Plains gives up on pipeline steel surcharge

U.S. pipeline operator Plains All American has abandoned a plan to institute a surcharge to offset Section 232 steel tariffs for its new Cactus II Pipeline, following objections by ConocoPhillips and Encana, according to regulatory documents secured by Kallanish, sister publication of Kallanish Energy.

The proposed tariff would have been $0.05/barrel on its 670,000 barrels per day Cactus II crude oil line from the Permian Basin to refineries on the Gulf Coast.

At that rate, the company estimates it would have offset the extra $40 million it expects to pay for steel for the $1.1 billion, 550-mile line in roughly 3.5 years.

ConocoPhillips and Encana both argued to the Federal Energy Regulatory Commission the surcharge was unnecessary, as Plains does not yet know whether it will ultimately be subject to Section 232 tariffs for Cactus II.

This post appeared first on Kallanish Energy News.