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January 2017

Vol. 22, No. 1 Week of January 01, 2017

Exxon won’t challenge Nutaaq tariff rate

KRISTEN NELSON

Petroleum News

ExxonMobil Alaska Production told the Regulatory Commission of Alaska Dec. 19 that it will not protest the temporary rate of $1.10 per barrel proposed by Nutaaq Pipeline for moving hydrocarbon liquids from Badami to a tie-in with the Endicott Pipeline. ExxonMobil is the operator of the Point Thomson unit and has been gradually bringing production on from that field since April.

Nutaaq had been charging $8.95 per barrel, when it was moving only production from the Badami field, but in late 2015 proposed decreasing that rate to $1.78 per barrel, effective Jan. 1. In May Nutaaq filed a mid-year increase from $1.78 to $2.71 per barrel for intrastate transportation, effective June 1.

In October, Nutaaq filed to increase the rate to $20.60 per barrel for November and December only.

Nutaaq told the commission its $2.71 rate was based on throughput from Point Thomson estimated in May and that the increase for the two months was required to make up the difference between the estimated and actual volumes. Nutaaq told RCA that Point Thomson volumes “have not been near the 5,000 barrels per day previously estimated, and upon which prior rates in 2016 were based,” and had “approached zero as their facility has experienced material startup issues.”

Alaska Oil and Gas Conservation Commission data, the only public source of current production by field, shows Point Thomson production averaging 1,688 barrels per day in October - the most recent month for which commission data is available.

The Department of Revenue’s Tax Division, which aggregates volumes, includes Point Thomson with Endicott and from Badami. Prior to Point Thomson startup in April volumes shown for Endicott were primarily in the 8,000-9,500 bpd range. December data, reported daily by the division, shows aggregated volumes from Endicott as low as 8,906 barrels on Dec. 10 and as high as 18,313 on Dec. 19, indicating that volumes from Point Thomson, while rising, are not yet consistently at the 10,000 bpd rate for which the Point Thomson facilities were designed.

When it filed for the November-December increase Nutaaq told the commission it planned to file a new rate for 2017, which it did in November, proposing to decrease the $20.60 rate to $1.10 per barrel.

ExxonMobil filed a conditional protest in mid-November. In that protest ExxonMobil acknowledged “that the volume of its shipments on the Badami Oil Pipeline is lower than was anticipated,” but said without the data and information which Nutaaq provided to the commission on a confidential basis it could not determine whether a formal complaint and protest was necessary. It was, the company said, preserving its right to file a formal complaint and protest.

On Dec. 14 the commission required ExxonMobil to file a formal complaint and protest by Dec. 21 if it desired further proceedings in the docket.

ExxonMobil notified the commission Dec. 19 that it did not intend to pursue a formal complaint and protest given the commission’s order establishing a temporary rate of $1.10 per barrel effective Jan. 1.






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