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Vol. 11, No. 47 Week of November 19, 2006
Providing coverage of Alaska and northern Canada's oil and gas industry

Anadarko, Tesoro score points

TAPS owners appeal order to open confidential pre-filed tariff testimony

Rose Ragsdale

For Petroleum News

A federal administrative law judge has sided with plaintiffs in the first skirmish between protesters and owners of the Trans-Alaska Pipeline System since hearings began Oct. 31 in a two-year-old interstate tariffs case.

Two oil shippers, Anadarko Petroleum and Tesoro Corp., along with the State of Alaska, are protesting a proposed 28 percent hike in tariffs that TAPS owners charge shippers on the 800-mile pipeline from Alaska North Slope to Valdez.

In a ruling issued Nov. 13, Presiding Judge Carmen A. Cintron of the Federal Energy Regulatory Commission ruled in favor of a motion filed by Anadarko and Tesoro asking that all pre-filed testimony and exhibits marked confidential in the case be opened to the public.

Cintron also denied a request from the five TAPS owners 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.

BP, ExxonMobil appeal to commission

However, FERC Commissioner Joseph T. Kelliher disagreed with Cintron on some aspects of the appeal. In response to an appeal by BP Pipelines (Alaska) Inc. and ExxonMobil Pipeline Co. to the full commission, Kelliher, acting as motions commissioner, said Nov. 15 that he believed the two TAPS carriers have demonstrated extraordinary circumstances regarding certain filings that warranted the full commission considering the issue.

The disclosure dispute arose as hearings before Cintron began Oct. 31. The overall case began when Anadarko filed a protest in December 2004, challenging tariff increases proposed for 2005 by the TAPS carriers — BP, ConocoPhillips Transportation Alaska Inc., ExxonMobil, Koch Alaska Pipeline Co. LLC and Unocal Pipeline Co.

Anadarko also filed a complaint with FERC protesting the existing tariffs, calling them “unjust and unreasonable.”

Tesoro joined the independent in asking 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 State of Alaska also joined the case, protesting the proposed tariff increases as being “excessive.”

Ground-breaking review by FERC

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

In 2002, the Regulatory Commission of Alaska ruled on a similar complaint from shippers, including Anadarko, and drastically lowered the tariff for TAPS oil being used inside Alaska. RCA also ordered the pipeline’s owners to cough up substantial refunds.

The 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 headed outside the state.

BP, which owns 50.01 percent interest in TAPS, sought the biggest increase, 87 cents. That’s a 28 percent hike from its 2004 rate. ConocoPhillips, with a 28.3 percent stake in TAPS, sought $3.52 a barrel, up nearly 9 percent from $3.23 a barrel in 2004. ExxonMobil, a 20.3 percent TAPS owner, wanted $3.60 a barrel, up 17.6 percent from $3.06 a barrel; while minority owner Koch Alaska Pipeline Co. LLC asked for $3.97 a barrel, or 7 percent more than the $3.71 a barrel sought in 2004 for its stake in TAPS. Unocal, another minority owner in TAPS, sought $3.98 a barrel for 2005, compared with $3.55 a barrel in 2005.

Shippers: Documents should be public

In their motion to remove confidentiality from certain filings in the case, Anadarko and Tesoro argued that designating the materials as public would further the judge’s goal of conducting an efficient public trial and rendering a public decision and eliminate a concern she expressed earlier about the sheer quantity of confidential information.

“This will greatly simplify and expedite the hearing by eliminating the number of times the presiding judge will have to close the hearing to the general public,” the companies argued.

Anadarko and Tesoro also 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 agreed. She 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 is outweighed by the public’s interest in having access to the documents.

Scrutiny would hurt competition

BP and ExxonMobil 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 will cause irreparable harm to the North Slope gas producers, BP Exploration (Alaska) Inc., ExxonMobil Production Co. and ConocoPhillips Alaska.

BP spokesman Daren Beaudo said the TAPS owners had numerous reasons for appealing Cintron’s ruling to the full commission. These include antitrust and competitive concerns.

“Sharing that information would affect us,” Beaudo added.

The commission has 15 days to rule on the appeal from BP and ExxonMobil.

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



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