Morning Headlamp — Wood Mackenzie advises a tolling system

“A valid issue.” A refiner raised a valid issue with the Federal Energy Regulatory Commission’s method for valuing crude oil that flows through the Trans-Alaska Pipeline System, the D.C. Circuit ruled. To compensate high-quality depositors for their loss, the Federal Energy Regulatory Commission oversees a system for compensating oil companies for the difference in quality between their input and output, known as the Quality Bank. Judge Sri Srinivasan, writing for the three-judge panel, was particularly convinced by Petro Star’s showing that that sum of Quality Bank’s price for all nine cuts exceeded the market price for a barrel of North Slope crude oil, when a valid pricing system should approximately match the market price.

Paying the toll. A study commissioned by three of the four Alaska LNG Project participants suggests alternative financing options currently being investigated could improve the project’s global competitiveness amid today’s lower energy prices. The current financing plan for the $45 billion-plus North Slope natural gas export plan, which has the state, BP, ConocoPhillips and ExxonMobil funding the project through debt and equity, doesn’t pencil out, according to Dave Barrowman, a vice president with the global energy consulting firm Wood Mackenzie. “Certainly moving to a tolling system could be beneficial, disproportionately beneficial, towards Alaska LNG,” Barrowman said.

 

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First Reads

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