Cook Inlet Gas

By Dave Donaldson

Gas supplies for SouthCentral are looking better going into this winter than they were last year.  And there’s new opposition – and support – for an Export License for the Conoco-Phllips/Marathon Liquefied Natural Gas Plant in Cook Inlet.  

Conoco-Phillips and Marathon Oil drew immediate public opposition to their request for an extension of its export license this year – since at the time of the public comment,  local utilities didn’t have enough firm delivery contracts for gas.  Some legislative opposition arose with the request to export the forty Billion cubic feet of gas remaining under the old license.

Governor Sean Parnell agreed in a letter to the U-S Department of Energy – recommending a “Conditional” approval  that would “show local gas needs are met, particularly during times of shortage under terms that protect Alaskan’s interests.”

Joe Balash, the administration’s Inter-Governmental coordinator, specializes in energy issues.  He says the governor’s driving priority is that local needs are met for local use.

Progress is good, and we’re encouraged.  And I think before everything is said and done, everything is going to be in a good place where we can keep the exports flowing in times of surplus and make sure that Alaskans’ needs are met before all else.

However, Balash says now things are in place and the situation looks better.  The solution has been “civil” rather than governmental.

The “civil” solution has happened in the last moments of the public comment period.  Anchorage’s gas utility, Enstar, approved new contracts with Conoco-Phillips that provides a Non-Firm supply of gas for SouthCentral.  Basically, it’s a contractual agreement to divert gas from its export facility in times of high demand – with only the requirement that enough gas remain to protect the plant from technical damage.  John Sims is with Enstar.

As far as Enstar’s forecasted demand for 2011, we don’t have everything contracted on  a firm-supply basis.  But we do have five legitimate options for purchasing gas.  And if we need to find that source, we’ll utilize one of the five contracts that we have.

Sims says the supply puzzle hasn’t been put together yet – but all the pieces are on the table.  He says one of the big issues that would allow the company to be more comfortable with its options would be off-season storage – which is under construction and should be in operation for the winter of 2012-13.  Additionally, he says the Regulatory Commission of Alaska has not yet approved those contracts – for the gas and for the storage facility.

Confidence is returning – so much so that Enstar has notified the Energy Department that it supports the export license for the LNG plant.   Sims says the plant is a major component of the gas field for producers,  and they need its year-round incentive to encourage new exploration and new development – gas that can be turned toward Anchorage whenever it’s needed.


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