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Two Alaska pipeline owners to withdraw Subsidiaries of Koch Industries, Chevron give notice; Alyeska says departure of two minor stakeholders won’t affect TAPS operations Wesley Loy For Petroleum News
We’re about to see a reshuffling of ownership in Alaska’s most vital asset, the trans-Alaska pipeline system.
The two companies holding the smallest ownership stakes have given notice to the remaining owners that they “are withdrawing from TAPS as of July 31,” said Katie Pesznecker, a spokeswoman for operator Alyeska Pipeline Service Co.
The two minor owners are Koch Alaska Pipeline Company LLC, a unit of Koch Industries Inc. of Wichita, Kan., which owns 3.0845 percent of TAPS, and Unocal Pipeline Co., part of Houston-based Chevron Corp., which holds 1.3561 percent.
The remaining owners in TAPS are BP Pipelines (Alaska) Inc., 46.9263 percent; ConocoPhillips Transportation Co., 28.2953 percent; and ExxonMobil Pipeline Co., 20.3378 percent.
BP and ConocoPhillips operate the major North Slope oil fields including Prudhoe Bay and Kuparuk, with ExxonMobil holding a large stake in Prudhoe. Chevron owns small stakes in Prudhoe, Kuparuk and Endicott, while Koch subsidiary Flint Hills Resources operates a refinery at North Pole near Fairbanks.
Operations unaffected Koch and Unocal made their intentions known by issuing a “negative term notice” to the TAPS owners.
Owner companies are entitled to withdraw under a contractual agreement between the TAPS owners, Pesznecker told Petroleum News in a June 27 email.
“This will not affect Alyeska Pipeline operations, and the company’s mission of safely moving North Slope oil is unchanged,” she said.
“As for ownership after July 31, the owner companies are discussing changes to commercial terms, pursuant to the Trans Alaska Pipeline System Agreement,” Pesznecker said. “Alyeska does not participate in these discussions. Alyeska cannot comment on the details of commercial transactions between owners.”
Alyeska is the Anchorage-based consortium that runs the 800-mile common carrier pipeline and Valdez tanker terminal for the owner companies. The pipeline has been moving Alaska North Slope crude oil for 35 years, since June 20, 1977.
Current oil throughput on the pipeline is under 600,000 barrels per day, far below the peak of 2.1 million barrels per day in 1988.
In recent years, Alyeska and the owner companies have struggled with a costly program to modernize and automate four pipeline pump stations.
Company comments Koch spokesman Jake Reint provided a written statement saying Koch Alaska Pipeline Co., or KAPCO, had “given notice of its intention to terminate its minority ownership” in TAPS.
“KAPCO plans to exercise an option to transfer its 3.08 percent ownership interest to TAPS remaining owners,” the statement said.
“The TAPS owners and Alyeska were given formal notice of KAPCO’s decision in April,” the statement continued. KAPCO is leaving TAPS to allow its parent, Koch Pipeline Co. L.P., to “focus on other strategic priorities.”
The statement added: “The ownership transfer in TAPS is subject to regulatory review. No timeline is being given for when the transfer is expected to be complete.”
Asked about Unocal’s TAPS move, Chevron spokesman Russell Johnson replied by email: “As a matter of long-standing policy, we do not comment on rumors or speculation.”
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