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Vol. 17, No. 49 Week of December 02, 2012
Providing coverage of Alaska and northern Canada's oil and gas industry

RCA pledges to make decision by Dec. 14 on Koch TAPS transfer

The Regulatory Commission of Alaska says it will decide by Dec. 14 whether to approve the transfer of Koch’s small ownership interest in the trans-Alaska pipeline system to the line’s three major owners, BP, ConocoPhillips and ExxonMobil.

Meantime, the RCA recently refereed a minor conflict over Unocal’s attempt to intervene in the matter. Unocal is the fifth and final owner in TAPS.

The 800-mile trans-Alaska pipeline carries North Slope crude oil to the tanker port at Valdez.

Koch Alaska Pipeline Company LLC, a unit of Koch Industries of Wichita, Kan., owns a 3.0845 percent stake in TAPS.

On Oct. 22, Koch, BP, ConocoPhillips and ExxonMobil filed a joint application with the RCA to transfer operating authority on Koch’s interest to the other three companies. The application didn’t disclose terms.

The companies moved for “expedited consideration,” requesting a decision by Dec. 14.

In an order issued Nov. 21, the RCA noted that under law, it wasn’t obliged to make a final decision on the joint application until April 22. However, the commission determined it could render a ruling by Dec. 14, noting the companies had said expedited consideration was “necessary in order to facilitate the continued operation and shipping capacity of TAPS and that expedited consideration will facilitate a year-end closing date, thus allowing the parties to focus on strategic priorities in the new year.”

Unocal seeks to intervene

Unocal Pipeline Co. also is looking to transfer or sell its stake in TAPS. At 1.3561 percent, Unocal holds the smallest piece of any of the five owners.

Unocal is believed to be negotiating a sale and transfer of its operating authority to the three major TAPS owners: BP, with a 46.9263 percent interest; ConocoPhillips, 28.2953 percent; and ExxonMobil, 20.3378 percent.

While its own deal is pending, Unocal has taken a keen interest in Koch’s pending transfer.

On Nov. 9, Unocal petitioned the regulatory commission to intervene in the Koch proceeding.

“As the current TAPS owner with the smallest ownership share, Unocal’s interests are unique and cannot adequately be represented by any other party in this proceeding,” Unocal told the commission. The company noted it was the only TAPS owner not a party to the joint Koch application.

“The Commission’s decision in this proceeding may have a significant effect on Unocal because Unocal is also seeking to withdraw from TAPS,” Unocal’s petition said. “Therefore, the decision in this proceeding has the potential to affect the terms of Unocal’s withdrawal from TAPS.”

Koch on Nov. 16 filed an opposition to Unocal’s petition to intervene.

Under RCA regulations, intervention is appropriate only in matters that involve a hearing, and an application to transfer operating authority does not require a hearing, Koch argued.

“Further, even if a hearing were required, Unocal failed to establish that its intervention would be conducive to the ends of justice,” Koch told the commission.

Koch noted that the RCA “regulates each TAPS carrier as if it owns a separate pipeline.”

As Unocal also is exiting the pipeline ownership group, Unocal has no interest in acquiring any portion of Koch’s ownership share, Koch said.

The commission’s decision regarding the Koch transfer application won’t impact Unocal’s pipeline stake or the disposition of its interest, “and thus Unocal has no interest in this docket that it needs to protect,” Koch argued.

“This conclusion is reinforced by the fact that Unocal has not finalized the terms of its TAPS interest transfer,” Koch added. “Unocal has previously indicated it may sell or transfer its TAPS interest to a third party, to one single TAPS owner, or to all remaining TAPS owners. Therefore, there is a reasonable possibility that Unocal’s transfer will look nothing like (Koch’s).”

RCA says no

In its Nov. 21 order, the RCA denied Unocal’s motion to intervene, noting that neither Unocal nor anyone else protested, or even commented on, the proposed Koch transfer, which was put out for public comment with a deadline of Nov. 9.

“No hearing is necessary in this proceeding. Therefore, we deny Unocal’s petition to intervene,” the RCA’s order said.

The regulatory commission already has granted both Koch and Unocal permission to suspend service on their shares of TAPS.

Koch’s sole shipper was Flint Hills Resources, a Koch subsidiary that operates a refinery near Fairbanks.

—Wesley Loy

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