KPL settlement delayed until late April

The Kuparuk Transportation Co., the State of Alaska and Anadarko Petroleum are asking for another month to finalize a settlement on shipping rates for the Kuparuk Pipeline.

The parties told the Regulatory Commission of Alaska that the most recent draft went to each party on March 24 and that the parties are “very close to finalizing that agreement.”

The RCA originally gave the parties until last December to reach a settlement. The three sides signed a “nonbinding agreement in principle” on the major issues at play in the case in December and asked the RCA to give them until the end of January and then until the end of February to get final management approval of the settlement.

They now expect to have something by April 29.

The case revolves around setting a new shipping rate on the Kuparuk Pipeline, a 28-mile pipeline that brings western crude oil supplies across the North Slope to Pump Station 1.

The state and Anadarko believe the shipping rate should be tied directly to operating costs (and presumably lowered), while Kuparuk Transportation believes it needs higher rates because throughput on the pipeline is declining just as the company is paying for upgrades needed to accommodate smart pigging technology to monitor pipeline integrity.

Kuparuk Transportation Co. is a partnership between subsidiaries of ConocoPhillips, BP and Chevron. The Kuparuk Pipeline moved more than 102 million barrels of oil in 2009.

—Eric Lidji