Marathon requests rate increase for KNPL

For the second time this year, Marathon Oil is asking state regulators to increase shipping rates on a small Cook Inlet gas pipeline because of declining throughput volumes.

Should Regulatory Commission of Alaska approve the increase for the Kenai Nikiski Pipeline, or KNPL, the firm transportation rate for reserved space on the line would jump nearly 40 cents, or 19.3 percent, to $2.472 per thousand cubic feet of daily capacity per month, while the interruptible rate would increase by about one cent to $0.0681 per Mcf.

The pipeline does not currently have any firm shippers.

The 20-inch KNPL runs 17.5 miles from the gas fields around Kenai to a pipeline hub north of Nikiski. It can transport around 167 million cubic feet of gas at maximum capacity. Under a settlement agreement reached in late 2006, Marathon is required to adjust the KNPL tariff when throughput on the line changes more than 10 percent over 12 months. Currently, Marathon, Union Oil Co. of California, ConocoPhillips and Aurora Power ship gas on the pipeline, mostly for sales to a liquefied natural gas plant in Nikiski. The pipeline also once supplied the now mothballed Agrium fertilizer plant.

Marathon most recently raised rates on the line April 1. The new rates, if approved, would go into effect on Oct. 1. RCA is accepting comments on the proposal through Sept. 26.

— Eric Lidji