Exxon again seeks to increase rate it charges to ship oil

State regulators must approve company's request.

Petroleum NewsJuly 14, 2012 

Exxon Mobil has once again asked state regulators for permission to increase the rate it charges to ship crude oil through the trans-Alaska oil pipeline to destinations in the state.

Exxon has proposed a 26 percent increase. With the increase, Exxon will charge $3.87 to ship a barrel of oil from the North Slope to North Pole, near Fairbanks, and as much as $6.10 to ship to Valdez, depending on the destination. (There are two off-take points in Valdez: the PetroStar refinery and the Valdez Marine Terminal.)

Exxon's existing rates are $3.07 a barrel to North Pole, and about $4.83 a barrel to points in Valdez.

As has becoming standard in similar rate cases, Exxon said the increase is needed because oil volumes in the pipeline continue to decline while operating costs are increasing.

The proposed rate increase would generate an additional $10 million a year. Exxon ships nearly all of its in-state oil to the Valdez Marine Terminal.

The company wants the higher rates to go into effect starting Aug. 1.

The request is the fourth Exxon has made since late 2008, when the owners of the trans-Alaska oil pipeline began filing rate cases using a newer, court-approved methodology rather than an older methodology established in a 1985 settlement with the state.

The Regulatory Commission of Alaska approved the three previous increases on a temporary and refundable basis while it studies the increasingly complex case.

With this latest filing, the regulatory commission is now handling 16 overlapping rate cases, four each from four different operators.

Exxon made its most recent request in December 2010.

With the proposed increase, Exxon would charge more than double what it charged in 2002, the most recent rates approved on a permanent basis. Those rates were $1.25 a barrel from the North Slope to North Pole, and $1.96 to Valdez. If the commission decides any or all of the increases it has temporarily approved since 2008 aren't justified, the carriers will have to issue refunds with interest.

The 800-mile pipeline from the North Slope to Valdez is owned by transportation subsidiaries of BP, Conoco Phillips, Exxon Mobil, Koch and Union Oil Co. of California. Exxon owns a 20.34 percent stake in the pipeline, making it the third largest owner after BP and ConocoPhillips. Unocal and Koch together own less than 5 percent and have indicated that their shares are for sale.

BP is the only pipeline owner that hasn't asked for an increase to in-state shipping rates.

Anchorage Daily News is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service