Buccaneer sales contract with Enstar approved

Buccaneer Energy announced Sunday that the Regulatory Commission of Alaska has approved its gas sales contract with Enstar for the natural gas well behind WalMart.

According to Buccaneer's announcement, the company will sell between 5 and 15 million cubic feet per day beginning in April, assuming the Cook Inlet Natural Gas Storage Alaska facility off Bridge Access Road in Kenai is done. That gas will be stored at the CINGSA facility throughout the summer, and taken back out of the ground in the winter when the demand for gas in Southcentral Alaska exceeds the supply. This winter, Buccaneer can sell gas on a non-firm basis, meaning that meaning that it will sell gas when Enstar is looking for extra. Those sales will begin once a pipeline to move gas from the first Kenai Loop gas well to market is finished, likely in December.

The regulatory commission made that decision Thursday. Gas sales contracts between Enstar and Aurora Gas and Cook Inlet Energy were also approved the same day. Those contracts are for gas sold on a non-firm basis, beginning at the end of this year. The contracts last through December 2012, with a provision that they can be extended for a year.

Enstar spokesman John Sims said earlier this month that the potential contracts with Buccaneer, Aurora Gas and Cook Inlet Energy would give Enstar a boost in meeting customers' natural gas needs this winter.

According to Buccaneer's announcement, this contract was the fastest contract approval in the commission's history. A number of legislators wrote letters of support to the regulatory commission for both gas sales contracts.

Enstar also recently filed with the regulatory commission to change its gas cost adjustment to include gas storage costs. That would allow it to adjust its rate to include the cost of storing gas at the CINGSA facility throughout the summer. A decision on that adjustment is expected to be made this month.

Formation drilling done

Buccaneer Energy recently announced that drilling on its second well in the Kenai Loop formation is done.

According to the company's announcement, analysis and additional work -- including well testing -- is still to be done. The drilling went down 11,000 vertical feet. So far, the work has identified four zones.

The company is still ahead of schedule for its contracts to explore and produce gas from its Kenai Loop wells.

Molly Dischner can be reached at molly.dischner@peninsulaclarion.com.

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