NEWS BULLETIN

December 10, 2004 --- Vol. 10, No. 113December 2004

TAPS owners seek higher tariffs for 2005

Owners of the trans-Alaska pipeline system are seeking substantially higher tariffs for shipping Alaska North Slope crude to Valdez in 2005, according to recent regulatory filings.

In documents filed Dec. 1 with the Federal Energy Regulatory Commission, the TAPS owners will ask shippers to pay up to 28 percent higher interstate transportation rates in 2005 for oil moved on the 800-mile trans-Alaska oil pipeline.

Unlike most oil pipelines, which base their tariffs on the producer price index, TAPS charges shipping rates calculated using a cost-based model approved by the owners, the state of Alaska and FERC in a 1985 settlement.

Each of the five owners will seek higher tariffs in 2005, ranging from $3.52 to $3.98 per barrel. The new transportation rates will apply to all crude types shipped from the North Slope, according to filings made with FERC by the five owner companies.

BP Pipelines (Alaska) Inc., which owns slightly more than a 50 percent interest in TAPS, is asking $3.86 per barrel, up 28 percent from $3.01 per barrel this year.

“The new rate was reached under the (TAPS Settlement Methodology) formula, which takes into consideration operating costs, depreciation, taxes and other components,” BP spokesman Daren Beaudo told Petroleum News late Thursday.

ConocoPhillips Transportation Alaska Inc., which holds more than a 26 percent stake in TAPS, will ask $3.52 per barrel, up nearly 9 percent from $3.23 per barrel in 2004. ExxonMobil Pipeline Co., which owns the third-largest share of TAPS, will seek $3.60, up 17.6 percent from $3.06, while minority owner Koch Alaska Pipeline Co. LLC wants $3.97 per barrel, or 7 percent more than the $3.71 per barrel that Williams Alaska sought in 2004 for the 3 percent interest in TAPS that it later sold to Koch. Unocal Pipeline Co., another minority owner, aims to charge $3.98 per barrel for 2005, compared with the $3.55- per-barrel tariff it sought for this year.

Assistant Attorney General Wilson Condon told Petroleum News Thursday that Alaska has until next week to protest the tariff hikes. “We have not made a decision on what we’re going to do … We will make a decision before the deadline,” said Condon, who supervises the oil, gas and mining section of the Alaska Department of Law.

The state of Alaska has filed protests of some aspects of TAPS tariffs in the past, but is precluded from protesting other aspects of the shipping rates under provisions of the earlier TAPS settlement, Condon added.

Editor’s note: See story in Dec. 17 issue of Petroleum News.


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