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Old pipelines an issue in moving Cook Inlet gas RCA rules Agrium has presented no evidence that Cook Inlet Gas Gathering System, built before Alaska Pipeline Act enacted, is used as common carrier Kristen Nelson Petroleum News Editor-in-Chief
Access to natural gas pipelines in and around Cook Inlet can be an issue in moving new sources of natural gas to market, and a ruling by the Regulatory Commission of Alaska illustrates why: some pipelines predate the effective date of the Alaska’s pipeline and right-of-way statutes.
In April the commission dismissed petitions by Agrium U.S. against Beluga Pipe Line Co. and Marathon Oil; Agrium has requested reconsideration.
The Marathon-operated Beluga Pipe Line is regulated by the commission as a public utility. It moves gas north along the west side of Cook Inlet from an interconnection with the Marathon-operated Cook Inlet Gas Gathering System near Granite Point to the Beluga power plant and to Enstar’s pipeline to Anchorage.
Agrium’s complaint against Beluga requested the commission to require the pipeline to “provide bi-directional service under the Alaska Public Utilities Regulatory Act” or as an alternative under the Alaska Pipeline Act, which the commission said “would require commingling of two separate gas streams flowing in opposite directions,” because Agrium wants to move gas south, through the pipeline and gas in that line is moving north.
But bi-directional flow through Beluga would only be of value to Agrium if it prevailed in its second complaint, which asked the commission to require Marathon to provide — under the Alaska Pipeline Act — transportation services through the Cook Inlet Gas Gathering System. That pipeline system, separate from Beluga, runs north from Trading Bay to Granite Point, where it crosses under Cook Inlet to the east forelands near Nikiski on the Kenai Peninsula side.
But the Cook Inlet Gas Gathering System is a private, not a common carrier pipeline, and is not regulated under the act.
The commission said that through its two complaints, “Agrium hopes to facilitate movement of gas from the west side of Cook Inlet to the Agrium plant” on the Kenai Peninsula, requesting “bi-directional service” on the Beluga pipeline in one filing and in the other filing, seeking “to gain access to the CIGGS Pipeline that conveys gas from the west side of Cook Inlet to the east side of Cook Inlet. Agrium envisions its future gas supplies traveling south through the Beluga Pipeline, then east through the CIGGS Pipeline, and across Cook Inlet to the Agrium plant.” Common carriage an issue Marathon has argued, the commission said, that the Cook Inlet Gas Gathering System is a private carrier not subject to the Alaska Pipeline Act because it “is not, and never has been, operated as a common carrier and does not provide transportation for hire.” The commission said Agrium argued that the commission “has the authority to regulate a pipeline regardless of the manner in which the ‘transportation for hire’ is commercially structured based on the substance and not the form of the commercial transactions.” Marathon told the commission that it does not receive natural gas from any third party on the Cook Inlet Gas Gathering System, and said the line “is not used by Unocal and Marathon to provide third-party transportation for hire.”
The commission said the pipeline is under its jurisdiction “if it transports gas for hire and as a common carrier. To meet its burden justifying good cause for us to begin an investigation, Agrium must provide to us specific information that would support such a finding.” The commission said it did not find facts in Agrium’s complaint that the Cook Inlet Gas Gathering System is operating as a common carrier pipeline.
“A complainant is responsible for bringing us sufficient information from which we can make a reasoned judgment that an investigation is warranted. Agrium did not make the necessary factual allegations. Instead, it requested, in effect, that we elicit those facts, if they exist. We decline to do so. We find nothing in Agrium’s complaint that would justify the cost of the requested investigation to the public and the parties against which the complaint has been brought.”
The commission ruled “that good cause does not exist to investigate the formal complaints filed” by Agrium against Beluga Pipe Line Co. and Marathon Oil and dismissed those complaints, “without prejudice, due to lack of good cause.”
As to Agrium’s second complaint, the commission said that since Agrium cannot use bi-directional service on the Beluga Pipeline without access to the Cook Inlet Gas Gathering System, that complaint is dismissed without prejudice. “If, in the future, bi-directional service could be in the public interest, we may consider this issue based on the facts presented at this time.” Pipeline in existence before Alaska Pipeline Act In a concurring statement, Commissioner Kate Giard said the underlying issue here is “the regulatory status of pipeline infrastructure existing before the Alaska Pipeline Act.” The Alaska Pipeline Act became effective Jan. 1, 1974, and certificates of public convenience and necessity for pipelines in existence before that date were to be issued without hearings or proceedings. The Alaska Right-of-Way Act requires common carriage as a condition of pipeline leases, Giard said, but the state leases for the Cook Inlet Gas Gathering System were signed before that act was effective and contain no common carriage requirement. The definition of pipeline in the Alaska Pipeline Act, she said, includes “used by a pipeline carrier for transportation, for hire and as a common carrier.”
Giard said private pipelines constructed before the Jan. 1, 1974, effective date of the Alaska Pipeline Act “are not even considered ‘pipelines’ under this definition and have no responsibilities under the statute. CIGGS is one such pipeline.”
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