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RCA approves North Slope rate changes
The Regulatory Commission of Alaska has approved increased shipping rates for the Endicott and Northstar pipelines and a decreased rate for the Milne Point Pipeline.
Through a subsidiary, Hilcorp Alaska LLC operates all three pipelines.
Under the new rates, the cost to use the Endicott pipeline between the Endicott Main Island and the trans-Alaska oil pipeline will increase to $4.86 per barrel, up from $3.83 per barrel. The cost to use the pipeline from its connection at the Badami unit to the trans-Alaska oil pipeline will increase to $3.09 per barrel, up from $2.43 per barrel. The cost to use the Northstar Pipeline will increase to $3.90 per barrel, up from $3.40 per barrel.
The cost to use the Milne Point Pipeline from the Milne Point facilities to a connection at the Kuparuk River unit will decrease to $1.11 per barrel, down from $1.35 per barrel.
All rates cover intrastate shipping, or oil intended for use within Alaska. The Federal Energy Regulatory Commissions oversees changes to shipments outside the state.
Effective for 2015 The new rates went into effect at the start of 2015.
While the commission typically approves changes to shipping rates on a provisional basis while it investigates whether those changes should be implemented permanently, it uses a different method for adjusting rates on the Endicott, Northstar and Milne Point pipelines.
The companies that own those pipelines propose changes to their rates each year using longstanding methodologies agreed upon through settlements with the state of Alaska.
The commission approves those changes each year on a provisional basis, and the rates become permanent on a daily basis. Each day, rates for the previous day become permanent unless a customer protests, at which point the commission will investigate.
An important difference between provisional and permanent rates is whether the owner of the pipeline will be required to issues refunds to customers, should the rates prove unjust.
Hilcorp became the operator of the three units through a 2014 deal with BP Exploration (Alaska) Inc. Hilcorp operates pipelines through its subsidiary Harvest Alaska LLC.
- Eric Lidji
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