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ConocoPhillips to pay BP, Exxon for Alaska pipeline costs
July 16, 2013 / 11:17 PM / 4 years ago

ConocoPhillips to pay BP, Exxon for Alaska pipeline costs

ANCHORAGE, Alaska (Reuters) - ConocoPhillips, Alaska’s top-volume oil producer, will pay about $264 million to BP Plc to help cover the cost of transporting crude through the Trans Alaska Pipeline (TAPS), under a settlement approved on Tuesday by federal officials.

The Federal Energy Regulatory Commission said it approved the deal between the three TAPS owners - BP, Conoco and Exxon Mobil Corp - on how to share costs for shipping oil down the 800-mile pipeline from Prudhoe Bay to the port of Valdez.

Under the plan, first proposed in September, Conoco owes the $264 million to BP, which has the biggest share of TAPS, for pipeline costs dating back to August 1, 2012, according to the settlement. Conoco agreed to pay Exxon $8.89 million for costs over the same period, while BP will pay Exxon $1.8 million.

BP owns nearly half of TAPS, while Conoco has 29 percent and Exxon the rest, according to operator Alyeska Pipeline Service Co. But Conoco, with a 36 percent share in the Greater Prudhoe Bay unit and large stakes in other fields, produces over 35 percent of the oil coming from Alaska’s North Slope, according to state and company figures from 2012.

“This agreement seeks to better align how costs are distributed among the TAPS owners,” Dawn Patience, a spokeswoman for BP in Alaska, said in an email.

The settlement covers a period that started when the three major North Slope producers became sole owners of TAPS. Two companies with minor shares, Koch Industries’ Koch Alaska Pipeline Co and Chevron-owned Unocal Pipeline Company, relinquished their combined 4.4 percent ownership last summer, allowing their shares to be allocated between the other three.

There are lingering questions about how the shares of the what FERC calls the “Exiting Carriers” will be managed and how costs prior to August 1, 2012, are allocated, but they fall outside of the settlement approved on Tuesday.

Neither Koch, Chevron nor the state of Alaska objects to the new deal between the remaining three, the approval order said.

Over the years, there have been many disputes about pipeline costs and how they should be shared. In 1985, the FERC approved a settlement between the state of Alaska and the then-numerous pipeline owners that allowed specific transportation tariffs for each company. That settlement deal expired at the end of 2008.

Since the mid-1980s, the number of TAPS owners has dwindled, largely because of company mergers. North Slope output averaged 515,646 barrels per day for the first half of July, according to state figures. It peaked in 1988 above 2 million barrels a day.

Editing by Braden Reddall. Editing by Andre Grenon

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