Tentative Cook Inlet tariff deal reached

The conflict over a Cook Inlet pipeline operator’s steep tariff hike might soon be over.

Lawyers for Cook Inlet Pipe Line Co. and oil producer Cook Inlet Energy on July 26 jointly filed a notice with the Regulatory Commission of Alaska that the two sides have reached an “agreement in principle.”

They said they aim to file a formal settlement agreement by Aug. 31.

Cook Inlet Energy objected after CIPL raised its rate by 259 percent, from $4.06 to $14.57 per barrel.

The RCA allowed the rate to take effect at the outset of 2010, but only temporarily and subject to refunds.

Texas-based CIPL operates a 20-inch pipeline that runs 42 miles from Granite Point down the western side of Cook Inlet to the Drift River Oil Terminal. The pipeline was installed in 1966.

CIPL has attributed much of its tariff increase to damage the erupting Redoubt volcano caused in 2009, idling west Cook Inlet oil production and the pipeline for months.

Cook Inlet Energy, in its formal complaint filed with the RCA in January, argued the rate hike was excessive and “could not have come at a worse time” for the fledgling company, which in late 2009 bought oil and gas assets on the west side of the Inlet.

In their July 26 joint filing, CIPL and Cook Inlet Energy said Daniel K. Donkel, an overriding royalty interest owner who also objected to the rate increase, had reviewed the agreement in principle and “supports its terms.”

The companies asked that the case before the RCA be “held in abeyance” while they hammer out the formal settlement agreement.

Petroleum News asked David Hall, chief executive for Cook Inlet Energy, whether the parties have agreed to a new rate. Hall said he couldn’t divulge details.

“But I would say it looks good,” he said.

—Wesley Loy