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ConocoPhillips seeks new TAPS increase The 13-14% increase for in-state shipping request follows increase in late 2012 and a subsequent decrease shortly thereafter Eric Lidji For Petroleum News
ConocoPhillips is asking for a 13 to 14 percent increase to the rate it charges to ship oil on the trans-Alaska oil pipeline to instate markets, its sixth request since late 2008.
The proposed increase would raise the cost to ship a barrel of oil from the North Slope to North Pole to $4.32, from $3.82, while shipping to locations in Valdez would increase to $6.84/$6.87, up from $5.98/$6.01, depending on its final destination. (There are two off-take points in Valdez: the PetroStar refinery and the Valdez Marine Terminal.)
ConocoPhillips wants the increase to go into effect on Aug. 15.
The proposed rates would generate some $60 million per year for ConocoPhillips. The company brings in $52.7 million from its current shipping rates for intrastate operations.
ConocoPhillips said the $7.3 million is needed because pipeline throughput continues to fall while costs continue to climb, the same reasons cited for previous rate increases.
ConocoPhillips last requested a rate change in late 2012, leading to $3.91 per barrel to North Pole and $6.14/$6.17 per barrel to Valdez, but subsequently requested a partial decrease to the current levels to accommodate a settlement on pipeline depreciation rates.
The state is taking comments through Aug. 6.
Considerable complexity The Regulatory Commission of Alaska and the Federal Energy Regulatory Commission are currently deliberating on separate consolidated dockets involving numerous rate cases from multiple owners on the trans-Alaska oil pipeline. Since those consolidated cases began, the pipeline owners have continued to file rate cases for subsequent years. The outcome of the consolidated dockets will have a direct impact on the newer rate cases.
The case will have a significant financial impact for the companies that own the pipeline, but also for a group of interested third parties — such as the State of Alaska, Anadarko Petroleum Corp. and Tesoro Alaska Co. — that benefit from lower shipping rates.
The RCA last approved “permanent” in-state tariffs in 2002. Those rates charge $1.25 to ship a barrel of oil to North Pole and $1.96 to ship to both offtake points in Valdez.
When it rules on the consolidated case, the RCA could force the companies to refund some portion of the revenue they have collected above those original rates. Or, it could uphold the series of increases, allowing the companies to keep the additional revenue.
To add to the level of complexity in the case, the two companies with the smallest stake in the pipeline — Union Oil Company of California and Koch — are in the process of transferring their interests to the three larger owners — BP, ConocoPhillips, ExxonMobil.
All of the owners except BP have been requesting increases almost annually since 2008.
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