September 2019, Vol. 246, No. 9


Plains All American to Remove Steel Tariff Surcharge on Cactus II

Plains All American Pipeline filed with U.S. regulators to remove a proposed surcharge on its Cactus II oil pipeline, tacked on as a result of the Trump administration’s tariff on imported steel.

Plains last year estimated the 25% steel tariff would add $40 million to its costs for the $1.1 billion pipeline, which runs 550 miles (885 km) from the Permian basin of West Texas and New Mexico to the U.S. Gulf Coast.

After the U.S. Commerce Department rejected Plains’ two initial requests for a waiver, the company decided to charge shippers a 5-cent a barrel fee to offset the higher construction costs.

“It’s making it clear the steel sanctions are increasing costs,” Sandy Fielden, an analyst at financial services firm Morningstar, said of the company’s new fee. “The shipper’s going to have to pay, come what may.”

The latest filing to remove the surcharge comes about a week after U.S. oil producer ConocoPhillips and a unit of Canadian producer Encana Corp asked the Federal Energy Regulatory Commission (FERC) to reject Plains All American’s proposed tariff surcharge. P&GJ

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