Cactus II Pipeline Tariff Waiver Request Denied

A new request to remove import tariffs on steel for Plains All American's Cactus II crude oil pipeline system got rejected by the Trump administration.

The U.S. Commerce Department had already denied Cactus II's similar request last year, citing the same reason that the waiver request was not a "complete submission". The company requested to waive import tariffs on hundreds of miles of steel pipeline imported from Greece.

The 25% steel import tariff announced in March 2018. The department has rejected waivers for 517.6K metric tons of steel, while granted waivers for 153.7K metric tons of steel, Argus reports.

Although, majority of requests from the oil and gas industry to win exemptions was lost to Department of Commerce, the department lifted the tariff on pipeline that Cheniere had proposed to import from Canada for its planned 1.4 billion cubic feet per day Midship natural gas.


First Major Pipeline Company Denied Steel Tariff Exemption

The U.S. Administration rejected requests to exempt Plains All American Pipeline’s $1.1 billion Cactus II pipeline in the Permian from the 25-percent tariff on imported steel making Plains All American the first company to have such a rejection to a major project.

According to a Commerce Department decision, the request was denied because there were suitable products available from U.S. steel producers.

The Cactus II pipeline, which initially had a capacity of 585,000 bpd and extended from the Permian to the Corpus Christi/Ingleside area, is one of the major pipelines that was planned as a secure outlet for Permian oil to be alleviated helping capacity constraints. The project is targeted to be operational in the third quarter of 2019.

Originally, material for Plains All American Pipeline was ordered from a Greek producer in December of last year, before President Trump signed on tariffs being enforced on steel and aluminum imports to protect U.S. production and jobs.

Plains All American explained that only three steel mills in the world could manufacture all the material it needed, and none of them were U.S. companies.

Other U.S. companies such as Kinder Morgan, Shell, and Williams Cos have yet to receive news on similar requests, with the U.S. Commerce Department back logged on over 20,000 requests.

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