Plains All American Pipeline LP shelved a proposal to impose a surcharge on its Cactus II Pipeline LLC system to offset the cost of the Trump administration's steel tariffs after Permian players ConocoPhillips and Encana Corp.'s marketing subsidiary asked federal regulators to reject the fee.
The Houston-based pipeline operator informed the Federal Energy Regulatory Commission in an Aug. 26 filing that it amended its original tariff filing to remove the surcharge. Plains asked FERC to reject the protest by ConocoPhillips and EnCana Marketing (USA) Inc., saying the issue is now "moot."
Plains had proposed a 5 cents-per-barrel surcharge on crude oil flows through the Cactus II system, which entered service earlier this month and will eventually provide capacity to transport as much as 670,000 barrels per day through new and existing pipelines between Texas' Permian Basin and the Gulf Coast export hub at Corpus Christi. The surcharge was set to go into effect on April 1, 2020, and was meant to amortize higher-than-expected project costs due to government regulation and tariffs.
Plains has so far been unsuccessful in its bid to secure a tariff waiver from the U.S. Department of Commerce for the imported steel it used to build the project.
ConocoPhillips and EnCana Marketing argued in an Aug. 19 filing with FERC that Plains' proposed surcharge was premature since it would not go into effect for several months. The producers noted that Plains is still pursuing a tariff exemption.
Plains CEO Wilfred Chiang previously said the company sought the surcharge as a parallel path to the ongoing effort to secure an exemption. Plains would revoke the fee and rebate customers "as appropriate" once the waiver came through, he said during an Aug. 6 conference call.
It was unclear from the Aug. 26 FERC filing whether the company will seek to impose the surcharge at a later date. Plains could not immediately be reached for comment.
