Exxon seeking 26 percent TAPS increase

Regulatory Commission of Alaska now managing 16 overlapping rate cases from four of the five TAPS carriers since late 2008

Eric Lidji

For Petroleum News

ExxonMobil has once again asked state regulators to increase the rate it charges to ship crude oil on the trans-Alaska oil pipeline to destinations in the state by about 26 percent.

Exxon is proposing to charge $3.87 to ship a barrel of oil from the North Slope to North Pole and as much as $6.10 to ship to Valdez, depending on the destination. (There are two off-take points in Valdez: the PetroStar refinery and the Valdez Marine Terminal.)

That represents a roughly 26 percent increase over Exxon’s existing rates of $3.07 per barrel to ship to North Pole, and about $4.83 per barrel to ship to points in Valdez.

As has becoming standard in similar rate cases, Exxon said the increase is needed because throughput continues to decline while operating costs have increased.

The proposed rate increase would generate an additional $10 million per year, or $48.1 million total. Exxon ships nearly all of its in-state oil to the Valdez Marine Terminal.

The company wants the higher rates to go into effect starting Aug. 1, 2012.

The request is the fourth Exxon has made since late 2008, when the owners of the trans-Alaska oil pipeline began filing rate cases using a newer court-approved methodology, rather than an older methodology established in a 1985 settlement with the state.

The Regulatory Commission of Alaska approved the three previous increases on a temporary and refundable basis while it studies aspects of an increasingly complex case.

With this latest filing, the RCA is now handling 16 overlapping rate cases, four cases each from four different operators. The RCA previously consolidated the first 12 cases into a single docket, but the companies have since each made an additional request. The RCA held the three previous cases in abeyance until the consolidated docket is resolved.

Exxon asked for its cases to be consolidated with those three other recent cases.

Exxon made its most recent request in December 2010.

With the proposed increase, Exxon would be charging more than double what it charged in 2002, the most recent rates approved on a permanent basis. Those rates charge $1.25 to ship a barrel of oil from the North Slope to North Pole and $1.96 to ship to points in Valdez. If the RCA decides that any or all of the increases it has temporarily approved since 2008 aren’t justified, the carriers would be forced to issue refunds with interest.

The 800-mile pipeline from the North Slope to Valdez is owned by transportation subsidiaries of BP, ConocoPhillips, ExxonMobil, Koch and Union Oil Co. of California. Exxon owns a 20.34 percent undivided stake in the pipeline, making it the third largest owner after BP and ConocoPhillips. Unocal and Koch together own less than 5 percent and have indicated that their shares are for sale — see update on this development in this issue.

BP is the only pipeline owner that hasn’t asked for an increase to in-state shipping rates.