Unocal still negotiating TAPS share sale

Kristen Nelson

Petroleum News

The Regulatory Commission of Alaska has approved another extension by Unocal Pipeline Co. of an application to transfer its operating authority in the Trans Alaska Pipeline System. The current extension expired March 1. Unocal applied for an extension Feb. 28, an extension the commission approved March 9.

Unocal filed for a temporary suspension of service on its share of the trans-Alaska oil pipeline in 2012, as it withdrew from Alaska. It told RCA in a June 2012 filing that it owns the smallest interest of any of the owners in the system, a composite interest of 1.36 percent (1.3561 percent of the pipeline and 1.66 percent of terminal tankage). The company said its interest in the trans-Alaska pipeline system “no longer meets the company’s core strategic needs.”

With a five-year renewal of the pipeline system agreement expiring July 31, 2012, Unocal said it had given the other owners the required 90-day notice that it did not wish to continue operations. Any owner withdrawing must discontinue operations and cease accepting tenders at the end of the agreement term, Unocal told the commission, and then sell its interest to either a third party or another owner for an agreed-upon price, subject to the remaining owners right of first refusal, or sell all to the remaining owners “for reasonable net salvage value on a pro rata basis.”

In 2012 RCA required Unocal to file an application to transfer its operating authority or an explanation of why the application cannot be made by the required date. The current extension expired March 1.

“Unocal still is not in a position to file an application to transfer its operating authority at this time,” the company said Feb. 28. “As explained in Unocal’s prior filings in this proceeding, Unocal and the other TAPS Carriers had a dispute over several transfer-related matters,” and are arbitrating the dispute and at the same time litigating portion of the dispute.

“The litigation has been time-consuming and is likely to continue for a significant period of time,” the company said.

The commission has extended the deadline for filing either an application or an explanation as to why the application cannot be filed by Sept. 1.

- KRISTEN NELSON