Facing protests from shippers, Plains All American Pipeline LP has decided to remove a capital surcharge on its Cactus II crude oil pipeline from the Permian Basin, which it had originally proposed to offset costs associated with U.S. tariffs on imported steel.
The move comes days after ConocoPhillips and Encana Marketing (USA) Inc. filed a protest with FERC challenging the surcharge, a 5.0 cent/bbl fee that would have gone into effect in April to help repay “capital expenditures associated with increased construction costs as a result of governmental regulation and tariffs.”
In a letter to the Federal Energy Regulatory Commission Monday, attorneys for Plains affiliate Cactus II Pipeline LLC asked the Commission to dismiss the ConocoPhillips and Encana protest now that the challenged surcharge has been removed.
Plains CEO Willie Chiang had discussed the proposed surcharge for Cactus II during the midstreamer’s 2Q2019 earnings call. He said the company would remove the surcharge if it successfully secured an exemption from the Trump administration’s tariffs for the steel it imported to build the pipeline.
Meanwhile, trade tensions between the United States and China, which escalated late last week with a new round of proposed tariffs, have stoked global economic uncertainty, roiling the oil market in the process.