RCA OKs Hilcorp pipeline consolidation

The Regulatory Commission of Alaska has approved the consolidation of Hilcorp’s Cook Inlet gas transmission pipelines into a single pipeline system called the Kenai Beluga Pipeline, or KBPL. The consolidation merges four previously separate pipelines, the Beluga Pipeline, the Kenai Kachemak Pipeline, the Cook Inlet Gas Gathering System and the Kenai Nikiski Pipeline into a single entity. Unlike the previous pipeline arrangement, KBPL will have what is referred to as a postage stamp rate, a fixed fee per volume of gas shipped, regardless of where gas enters and leaves the pipeline system.

Previously, complications and costs associated with separate and different shipping rules and shipping rates for the four individual pipelines had rendered the pipeline system expensive and inefficient to manage, operate and use. Hilcorp Alaska, owner and operator of the system, anticipates significant cost savings, both for itself and for shippers of gas, under the new pipeline management arrangements. The new management structure will also facilitate the implementation of system upgrades, such as additional gas compression to improve the system’s versatility, the company has said.

Consolidation of the pipelines entailed many months of negotiation between Hilcorp and various stakeholders in the pipeline system, including Cook Inlet gas producers; Southcentral Alaska gas and electricity utilities; and industrial gas users. At the end of August Hilcorp published a settlement agreement, laying out the terms and conditions under which the new pipeline entity would work.

Following a formal Oct. 15 hearing, the commission has now approved the settlement agreement, saying that no one intervened to oppose the settlement and that the pipeline consolidation is in the best interests of the public. Agrium Inc., the owner of a mothballed fertilizer plant on the Kenai Peninsula, and Homer Electric Association declined to join the settlement agreement but did not object to approval of the agreement, the commission said.

The new pipeline system officially went into operation on Nov. 1.

- Alan Bailey