Alaska oil companies settle dispute over Trans-Alaska
Pipeline tariff charges
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[December 16, 2017]
ANCHORAGE, Alaska (Reuters) -
The state of Alaska will receive hundreds of millions of dollars in a
settlement with oil companies over the value of North Slope crude oil
shipped through the Trans-Alaska Pipeline (TAP), officials announced.
The settlement between Alaska and the companies that own the 800-mile
oil artery concerns transportation tariffs charged by the pipeline
owners between 2009 and 2015.
Alaska claimed that the Alyeska owner companies, including BP,
ConocoPhillips, ExxonMobil, Koch Industries and Unocal, overstated the
tariffs and improperly devalued the oil delivered by the pipeline, thus
reducing state income.
“This settlement is a great result for the State,” Alaska Attorney
General Jahna Lindemuth said in statement. “It creates certainty going
forward, avoids future litigation, and will provide additional taxes and
royalties -- bringing needed money to the state treasury.”
The settlement was filed Friday with the U.S. Federal Energy Regulatory
Commission and the Regulatory Commission of Alaska (RCA), said Chief
Alaska Attorney General John Ptacin. It is subject to FERC and RCA
approval, which state officials hope will happen by next spring, he
The settlement resolves multiple disputes over the time period. “There’s
about 40 rate cases. We’re settling all of those cases in this
settlement agreement,” Ptacin said.
The terms allow the state to retain $224 million in already collected
revenues and grant the state an additional $165 million in oil revenues.
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Other terms require the companies to exclude from any tariff calculations
approximately $625 million that the owner companies spent on “strategic
reconfiguration” for TAPS operator Alyeska Pipeline Service Co. Terms also
include a methodology for calculating transportation tariffs through 2021.
The settlement resolves complaints the oil companies filed in Washington, D.C.
and Alaska courts that challenged past FERC and RCA rulings, Ptacin said.
Much of the disagreement stemmed from Alyeska’s strategic reconfiguration
project, which was aimed at streamlining operations, increasing automation and
reducing costs in a time when the pipeline is carrying reduced oil volumes.
The state argued that the owner companies botched the project and added costs
that should not be used to reduce the value of North Slope crude or the revenues
derived from that crude. The state prevailed on that point, Ptacin said.
Disputes also concerned property taxes and how they would be treated in the
tariff calculations, he said.
Also parties to the settlement are Anadarko, Tesoro, Flint Hills and Petro Star
Inc., which shipped oil through the pipeline but held no ownership shares. Those
companies generally sided with the state in the tariff disputes, Ptacin said.
(Yereth Rosen; editing by Clive McKeef)
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