Aurora "Sour" Gas

Maybe an Alaskan style bailout is needed for the chumps that signed up for re-negotiable natural gas contracts with a hedgehog? That “re-negotiable” term herein means that a contract could cease and desist anytime of the year with only a 30-days notice. And back in November of this year through a force majeure, Aurora went “sour” on its customers – 300 big energy guzzlers, like the local schools and Big Wildlife businesses and not to forget military housing for our troops. Now most Alaskans could not make heads or tails as to who or what Aurora Gas Company is all about. Except if you were a customer and now scrambling to get a supply of fuel for the up-coming “Big Chill” season. So here is a little tidbit about Aurora. First and foremost, anybody in their right mind that tries to infiltrate the “Big Oil” monopoly here in Alaska has not done the homework. Aurora tried to break into that lucrative monopoly in Cook Inlet, with the natural gas market. “Big Oink Oil” also controls the natural gas markets here in Alaska. Now Aurora found customers, commercial type customers that could sign long-term large volume contracts wherein they thought they would get a wheel of a deal with respect to natural gas pricing and availability. The pricing may have been upfront, but not the availability. See, Aurora had no independent infrastructure it could call its very own, so contracted for natural gas volumes with the “Big Oil” conglomerates like ConocoPhillips(a.k.a. ARCO Alaska), Unocal and Marathon. But the make and break for Aurora was based on a gamble, with respect to the weather. According to historical records, Anchorage was trending towards a heat wave, so the gas volumes that Aurora had signed up for in efforts to feed its own customers was thought to be sufficient. Accept the weather is not all that cooperative here in the Last Frontier. Now one must remember that “Big Oil” accountants are smart, as they know exactly how to control things. Just look at how British Petroleum cornered the propane market. So Aurora had a good deal going, so did that company’s customers, until a cold spell consumed all of Aurora’s available gas contracts. What it meant was this. Without enough gas to supply its customers, like to keep the schools warm and families of daddies off to work at war in Iraq, Aurora had to dip into “premium” gas contracts, with guess who? Yes indeed, “Big Oil” was there to lend a helping hand, at a cost. “Premium” natural gas was selling upwards 3-times the average pricing index. Take it or leave it was the sentiment. And Aurora could not pass this increase on to its customers. So it had to dip into its own profit pocket, a deep dig it was. Now what Aurora was doing was trying to build an infrastructure to supply enough gas so it didn’t have to worry about availability. Bottom-line, this premium gamble was known by those in the know. See, when Aurora made contracts with big commercial customers, it basically stole away profits from the big players, so the web of failure surrounded Aurora’s future. And the weather played the pivot for the spider’s game. But early on, when Aurora was having this dilemma in the winter of 2003, low and behold there came a bailout. Now I don’t know if Ben Stevens had anything to do with this, but he was on the board of directors for Enstar during this ritual All I know is that there came a weird type influence from somewhere up high to “cook” the books in efforts to help Aurora make its commitments. I was a senior pipeline controller for Enstar during Aurora’s beginning. I was fired when I refused to “cook” the books in efforts to help Aurora limp along when unusual cold winters almost found Anchorage without enough gas to heat water to a boil for morning coffee. On at least a dozen occurrences, Enstar came within hours of loosing gas pressure to neighborhood houses. Because the entire natural gas system relies on “line-pack” to hold enormous volumes of natural gas, problems in gas availability is not apparent until the early morning hours. A pipeline controller monitors this line pack along with the “degree days”, to understand how much gas is required. It is a dynamic system of checks and balances. On several occasions during the winter of 2003, I had to scramble to get enough gas into the system. When a cold spell lasts a few days too long, the system continues to deplete to a critical stage of no return. On one particular night, I spent several hours trying to get more gas into the system from producers. It ended up as “premium” gas. Now the producers had enough gas to fill their own contract requirements, even if it meant more gas to offset the