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CEA, Furie sign supply agreement
Anchorage utility Chugach Electric Association has agreed on the terms of a gas supply agreement with Furie Operating Alaska LLC and has filed the agreement with the Regulatory Commission of Alaska for approval. The gas would presumably come from Furie’s Kitchen Lights gas field, offshore under the Cook Inlet.
The agreement starts with an interruptible supply of unspecified amount that would go into effect as soon as the commission approves the agreement. That supply would terminate on March 31, 2033. In addition, a firm supply of approximately 1.8 billion cubic feet per year, with a minimum daily rate of 5 million cubic feet per day, would start on April 1, 2023, and also continue to March 31, 2033. The supply agreement allows Chugach Electric the option of increasing the firm supply by up to 1.8 bcf per year, upon providing Furie with a notice of intent to do this. The electricity utility can also purchase additional daily firm deliveries of up to 2 million cubic feet per day, beginning in year seven of the contract.
Chugach Electric told the commission in a March 16 filing that it already has sufficient gas under contract to meet all of its needs through to March 31, 2023. The 1.8 bcf per year in the new Furie gas supply would then likely account for 20 to 25 percent of the utility’s gas fuel needs during the period of the firm supply component of the contract. Currently Chugach Electric obtains its firm gas supplies through its ownership interest in the Beluga River gas field on the west side of Cook Inlet, and from Hilcorp Alaska. The utility also has interruptible gas supply agreements with Cook Inlet Energy and AIX Energy.
A graph included with Chugach Electric’s commission filing shows the utility’s Beluga River gas supply climbing until the mid 2020s before going into a decline.
Pricing agreements 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 for firm gas supplies would start at $7.16 per mcf in 2023, increasing to $7.98 per mcf in 2033. Chugach Electric told the commission that it believes that the firm gas pricing is competitive with existing contracts covering the time period involved.
Subject to the minimum pricing in the agreement, the actual price of gas in an interruptible supply would be negotiated between Furie and Chugach Electric on a case-by-case basis. There is no specific limit to the volume of gas that could be purchased as a consequence of one of these negotiations, but the supply could be interrupted at any time by either Furie or Chugach Electric.
Under the terms of the agreement Furie, at its discretion, would deliver the contracted gas from its gas field to the Kenai Beluga Pipeline, or from gas storage in the Cook Inlet Natural Gas Storage Alaska facility on the Kenai Peninsula. Chugach Electric would be responsible for the shipment of the gas from the delivery points.
Chugach Electric told the commission that the Furie gas supply agreement is consistent with the utility’s policy of diversifying its gas supply arrangements and that the agreement would form the cornerstone of the utility’s supplies after a supply agreement with Hilcorp Alaska terminates in 2023.
- ALAN BAILEY
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