Plains' proposed Cactus II pipeline surcharge challenged by oil producers

|About: ConocoPhillips (COP)|By:, SA News Editor

ConocoPhillips (COP -1.5%) and Encana (ECA -2.3%) have asked the Federal Energy Regulatory Commission to reject a proposed tariff surcharge by Plains All American Pipeline (PAA, PAGP) on its Cactus II oil pipeline, according to a regulatory filing.

COP and ECA said the Plains surcharge was premature because the U.S. Department of Commerce may still grant the pipeline operator an exemption before the fee goes into effect in April, and added that surcharges "are generally disfavored" by FERC.

Earlier this month, Plains proposed charging shippers a $0.05/bbl fee on its 670K bbl/day Cactus II pipeline next April to offset higher construction costs due to the Trump administration's steel tariffs.

Plains last year estimated the tariffs would add $40M to its costs for the $1.1B pipeline, which runs 550 miles from the Permian Basin to the U.S. Gulf Coast.

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