On Thursday, Australia-based independent oil and gas company Buccaneer Energy Ltd. announced that it had completed a sales contract with ConocoPhillips to supply the Kenai Peninsula LNG facility with natural gas.
The contract will commence when Buccaneer's Kenai Loop #1 well begins production in December. The contract is expected to conclude at the end of April 2012, but could end earlier if the Cook Inlet Natural Gas Storage Authority (CINGSA) facility is completed earlier. Buccaneer has a sales contract with the gas utility ENSTAR that commences when the storage facility comes online.
The contract with ConocoPhillips doesn't contain sales volume requirements, but allows Buccaneer to sell up to 2.5 BCF to ConocoPhillips at undisclosed prices consistent with recently executed gas contracts.
Buccaneer director Dean Gallegos said in the release that the new contract gives Buccaneer flexibility and near-term cash flow and allows the Kenai Loop project to flow continuously from the time of first production.
He explained, "The ability to flow the well continuously will give us the opportunity of assessing the reservoir performance prior to the commencement of the ENSTAR gas contract in April 2012. If the reservoir performs as testing has indicated, it will give us the ability to increase the production rate from the anticipated minimum of 5.0 MMCFD."
Also on Thursday the Peninsula Clarion reports that ConocoPhillips announced that new gas supply contracts, with Buccaneer and others, will enable LNG exports from its Nikiski plant, currently in winterization mode, to resume by the middle of 2012.
ConocoPhillips spokesperson Natalie Lowman said that the company has arranged for a tanker to carry the LNG but is still looking for a buyer.
Read more from the Clarion, here.