas supply contract.
The agreement with Furie is the culmination of that effort, HEA said.
Gas costs will be lower The agreement calls for the purchase of between 4 billion and 6.2 billion cubic feet of natural gas annually beginning March 31.
HEA said its gas costs in 2016 and 2017 will be lower than what it is currently paying.
“This contract will provide one of the Cook Inlet independent producers with a market for its gas, allowing them to move forward with significant investment in Cook Inlet offshore gas infrastructure,” HEA General Manager Brad Janorschke said in a statement.
He said the contract is the result of the state’s efforts to incentivize offshore Cook Inlet exploration and development.
“The excess capacity that will result from this development and the pricing within this contract may lead to more competitive gas pricing within the Cook Inlet market,” Janorschke said.
Platform installed Furie finished construction and installation of a new offshore platform, 16 miles of subsea pipeline and a natural gas processing facility in Nikiski this summer, and is currently connecting the Kitchen Lights unit discovery well within the platform caisson to the production equipment.
Furie has indicated they plan to have some production online by November.
“When we began drilling in 2011, the Cook Inlet was in the midst of a potential energy crisis,” Furie Senior Vice President Bruce Webb said in a statement. “It seems fitting that our first natural gas deliveries will be to HEA who supplies electricity to the community where our onshore production facility is located,” Webb said.
Regulatory Commission of Alaska approval is required for the gas sale and purchase agreement to become effective.
- Petroleum News
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