Enstar attracts new customers, plans southern expansion

Posted: Tuesday, February 25, 2003

Enstar Natural Gas Company added 430 new customers in 2002 bringing its total on the Kenai Peninsula to 10,500.

The company currently is reviewing plans that could result in bringing natural gas service to the Kasilof area, which would add between 80 and 100 new customers by late fall.

Enstar also is eager to serve the southern end of the peninsula, according to peninsula division manager Charlie Pierce.

With that in mind, the company has completed preliminary distribution design work for the Homer, Anchor Point and Ninilchik communities.

To make that expansion in service economically feasible, a secure, uninterrupted supply of natural gas needs to be developed close by.

"Enstar is currently in discussions concerning supplies and hopes to have something more concrete to report in a few months," Pierce said.

All of Enstar's natural gas supplies come from Cook Inlet. Current suppliers are Marathon from various fields; Conoco-Phillips, Chevron and Anchorage Municipal Light and Power from the Beluga River field; and Aurora Gas from the Moquawkie field. Beginning in 2004, the company also plans to purchase gas from Unocal.

Asked if Enstar is planning to establish supply contracts with companies currently working on additional development of natural gas resources in Cook Inlet, Pierce said the company has supply arrangements with three of those companies: Marathon, Unocal and Aurora Gas.

Additionally, he said, "Enstar is currently discussing future supply arrangements with several parties, including several that are actively trying to develop additional Cook Inlet natural gas reserves."

During midwinter months, natural gas storage capacity can cause problems for industrial customers such as Agrium Kenai Nitrogen Operations and the ConocoPhillips liquefied natural gas plant in North Kenai, according to Kenai Peninsula Borough oil and gas liaison Bill Popp.

However, Pierce said Enstar has all of its requirements -- including peak requirements -- under contract through 2005.

"Enstar's suppliers are responsible for providing the peak requirements," said Pierce.

"Enstar understands Unocal is currently developing storage as a way to meet its commitments to Enstar.

"Enstar has had discussions with other parties about storage to meet the needs of the Cook Inlet community in the later part of the decade," he said.

Currently, the price of gas is $2.29 per thousand cubic feet under Enstar's older contracts, but a more recent agreement uses a 36-month average of the Henry Hub natural gas futures --as traded on the New York exchange -- as the price, limited to a floor price of $2.75. Henry Hub is an industry average of gas prices paid throughout the United States.

Pierce said Enstar expects to begin taking gas under that contract in 2004. Enstar's older contracts use a price index based on crude oil prices.

Because index periods for both types of contracts are still running, it is impossible for the company to estimate what the exact effect will be, according to Pierce.

"Over time, volumes under those (older) contracts will be replaced by volumes under newer contracts which have a minimum price of $2.75 per thousand cubic feet," Pierce said.

Growth plans for Enstar on the Kenai Peninsula during 2003 include an anticipated installation of 10 to 12 miles of new distribution pipe with 350 new service lines aimed at generating 300 new customers this year.



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