Dive Brief:
- Continuing a trend of power providers investing directly in natural gas commodities, Municipal Light & Power and Chugach Electric Association have announced they intend to jointly purchase ConocoPhillips’ one-third interest in the Beluga River Unit natural gas field in the Cook Inlet, the Associated Press reports.
- The deal would transfer a 70% ownership stake in ConocoPhillip's remaining portion to ML&P and 30% to Chugach, for a total purchase price of $152 million.
- ML&P, which is owned by the Municipality of Anchorage, already owns one-third of the Beluga River gas field.
Dive Insight:
It appears to be a familiar story, utilities rushing to purchase inexpensive gas reserves, thereby locking in cheap fuel. ML&P already owns a significant chunk of the gas field, and said its previous investment is already returning dividends for customers.
“ML&P’s initial investment in the Beluga River gas field proved to be highly beneficial to our ratepayers,” ML&P General Manager Mark Johnston said in a statement. “We were glad to partner with Chugach to spread the financial benefits and energy security of gas ownership to more Anchorage families and businesses.”
Anchorage purchased interest at BRU in 1996 and since then ratepayers have saved an estimated $239 million, the utility said.
“Today, we secured a long-term gas supply for ML&P ratepayers, providing a quality and reliable resource at a very low cost. By partnering with Chugach, we were able to spread these benefits to more residents of the Anchorage Bowl," said Mayor Ethan Berkowitz.
ML&P and Chugach said they expect the joint purchase to supply a "significant portion" of the utilities’ gas needs over the next decade while saving the residents of Anchorage millions during the same period. The utilities said that in 2018, under current signed contracts, Chugach will pay approximately $7.53/thousand cubic feet (Mcf) and ML&P will pay approximately $8.78/Mcf, while ML&P’s current cost of producing gas from Beluga River is $4.35/Mcf.
If the deal is approved, ML&P will own 56.67% of the Beluga River Unit, Hilcorp will own 33.33% and Chugach will own 10%. The Regulatory Commission of Alaska must sign off, however.
