GVEA and Petro Star Inc. Agree to Fuel Supply Terms
Today, Golden Valley Electric Association and Petro Star Inc. reached agreement on terms covering the supply of a naphtha-blended fuel to be burned at GVEA's North Pole power plants. GVEA and Petro Star expect to finalize a fuel sale and purchase contract sometime after the GVEA Board of Directors' meeting on May 12th.
GVEA has been working to find a new fuel supplier since February when Flint Hills Resources announced it would cease refining crude by the end of May. An interim contract with Petro Star will allow GVEA to continue to evaluate long-term fuel solutions for its power plants.
"We were concerned that Flint Hills' closing would negatively impact the price of electricity for our members," said Cory Borgeson, President and CEO of Golden Valley. "The good news is that this fuel agreement will have a minimal impact to our members' electric bills."
"Also good news is that for at least as long as Petro Star supplies the naphtha blend, GVEA's pipelines that connect the refinery to the Trans-Alaska Pipeline System will continue operating, thus allowing for further capital recovery on this investment," said Borgeson. "Finally, GVEA will benefit from Petro Star's existing product storage, while it evaluates the option to add its own fuel tanks in the future."
"Connecting GVEA's power plant to Petro Star's Refinery will be fairly simple," said Lynn Thompson, GVEA's Vice President of Power Supply. Significant piping is already in place on GVEA's side, as it was planned for during plant construction in the event that Petro Star would ever be needed as a fuel supplier." Thompson estimates GVEA will need to install approximately 600 feet of pipe to connect GVEA's North Pole Power Plant to Petro Star piping at the refinery. For its part, Petro Star will be responsible for all refinery process modifications and adding dedicated custody transfer metering and associated improvements.
"This agreement is possible only with the support of Petro Star's parent company, Arctic Slope Regional Corporation, and the continuing efforts and commitments of the Parnell Administration and the Alaska State Legislature to ensure instate refiners remain capable of meeting the Alaskans' energy needs using North Slope crude oil," said Doug Chapados, Petro Star's CEO and President. "It has been a pleasure working with the GVEA team to determine how to supply low cost fuel to serve its members, and Petro Star looks forward to supplying this product in the very near future."
GVEA press release