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RCA grants temporary TAPS suspensions Two minor owners in pipeline, Koch and Unocal, had requested OK to halt service pending transfer of their ownership interests By Wesley Loy For Petroleum News
State regulators have granted two energy companies permission to suspend service on their minor shares of the trans-Alaska pipeline system.
The suspensions are temporary as the companies look to finalize the sale or transfer of their ownership interests, according to a pair of orders the Regulatory Commission of Alaska issued July 27.
The two companies are Koch Alaska Pipeline Company LLC, a unit of Koch Industries Inc. of Wichita, Kan., and Unocal Pipeline Co., part of Houston-based Chevron Corp.
The companies own the two smallest stakes in the pipeline. Koch holds a 3.0845 percent interest, while Unocal holds 1.3561 percent.
The remaining owners are BP Pipelines (Alaska) Inc. with 46.9263 percent; ConocoPhillips Transportation Co., 28.2953 percent; and ExxonMobil Pipeline Co., 20.3378 percent.
A third party, Alyeska Pipeline Service Co., operates the 800-mile pipeline on behalf of the owners.
No hearing necessary In recent months, Koch and Unocal told the other companies they wanted to withdraw from the TAPS ownership group. Both have cited “strategic” reasons.
To continue as owners, the two firms would have had to sign up for another five years.
By withdrawing, Unocal and Koch were contractually obligated, as of July 31, to stop accepting tenders to ship oil on their shares of pipeline capacity.
The companies needed RCA approval to temporarily suspend service after that date, pending the sale or transfer of their ownership interests.
Commissioners found no reason not to approve the temporary suspensions.
Two companies, Tesoro Alaska Co. and Anadarko Petroleum Corp., jointly filed comments with the RCA raising certain issues. One was that the RCA couldn’t authorize a discontinuance of service, whether temporary or permanent, without a hearing and finding that continued service is not required by public convenience and necessity.
Commissioners determined no hearing was necessary. They also noted that plenty of excess capacity exists on the pipeline to accommodate crude oil shipments.
At its peak in 1988, the pipeline carried 2.1 million barrels per day. Current oil throughput is less than 600,000 barrels per day.
Owner consolidation likely Commissioners did, however, agree with Tesoro and Anadarko that some safeguard was needed to “ensure that the suspension of service is in fact temporary.” So they ordered Koch and Unocal to file applications within 90 days — that is, by Oct. 25 — to transfer their TAPS interests.
Commission approval is needed before a pipeline carrier can transfer its operating authority to another entity.
Koch had informed the commission it intends to transfer its TAPS operating authority to BP, ConocoPhillips and ExxonMobil.
Likewise, Unocal in a June 28 filing said it was “actively engaged in negotiations” with the other TAPS owners regarding the transfer of its ownership interest.
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