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RCA orders investigation of proposed Badami pipeline rate
Petroleum News - Alaska Staff
BP Transportation (Alaska) Inc. has proposed a Badami pipeline tariff of $20.59 per barrel for 2002, an increase of two and a half times from its 2001 rate of $8.34 per barrel.
In a Dec. 26 order, the Regulatory Commission of Alaska suspended BP's proposed tariff, established a temporary rate equal to the filed rate and instituted an investigation.
The tariff is for transporting processed crude oil from the Badami central processing unit to the tie-in point with the Endicott Pipeline.
The commission's staff, in a Dec. 26 memo, said BP "purportedly calculated its proposed 2002 filed rate" under the Badami pipeline settlement agreement between BP and the state of Alaska. The commission staff said it reviewed information filed by BP "and determined the proposed rate is less than or equal to the maximum rate calculation shown in BPTA's supporting information" but said it had not verified the underlying data supporting the calculations.
RCA staff said the 2002 rates proposed by BP "have not been shown to be just and reasonable, and may be unjust and unreasonable."
State safe, Total Fina Elf will pay Jim Stouffer, royalty accounting supervisor for the Department of Natural Resources, told PNA Dec. 27 that BP has the right to recoup unrecovered costs from the previous year.
"As I understand it, Badami production is lower" than BP initially expected. "There's just 2,000 barrels a day going through it now. ... BP has static costs with that pipeline. If they don't cover their costs one year, they can turn around and recover costs from the previous year. As I understand it, it's up to the owner of the pipeline, which is BP," he said.
When two nearby units come on line -- Point Thomson and Slugger -- Stouffer said the additional flow through the Badami pipeline should "significantly reduce the cost of the tariff.
"With the cost of oil around $16, we -- the state of Alaska -- were concerned it would drive our royalty to a negative. Basically, we wondered if we would have to pay to ship our royalty oil from Badami, since the tariff is higher than the price of oil. But the AG's office says no," he said.
It will be a different story for BP's partner at Badami, TotalFinaElf, Stouffer said. "TotalFinaElf's costs will far exceed their revenue from Badami."
New rates in place RCA recommended the proposed 2002 rates be suspended and investigated and the investigation incorporated into existing dockets related to the investigation of the agreement and BP's suspended rates.
The commission said Dec. 26 that it will allow BP to collect temporary rates "equal to the 2002 filed rates" but "subject to refund of the difference between the temporary rates and the final rates" set by the commission at the conclusion of its proceedings.
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