Chugach Electric announces new long-term natural gas contracts
Governor Palin and Chugach Electric Association are pleased to announce that Chugach has a new, long-term natural gas contract with ConocoPhillips. The new seven-year contract is designed to fill 100 percent of Chugach's unmet needs through April 2011, approximately 50 percent of Chugach's unmet needs from June 2011 through December 2015, and approximately 25 percent in 2016.
The total volume of gas under the contract is about 66 billion cubic feet. The vast majority (90 percent) of the gas under the contract will be priced off of a basket of Lower 48 Production Area price points, as published in Platts Gas Daily. The pricing formula in the contract will result in the most competitive price, on average, of any price formula presented to the RCA during the past decade for a major gas contract. Production Area Composite Index compares favorably with Henry Hub and has averaged out to be 9 percent less than Henry Hub over the past four years.
As further consideration for the contract, Chugach has agreed to withdraw its appeal of the United States Department of Energy's approval of the LNG export authorization for the period 2009-2011. Chugach asked that DOE condition LNG exports by requiring that the gas producers also make binding commitments to meet the natural gas supply needs of gas-dependent Cook Inlet utilities such as Chugach and ENSTAR. The new supply contract between Chugach and ConocoPhillips ensures that Chugach's needs will be fully met through the end of the export authorization and then for significant portions of Chugach's requirements through 2016.
The contract was fully executed and submitted to the Regulatory Commission of Alaska yesterday. Chugach has been in negotiations with Cook Inlet producers for many years. We are pleased that the result of our efforts is a contract that provides needed gas volumes at a reasonable price and on terms that are fair, just and equitable.
The State of Alaska provided critical assistance in bringing about the successful conclusion of these negotiations.
Chugach is the largest electric utility in Alaska, providing power for Alaskans throughout the Railbelt through retail, wholesale and economy energy sales.