A small oil producer and a pipeline operator along Alaska’s Cook Inlet have reached a settlement of a tariff dispute.
Cook Inlet Energy LLC and Cook Inlet Pipe Line Co. filed the settlement Oct. 19 with the Regulatory Commission of Alaska. The two companies say that, if approved, the settlement would “fully resolve all issues.”
Anchorage-based Cook Inlet Energy, which operates oil and gas wells on the west side of Cook Inlet, had complained that CIPL’s 259 percent rate increase, to $14.57 per barrel, was excessive. Texas-based CIPL, which operates a 42-mile pipeline along the Inlet, attributed much of its rate increase to damage from the 2009 eruption of nearby Redoubt volcano.
The settlement sets out a methodology for determining Cook Inlet Energy’s pipeline transportation rates through the year 2014.
For the remainder of 2010, Cook Inlet Energy would pay CIPL a rate of $8 per barrel shipped.
“The rates to be paid by CIE to CIPL during the calendar years 2011 through 2014 shall be determined by dividing an agreed annual CIPL revenue requirement of $17.28 million for each such year of the term of the Settlement Agreement by the forecasted total annual CIPL throughput for each such year,” the Oct. 19 commission filing says.
At the end of each year, including 2010, a “true up” adjustment would be made based on the actual total annual CIPL throughput.
As part of the settlement, Cook Inlet Energy would commit to pay for transportation of a minimum of 260,063 barrels of production in 2010 and 346,750 barrels in each of the years 2011 through 2014, “whether or not it actually ships the volumes.”
See stories in the Oct. 31 issue of Petroleum News, available to subscribers online at noon, Friday, Oct. 29 at www.PetroleumNews.com
