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Unocal reduces tariff increase on TAPS After withdrawing request to double intrastate rates, Unocal now asking for only 57 percent jump; owners want to consolidate cases Eric Lidji Petroleum News
Unocal Pipeline Co. is asking state regulators to approve a 57 percent increase to the rate it charges for shipping oil along the trans-Alaska oil pipeline to markets within the state.
The request comes after Unocal withdrew an initial request to double its intrastate rate, a tariff on oil shipped to one of three locations in Alaska, primarily for use by refineries.
Under the proposed increase, which Unocal is asking to go into effect on Feb. 1, 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 Regulatory Commission of Alaska set the current intrastate rates in a 2002 decision that also set out a new formula for calculating rates, replacing one in use since 1986.
Since that decision, the companies that own the pipeline have typically requested new rates every year using the old formula and have been rejected by the RCA every year.
This year marks the first time the owners have used the 2002 formula to calculate rates.
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 stayed below a predetermined limit.
With Unocal’s new request, four of those companies have requested an identical 57 percent increase to intrastate rates. The fifth company, BP, which owns the largest share of the pipeline, told state regulators it doesn’t plan to ask for a rate increase this year.
Unocal owns the smallest share of the pipeline, less than 1.5 percent. The proposed rate increase would only garner an additional $3 million in revenue for the company.
Requesting consolidation Because the four companies requesting increases used the same formula to craft their rate proposals, they’ve asked the Regulatory Commission of Alaska to consolidate the cases.
The four 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.
Unocal and Koch, which owns just more than 3 percent of the pipeline, both originally requested much larger intrastate rate increases calculated under the 1986 formula, but both withdrew those requests and resubmitted rate increases under the 2002 formula.
So far, the RCA approved a 57 percent increase for both ConocoPhillips and ExxonMobil on a temporary basis, but has not made a preliminary ruling on the similar requests from Unocal and Koch, which have asked for the rates to become effective on Feb. 1.
The pipeline currently moves some 750,000 barrels of oil per day, down from a peak of about 2.1 million barrels each day in 1988. Some 90 percent of the oil is shipped to markets out of state under the jurisdiction of the Federal Energy Regulatory Commission.
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