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Time to regulate old gasline under pipeline act? RCA to consider whether Kenai-Nikiski Pipeline a common carrier Kristen Nelson Petroleum News Editor-in-Chief
The Regulatory Commission of Alaska said June 20 that it will open a docket to consider whether or not the Kenai-Nikiski Pipeline should be regulated as a common carrier under the state’s pipeline act. In the 1970s the commission’s predecessor, the Alaska Public Utilities Commission, ruled that Kenai-Nikiski Pipeline did not have to be regulated as a pipeline because owners Unocal and Marathon Oil shipped the majority of the gas on the line to their own facilities.
The commission also said it has determined that a May 30 motion for a declaratory order from Marathon on the status of the Kenai-Nikiski Pipeline is an application for connection, and has opened a docket to consider that application. (See story in June 22 issue of Petroleum News.) The commission said it is requiring Marathon to file a proposed connection agreement for the connection between the Kenai-Nikiski Pipeline and the Kenai Kachemak Pipeline by June 26.
Marathon and a subsidiary of Unocal are owners of the Kenai Kachemak pipeline, under construction from Ninilchik to Kenai. Work on that pipeline is 99.9 percent complete, the Joint Pipeline Office said June 24, with natural gas transportation expected to begin in August.
The two companies jointly owned the Kenai-Nikiski Pipeline until Dec. 1, 1994, and still jointly own the northernmost 0.8 miles of the pipeline. Old docket closed The commission said Marathon filed its motion in docket U-70-73, a docket which has had no activity since 1971 and is, the commission said, a closed docket, even though its predecessor, the Alaska Public Utilities Commission, did not issue closing orders for dockets at that time. Docket U-70-73 dealt with an application from Unocal and Marathon for exemption of the Kenai-Nikiski natural gas pipeline from pipeline regulation. The companies each owned 50 percent of the line at that time. The 1970 application was dismissed after the commission found that Unocal and Marathon were public utilities and should be exempted from regulation under the pipeline act, except for conditions or pricing of natural gas sales to public utilities; quality of service to public utilities; and safety of pipeline operations.Expedited consideration request When Marathon filed its request in May, it asked for expedited consideration by the commission because the connection of the Kenai-Nikiski and Kenai Kachemak pipelines may occur in mid-August. The commission said it will make every effort to accommodate the request, but said that “until Marathon files a connection agreement governing the connection between KNPL and KKPL, we cannot begin the public notice process required for approval of connection agreements.”
Once Marathon has filed the proposed connection agreement, the commission said it would provide public notice and review any comments filed. Marathon will then have the opportunity to respond to comments. The commission said that any commenter wishing to participate as a party in the proceeding must file a petition to intervene. Should Kenai-Nikiski be regulated as a pipeline? The commission said that Marathon’s motion “also raises the issue of whether KNPL should be regulated under the Alaska Pipeline Act.” Marathon became the sole owner in 1994, but, the commission said, “the record suggests that Marathon continued to ship Unocal’s gas, because the gas supply for this pipeline comes from the Kenai gas field at the southern terminus of KNPL in which Unocal has an interest.
“Therefore, KNPL must have been shipping gas for third parties.”
The commission also noted that Marathon said in its motion that it had been approached by third parties to ship gas in the Kenai-Nikiski pipeline.
“Because KNPL is already shipping gas for third parties, it may now be time to determine if KNPL should be regulated under the Alaska Pipeline Act. AS 42.06 requires us to regulate pipelines and pipeline carriers that transport gas for hire as a common carrier,” the commission said.
In Docket P-03-7, the commission said, it is requiring “Marathon to show cause why KNPL is not now subject to the Alaska Pipeline Act.” The commission said it is requiring Marathon to address several issues: whether the Kenai-Nikiski pipeline receives gas from Unocal or other shippers; whether Marathon has an agreement with Unocal or other shippers for transportation of gas over the pipeline; and whether the northern section of the pipeline, equally owned by Marathon and Unocal, should not also be subject to regulation as a common carrier.
Marathon has until July 25 to file on the pipeline regulation issue. Interested parties have until July 14 to file comments “regarding the regulatory status of the Kenai-Nikiski Pipeline.”
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