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Unocal gets another TAPS bump All rate cases on hold while RCA and FERC hear testimony on a consolidated docket connected to Strategic Reconfiguration Eric Lidji For Petroleum News
The Regulatory Commission of Alaska temporarily approved a 7 percent increase to the rate Union Oil Company of California, or Unocal, charges to move crude oil through the trans-Alaska oil pipeline to markets in the state, but will hold off on investigating the matter further until a larger and related rate case currently in hearings reaches a conclusion.
The increase allows Unocal to charge $3.31 to ship a barrel of oil from the North Slope to North Pole and about $5.18 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.) Under temporary rates approved last year, Unocal currently charges $3.07 per barrel to ship to North Pole, and about $4.83 per barrel to ship to points in Valdez.
The increase went into effect on Jan. 1, 2012.
The company previously said it needed the increase to offset declining throughput at a time of rising operating costs. The increase should bring Unocal about $14.7 million per year, compared to the $13.7 million it was previously earning on in-state business.
Ownership of the pipeline is divided among subsidiaries of BP, ConocoPhillips, ExxonMobil, Koch and Unocal. Unocal owns the smallest stake at 1.36 percent.
Unocal, through its affiliate Chevron, is keeping its North Slope assets, including its interest in the pipeline, despite recently selling its Cook Inlet assets to Houston-based independent Hilcorp Alaska LLC.
Conclusion delayed Unocal will likely be collecting the increase on a temporary basis for a while.
The RCA and the Federal Energy Regulatory Commission are holding hearings on a consolidation 12-docket proceeding — consisting of three rate cases each from four of the companies that own undivided stakes in the pipeline. ConocoPhillips, Koch and now Unocal have since filed additional rate cases. Because those cases hinge on issues at play in the larger proceeding, the RCA put them on hold until consolidate case is resolved.
That larger case primarily concerns whether and how the owners of the pipeline can recover the costs of Strategic Reconfiguration, an over-budget upgrade on the pipeline, but third parties, including the State of Alaska, the independent producer Anadarko Petroleum Corp., and the refining company Tesoro Corp. have also challenged details such as the depreciable life of the pipeline and the nature of declining throughput.
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