Utilities Move Forward on Beluga River Gas Field Purchase
Chugach, ML&P file for approval with RCA
ANCHORAGE – On March 11, Chugach Electric Association, Inc., and Municipal Light & Power submitted a request to the Regulatory Commission of Alaska (RCA) for approval of the purchase of ConocoPhillips’ one-third working interest in the Beluga River Unit (BRU) natural gas field in Cook Inlet.
The filing is the next step in the process announced February 9 that the two utilities are working to acquire ConocoPhillips’ one-third interest in the BRU. If approved by the RCA, the agreement transfers 70 percent ownership of the ConocoPhillips’ interest to ML&P and 30 percent to Chugach. The total purchase price is $152 million.
“We are pleased to be moving forward with this great opportunity to partner with ML&P, ultimately providing more efficient and affordable energy to more Anchorage residents and businesses across the city,” said Brad Evans, CEO of Chugach Electric Association. “Acquiring low-cost, reliable supplies of natural gas is key to serving our customers, and we know this purchase will have significant, long-term benefits for ratepayers.”
The Joint Request seeks approval of the Purchase and Sale Agreement and the recovery of costs associated with the acquisition. The request includes the supporting economic analysis from National Economic Research Associates, Inc. and due-diligence reports on environmental, equipment, and reservoir analysis. The parties are requesting the RCA approve the transaction by April 21, 2016.
ML&P already owns one-third of the BRU. ML&P and Chugach expect the joint purchase of ConocoPhillips’ interest to supply a significant portion of the utilities’ gas needs over the next 18 years while saving the residents of Anchorage millions during the same period.
“In the 20 years since ML&P first acquired interest in the Beluga River Unit, our ratepayers have saved hundreds of millions of dollars. By partnering with Chugach, the benefits of gas ownership extend to more Anchorage residents and we secure a reliable and inexpensive energy source for our customers,” stated ML&P General Manager Mark Johnston.
If the joint purchase of ConocoPhillips’ interest at Beluga River is approved, ML&P will own 56.67 percent, Hilcorp will own 33.33 percent, and Chugach will own 10 percent from the surface down to 7,000 feet. ML&P and Chugach will own 80 percent and 20 percent of the interests below 7,000 feet, respectively. Hilcorp is expected to be the operator of the field.
The BRU is located on the west side of Cook Inlet, approximately 35 miles from Anchorage. It is an established natural gas field originally discovered in 1962.