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Exxon asks for TAPS tariff increase Exxon wants 22 percent bump to offset declining throughput, represents relatively small revenue recovery, asks for consolidation Eric Lidji For Petroleum News
ExxonMobil has asked state regulators to increase the rate it charges to ship oil on the trans-Alaska oil pipeline to in-state destinations by about 22 percent.
The request makes Exxon the third of the five owners of the 800-mile pipeline to ask for an increase to intrastate shipping rates in 2010. The Regulatory Commission of Alaska previously approved increases for ConocoPhillips and Koch on a temporary basis.
Exxon is proposing to charge $3.07 to ship a barrel of oil from the North Slope to North Pole and about $4.83 to ship to Valdez, depending on the final destination. (There are two off-take points in Valdez: the PetroStar refinery and the Valdez Marine Terminal.)
That represents a roughly 22 percent increase over Exxon’s existing rates of $2.53 per barrel to ship to North Pole, and about $3.94 per barrel to ship to points in Valdez.
Exxon said the increase is needed because throughput is declining while operating costs and ad valorem taxes are increasing. The proposed rates would bring Exxon some $3.3 million per year, or $600,000 more than the $2.7 million the company currently earns on in-state markets. Exxon presumably ships most of its North Slope oil to the West Coast.
Would be most expensive The rate increases would make Exxon the most expensive carrier for in-state markets. By comparison, ConocoPhillips and Koch requested 12 percent increases in 2010, bringing their rates to roughly $2.87 per barrel to North Pole and $4.50 per barrel to Valdez.
Exxon wants the new rates to go into effect by Jan. 20, 2011.
The request is the third time since November 2008 that Exxon has asked the RCA to increase in-state shipping rates. If approved, it would represent a 146 percent jump in shipping rates over the past two years. In late 2008, four of the five owners (including Exxon) asked for a 57 percent increase to in-state shipping rates in place since 2002.
Those 2002 rates, calculated under a new methodology, charge $1.25 to ship a barrel of oil from the North Slope to North Pole and $1.96 to ship to various points in Valdez.
If the RCA ultimately decides that any or all of the rate increases it has temporarily approved since 2008 aren’t justified, the carriers would be forced to issue refunds.
BP is the only pipeline owner that hasn’t asked for an increase to in-state shipping rates. Unocal did not request an in-state rate increase in 2010, but did in 2008 and 2009.
Exxon owns a 20.34 percent undivided stake in the pipeline, making it the third largest owner after BP and ConocoPhillips. Unocal and Koch together own less than 5 percent.
The 800-mile pipeline runs from Prudhoe Bay to Valdez, through North Pole.
Consolidation continues Exxon also asked that its case be consolidated into an existing docket that contains 10 separate rate cases by four of the five owners of the pipeline between 2008 and 2010.
The RCA and the Federal Energy Regulatory Commission, which oversees aspects of the pipeline dealing with interstate commerce, plan to hold joint hearings covering a variety of shipping rate related issues later this year, from October 2011 to January 2012.
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