RCA says it will investigate Cook Inlet Gas Gathering System

Kristen Nelson

The Regulatory Commission of Alaska said Dec. 22 that it finds “that good cause exists to institute an investigation” into Agrium’s complaint against Marathon and Unocal Alaska, owners of the Cook Inlet Gas Gathering System, but said its investigation will be “highly focused.”

Agrium U.S. Inc. filed a complaint Oct. 1, asserting that Marathon Oil Co. and Unocal Oil Company of California are operating the Cook Inlet Gas Gathering System in violation of the Alaska Public Utilities Regulatory Act and the Pipeline Act.

Agrium told the commission it must regulate the gathering system as a public utility, as a natural gas pipeline and as a pipeline operating for hire and a common carrier pipeline. Marathon and Unocal have told the commission that none of the bases identified by Agrium is a valid basis under which the commission must regulate CIGGS.

The commission said no party has contested its jurisdiction to determine if the Cook Inlet Gas Gathering System falls under its regulation.

The commission said that, although the gas gathering system “has been operating as an unregulated pipeline facility since 1972 … we will not open an investigation into a complaint unless the complainant has shown good cause to our satisfaction.”

Agrium, the commission said, “has shown good cause to our satisfaction. Agrium posits several plausible bases and, for each basis, has alleged facts which, if proven, would mandate that we regulate CIGGS or exempt it from regulation.”

While Agrium has met the threshold for investigation, the commission said “all parties should understand that additional evidence will be required to prevail on the merits. For the purpose of opening an investigation only, we find that Agrium has presented sufficient evidence for us to conclude that the CIGGS pipelines may be transporting natural gas for persons other than CIGGS’ owners for a fee, that it may be a gas transmission public utility, and that it may be a natural gas pipeline” as defined in state statute.

The commission said that Unocal Alaska requested oral argument before a decision was made to investigate, but said “Agrium has demonstrated good cause to our satisfaction. Our minds on this point are unlikely to change through oral argument.” Unocal’s request was denied.

The commission said that while it is opening an investigation, it is “aware of the cost and disruption a wide-ranging investigation could cause. Accordingly, we intend to conduct a highly focused investigation. In proceeding with our investigation, we will continually balance the expense and time parties must devote to the investigation, as well as our commitment of public resources to the investigation, against the benefit to be derived from the investigation.”

A prehearing conference has been scheduled for Jan. 21, and the commission has asked “parties to be prepared to discuss how best to conduct this proceeding quickly with the least expense to parties, including discovery expense.”