MEA may have gas source

BIG LAKE — It’s not a contract, but Matanuska Electric Association General Manager Joe Griffith said a handshake agreement with Hilcorp Alaska is helping him sleep at night.

During a speech to the Big Lake Chamber of Commerce on Monday, Griffith announced that Hilcorp has agreed to contract with MEA to supply natural gas to its new Eklunta generation station.

Griffith said details of a contract have not been settled, but that Hilcorp and MEA and moving in that direction. He said Hilcorp purchased most of Marathon’s exploration, development, production, transportation and sales of crude oil and natural gas, which accounted for about 35 percent of Cook Inlet natural gas production.

A Consent Decree between the state of Alaska and the two companies allowed the sale to go forward, but established a price cap structure for the gas sold for the next five years.

“Hilcorp has said we can get you to 2017,” Griffith said. “We don’t know what’s going to happen after that.”

Still, this is a major step — it’s the first time since the utility’s board of directors voted to build a power plant that even a preliminary agreement for a fuel has been obtained.

Griffith said so far he’s met with 21 companies working to nail down a natural gas supply in time for the Eklutna power plant’s Jan. 1, 2015, startup.

There are a lot of moving pieces in Alaska’s energy portfolio presently, he said.

Several big energy projects including the Susitna-Watana Hydroelectric Project, LNG trucking and a small diameter pipeline from the North Slope to Southcentral received legislative funding this year.

Griffith said adding Watana to the mix in Southcentral will be a challenge since the plan put forward thus far includes the hydroelectric generation facility that would generate an average of 2.5 million megawatt hours a year, but does not include money to tie it into the Railbelt Intertie system.

This year’s capital budget includes $25 million for the pipeline project to Southcentral, which is estimated to be ready for use by 2019.

“We still need to figure out fuel for 2017 to 2019,” Griffith said.

He said he’s also skeptical of a $350 million state-funded plan to truck LNG from the North Slope to Fairbanks. Griffith said his concern with this plan is it leaves out $800 million or so that will be needed for a gas processing plant on the North Slope to prepare the gas for use and transport.

At the chamber meeting, he gave an updated on the Eklutna plant and a couple of projects to upgrade transmission lines to operate the plant and to expand capacity in the core area.

Griffith said a power outage in the Wasilla area a few weeks ago was caused by an overload at the Herning Substation that blew a transformer off the pole.

“We’ve got to get power to that sector,” he said. “We’re right at the limits of power in the Wasilla core.”

The route needs a conditional use permit from the city of Wasilla, which thus far opposes the route the lines would travel. A hearing in front of the Wasilla Planning Commission is May 14.

Griffith said he has offered to set up a program for Wasilla similar to the one in Eagle River where residents pay a monthly surcharge to have buried electric lines. He said thus far the city hasn’t come to the table to support the idea.

He said the cost would be around $20 per month for the average customer, but much more for businesses.

Contact managing editor Heather A. Resz at 352-2268 or heather.resz@frontiersman.com.