|
Rate increase cases coming together ConocoPhillips, ExxonMobil and Koch ask for 57 percent jump; Unocal pulls request to double rates; BP won’t ask for increase Eric Lidji Petroleum News
Most of the owners of the trans-Alaska oil pipeline are now accounted for in a new round of requests to increase shipping rates on crude oil delivered to markets within Alaska.
Of the five companies that own the pipeline, three have requested a roughly 57 percent increase to their intrastate tariff, or the rate companies charge for delivering crude oil from the North Slope to refineries in the state along the trans-Alaska oil pipeline.
One more company recently withdrew its request for a much larger increase to its intrastate tariff, but will most likely submit a revised filing to state regulators. The fifth owner recently told state regulators it doesn’t intend to request a rate increase this year.
The trans-Alaska oil pipeline is owned by subsidiaries of BP, ConocoPhillips, ExxonMobil, Unocal and Koch. Each company owns an undivided share of the pipeline and sets its own rates, so long as the five rates combined stay below a predetermined limit.
The companies typically file for new rates every year. But for the past five years, state regulators have rejected those filings because the companies calculated new rates using an old formula struck down by a 2002 ruling of the Regulatory Commission of Alaska.
This year marks the first time the owners have calculated rates using the 2002 formula.
Three want 57 percent jump Between early October and mid-December, ConocoPhillips, ExxonMobil and Koch used the 2002 formula to justify increases of around 57 percent to their intrastate tariffs.
The Regulatory Commission of Alaska approved the ConocoPhillips and ExxonMobil rate increases on a temporary basis while it examines whether the proposed rates are justified under the complex terms of the 2002 formula, which includes consideration of operation and maintenance costs, throughput on the pipeline and depreciation expenses.
If RCA ultimately determines the recently implemented rates are not justified, the companies would have to refund any extra revenue they’ve collected with interest.
RCA is currently considering whether to approve the Koch increase.
The companies have asked state regulators to consolidate the three cases into one.
Under the temporary rates approved for ConocoPhillips and ExxonMobil, the cost to ship a barrel of oil from the North Slope to North Pole would jump to $1.97 from the current rate of $1.25, while rates to locations in Valdez would increase to about $3.04, depending on the company and the final destination, from the current rate of $1.96.
The three companies say the increases are justified because throughput on the pipeline has dropped nearly 30 percent since 2002 without an equal decrease in operating costs.
The pipeline currently moves some 750,000 barrels of oil per day, down from a peak of around 2.1 million bpd in 1988. Around 90 percent of the oil is shipped to markets out of state under the jurisdiction of the Federal Energy Regulatory Commission.
1986 vs. 2002 formulas There still appears to be confusion between the older and newer ratemaking formulas.
In late November, Unocal asked to double its intrastate tariff, calculating the proposed rates using the formula created in a 1986 settlement with the state, not the 2002 formula.
But Unocal withdrew that request in mid-December without explanation, and as of Dec. 29, the company had not yet submitted revised filings using a different formula.
In early-December, Koch originally proposed to more than triple its intrastate tariff, also using the 1986 formula to calculate its proposed increase. But the company also withdrew its request in mid-December, before eventually filing revised rates in late-December.
BP also filed rate information with state regulators using the 1986 formula, but said while “maximum tariff rates calculated for 2009 are higher than (BP’s) current intrastate tariff rates,” the company would not request an increase to its in-state shipping rate this year.
BP owns the largest share of the pipeline at about 47 percent, while ConocoPhillips owns some 28 percent of the pipeline and ExxonMobil owns about 20 percent. Koch owns just more than 3 percent and Unocal owns the smallest share at about 1.5 percent.
| 