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Vol. 11, No. 50 Week of December 10, 2006
Providing coverage of Alaska and northern Canada's oil and gas industry

TAPS owners win in appeal

FERC allows carriers to keep confidential information used in shipping bids

Rose Ragsdale

For Petroleum News

The Federal Energy Regulatory Commission has overruled an administrative law judge decision to open confidential records listing competitively sensitive data to public scrutiny in a two-year-old interstate tariffs case.

The order, issued Nov. 30, came in response to an appeal from the five owners of the Trans-Alaska Pipeline System who were ordered by Presiding Judge Carmen A. Cintron earlier to open all filings and documents in the case that are designated as “confidential” and “highly confidential” to the public.

Cintron also denied a request from the TAPS owners — BP, ConocoPhillips Transportation Alaska Inc., ExxonMobil, Koch Alaska Pipeline Co. LLC, and Unocal Pipeline Co. — to maintain the confidentiality of 2006 data contained in the filings, and she denied an interlocutory appeal of her ruling on the ground that no extraordinary circumstances exist to merit granting such a request.

However, FERC Commissioner Joseph T. Kelliher, acting as motions commissioner, disagreed with Cintron on at least one aspect of the appeal and referred it to the full commission for review.

The TAPS owners protested having to make public documents which contained commercially sensitive cost and throughput projections, net carryover, and voluntary revenue reduction information contained within their 2005 and 2006 tariff calculations, known as the “TSM projection data.”

“TSM” refers to a 1985 settlement agreement between the TAPS carriers and the State of Alaska that is used to set tariffs for crude shipments on the pipeline. The TAPS carriers said they use this data in competing for customers to fill capacity on the 800-mile trans-Alaska oil pipeline.

The full commission reviewed Cintron’s decision and arguments by the TAPS owners as well as the opinions of Anadarko Petroleum and Tesoro Corp., two TAPS shippers that are protesting the tariffs as being excessive.

FERC concluded that TAPS’ owners had good reasons to keep the information confidential.

“We conclude that the appeal should be granted because once the information becomes public, the decision to make it public cannot be corrected later on. The TAPS Carriers’ have shown that release of the material is likely to have an adverse impact on the existing competitive situation involving TAPS rates and capacity,” the commission wrote in its eight-page order.

FERC said the State of Alaska’s support of the argument advanced by the pipeline owners added further weight to their position. The commissioners noted that the state has an interest in ensuring competitive tariff rates on the pipeline.

The commissioners also said they found Anadarko and Tesoro’s arguments for denying the appeal unconvincing.

“That the TSM Projection Data did not have confidential status prior to 1995 is irrelevant because until 1995 capacity on TAPS was fully subscribed, and the carriers did not compete for throughput. That is not the situation at present, where throughput on TAPS is less than its mechanical capacity, and the carriers actively compete to fill their portion of the capacity,” the commissioners wrote.

The commission also noted that only the TSM projection data would remain confidential out of hundreds of documents and filings that will be made public in the case.

In response to another appeal of Cintron’s ruling by BP Pipelines and ExxonMobil Pipeline, Kelliher said he did not believe the two TAPS carriers demonstrated extraordinary circumstances and the issue did not warrant a full review by the commission.

BP and ExxonMobil had asked the commission to allow them to keep “highly confidential” the prices at which the two TAPS owners purchase fuel gas for the TAPS pump stations from the gas producers. The carriers claimed this information has limited relevance to the tariff proceedings and making the prices public would cause irreparable harm to the North Slope gas producers, BP Exploration (Alaska) Inc., ExxonMobil Production Co. and ConocoPhillips Alaska.

The full commission did not review this issue.

The dispute over disclosing confidential documents and exhibits in the case arose as hearings before Cintron began Oct. 31.

In arguing for full disclosure, Anadarko and Tesoro offered to waive “confidential” and “highly confidential” classifications of some of their own documents, if the TAPS owners would agree to do the same.

After hearing additional oral arguments and weighing the parties’ positions, Cintron said she found no competitive harm to the TAPS carriers from public disclosure of the documents and if there were any competitive harm, such harm would be outweighed by the public’s interest in having access to the documents.

The underlying case began nearly two years ago when Anadarko, Tesoro and the State of Alaska protested a proposed 28 percent hike in TAPS’ 2005 tariffs, calling them unjust, unreasonable and excessive.

BP, which owns 50.01 percent interest in TAPS, sought the biggest increase, 28 percent, or 87 cents, higher than its 2004 rate.

The two shippers and Alaska officials have asked FERC to suspend the 2005 tariffs, declare the rates subject to refund, establish just and reasonable TAPS rates and take other appropriate steps to provide relief.The Regulatory Commission of Alaska ruled in 2002 on a similar complaint from shippers, including Anadarko, and drastically lowered the tariff for crude being shipped to Alaska destinations on TAPS. RCA also ordered substantial refunds.

The TAPS tariff for oil being purchased for in-state use was about $1.96 a barrel in 2004, compared with $3.01 a barrel or more for oil transported outside the state.

The case represents the first time FERC has been asked to rule on the fairness of the tariffs that TAPS owners charge for Alaska North Slope crude shipped to markets outside Alaska. Currently, about 17 percent of the nation’s oil is supplied by the North Slope via the pipeline.

Hearings in the tariff case are ongoing. Initial briefs are due Feb. 2.



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