cold-spell. Unfortunately for the Aurora customers, it meant bargaining for “premium” natural gas. I didn’t care, as my job was to make sure Anchorage and the Valley stayed warm. Now when the smoke cleared and the daily accounting came in, the fact that I had OK’d premium gas volumes to enter the pipeline, it was looked upon with scorn. Again, someone else being unprepared is not my problem. And I didn’t understand why Enstar was seeing this as a problem. Remember, Entsar doesn’t really own any gas, as it is just a transportation company. This “premium” supply and demand thing went on for several months during this one very cold winter. Now one of the things that a gas controller has responsibility over is preparing all the reports for gas volume accounting. Natural gas buying and delivery is based on a 24-hour scheduling timeline. In Enstar’s reporting, there was an entry for two of Aurora’s ambitious stalled projects, called Moquawkie and Lone Creek. These were leases west of Anchorage wherein Aurora was hoping to find natural gas, in efforts to have enough availability without resorting to this “premium” contract stuff. But due to a colder then normal winter, drilling was behind schedule. It appeared as though it was to mean a complete seasonal delay, and with such a brutal winter so far, Aurora or somebody was feeling the pinch. Hey, business is business. Now one day my manager tells me that we have to start accounting gas volumes for Aurora? It basically meant that this company was to get allocated and paid for gas it didn’t have! It meant by doing so that this would account for “over and shorts” with respect to gas volume availability, as a means to never again enter the “premium” zone. But the gas had to come from somebody? Now since the entire Enstar pipeline is a commingled system with gas entering the system from various locations by various producers, it is difficult to differentiate residential from commercial usage. It was evident that this was a way to pass the buck. “Big Oil”, who had not the data that showed usage, well by a little creative accounting, Aurora could be afforded volumes that would cover the availability aspect, at the same time provide them with cash for gas that wasn’t even there or theirs to begin with. Again, I refused to take part of this scam. It was so clear cut an illegal attempt to rip another entity off, even if it was Big Oil - who could most likely afford a little malfeasance upon its lucrative profits. As a matter of fact, before I was terminated for refusing to take part of this illegal manipulation, somebody had gone back 4-months into the books and cooked Aurora’s gas volumes. Where there existed a bunch of zeros, now some manipulated number, a convenient offset it was. And there wasn’t even a pipeline or meter to register this gas! Anyway, maybe this bailout allowed Aurora to go where no logically thinking businessman should have gone, up against “Big Oil”. So now we see the fall-out, as Aurora is bailing out of the scene. And “Big Oink Oil” has enough natural gas to supply Aurora’s 500-meters, but it will be at a cost. Because these guys play tough. Enstar should be investigated with respect to “cooking” the books for Aurora early on when the latter was trying to compete with the “Big” guys, in their own backyard. Competition is an OK thing, as long as it doesn’t end up causing harm, which is not the case herein. Somebody will pay for the gas, at a “premium”, maybe it is time for someone to pay for the behind the scenes shenanigans. If indeed Enstar was instrumental in using book “cooking” to aid and abet Aurora, and now Aurora is reneging, then Enstar management should pay. And if there existed a decent regulatory commission that was here too see to it that stuff like this is not allowed, then maybe Enstar would be liable and pay. But then that would just be passed on to the customers, and we would all end up paying. Sounds just like another worker-bee bailout, Alaskan style. Oh, I did file a complaint with the regulatory commission when I was terminated, it was dismissed! See, I don’t have “Esquire” after my name, as I am just a worker-bee! What the hell did Ben do for $70,000 dollars when on Enstar’s Board of Directors? Maybe he had something to do with my termination. Would be nice to know. Anyway, it goes to show that corruption has become not only a political tool, but a tool of all the trades here in Alaska. Damn, just received a shut-off notice from Enstar! Buddy, can you spare a dime?

CopyRight 2008 – Dixie Productions/MSK Media/Eagle Rock Press
Contact: Storylineonline@gci.net or www.Storylineonline.com or www.chinookjournal.blogspot.com