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Settlement proposed for Northstar pipeline rates
BP Transportation (Alaska) Inc. and the State of Alaska have petitioned the Regulatory Commission of Alaska to accept a settlement agreement for intrastate tariffs on the Northstar oil pipeline. The pipeline transports Northstar production from Seal Island in the Beaufort Sea to Pump Station No. 1 of the trans-Alaska pipeline, a distance of 17 miles. RCA has been investigating intrastate tariffs on the Northstar pipeline since 2001 — the intrastate tariffs apply to Northstar oil earmarked for sale within Alaska. FERC has agreed to methodology In essence, BP and the state have agreed to calculate maximum intrastate tariffs using the Northstar Settlement Methodology (known as NSM) that had previously been agreed with the Federal Energy Regulatory Commission for interstate tariffs on the pipeline. If RCA accepts the settlement BP will refund intrastate shippers for any tariff amounts paid in the past in excess of the settlement tariffs.
NSM will involve prorating pipeline revenue requirements in proportion to the projected pipeline throughput for a particular type of intrastate transportation. The maximum tariff for that type of transportation will then be the prorated revenue divided by the projected throughput.
As agreed with FERC, the pipeline depreciation component of the revenue requirement will use a unit of throughput method that takes into account the projected petroleum remaining to be recovered from the field.
Superior Crude Trading Co. and Murphy Exploration (Alaska) Inc. are also parties to the intrastate tariff dispute and need to agree to the settlement. Superior, a subsidiary of Murphy Oil USA Inc., ships oil on the pipeline and Murphy Exploration is a co-owner with BP of the pipeline. Murphy Oil owns a small percentage working interest in the Northstar field.
—Alan Bailey
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