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Nutaaq seeking large rate increase
Just months after taking over the system, the new owner of the Badami Pipeline is seeking a 30 percent increase to its tariff rate on the eastern North Slope pipeline.
The increase is needed to cover operating costs, according to the company. The hike would restore the rate to 2013 levels, before a former operator voluntarily reduced it.
The Regulatory Commission of Alaska is allowing Nutaaq Pipeline LLC to charge the higher rate on a temporary and refundable basis while it investigates the request.
With the increase, it now costs $12.25 to ship a barrel of oil from the Badami central processing unit to the start of the Endicott Pipeline, up from a previous rate of $9.42.
The state is taking comments on the matter through April 18.
The request is the latest in a series of revisions connected to the transfer of the pipeline.
Ownership transferred in 2013 Last year, as part of a larger transfer of the Badami unit and its associated facilities, BP Transportation (Alaska) Inc. transferred the Badami Pipeline to Nutaaq Pipeline, which is a joint venture between unit-operator Savant and its partner Arctic Slope Regional Corp.
The methodology for the shipping rate on the pipeline is governed by a 2004 settlement between BP and the state, and requires the owner to file annual revisions based on costs.
In November 2013, after the RCA approved the transfer, but before the deal closed, BP filed its annual tariff revision. The previous rate had been $12.25 per barrel, and while the settlement methodology allowed for a maximum rate of $21.97 per barrel, at least according to BP calculations, BP requested a voluntary rate reduction of $9.42 per barrel.
Using the settlement methodology, Nutaaq is calculating a rate of $12.25 per barrel. The higher rate would bring in $4.07 million, up from $3.13 million under the previous rates.
—Eric Lidji
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