Koch requesting in-state tariff hike

Follows ConocoPhillips’ request for another 12.5% increase over existing temporary rates, suggests more consolidation

Eric Lidji

For Petroleum News

Following in the footsteps of ConocoPhillips, Koch Alaska wants to increase the rate it charges to ship oil on the trans-Alaska oil pipeline to in-state destinations.

Under a proposed increase filed with the Regulatory Commission of Alaska at the end of August, Koch would charge $2.87 to ship a barrel of oil from the North Slope to North Pole, and about $4.50 to ship to Valdez, depending on the final destination. (There are two off-take points in Valdez: the PetroStar refinery and the Valdez Marine Terminal.)

Koch is asking for a roughly 12.5 percent increase over its existing rates of $2.55 per barrel to ship to North Pole and about $3.99 per barrel to ship to points in Valdez.

Koch said the increase is needed to offset declining throughput on the pipeline. The proposed rates would bring Koch an additional $3.4 million a year in revenue.

The Koch rates roughly match those recently filed by ConocoPhillips. The RCA recently approved those rates on a temporary basis, the first step toward permanent approval.

Koch wants the RCA to implement its new rates by Oct. 1.

The request is Koch’s third over the past 20 months. If approved, it would represent a 130 percent jump in shipping rates since December 2008, when four of the five owners of the pipeline asked for a 57 percent increase to in-state shipping rates in place since 2002.

Those 2002 rates, calculated under a new methodology, charge $1.25 to ship a barrel of oil from the North Slope to North Pole and $1.96 to ship to various points in Valdez.

Subsidiaries of BP, ConocoPhillips, ExxonMobil, Union Oil Co. of California and Koch own an undivided share of the pipeline. Koch owns 3.08 percent of the pipeline.

Koch also wants the RCA to consolidate its case with several previous cases.

All of the owners of the pipeline, except BP, requested rate increases in 2008 and 2009, and the RCA approved all eight cases on a temporary and refundable basis.

This past August, the RCA consolidated those cases, seeing enough similarities between the proposed rates and the justification behind them to justify merging the proceedings.

Since then, ConocoPhillips requested new rates. Now Koch has done the same thing.

Koch wants all 10 cases to be consolidated.