Plains All American Hit with $40 Million Tax on Cactus II Steel Import

Plains All American Pipeline (PAA) has been hit with a $40 million tax because of steel tariffs that were enforced under the Trump administration.

The pipeline project will go forward, but Plains' COO has said that the financial impact is worrisome.

“We can’t let trade officials determine product specification for companies. It’s our pipeline, it’s our asset," Plains' COO said.

The COO also told Congress that the material needed to build oil and gas pipelines should be exempt from the steel tariff considering that it only makes up ~5% of the total volume of steel imports.

He also emphasized that steel orders already made should stand, tariff free, at least until U.S. manufacturers are able to build the capability and capacity to deliver timely materials to meet America’s energy production growth.  

The $40 million tax is for high-grade steel from Greece that would be used to build the 585,000 bbl/day Cactus II pipeline. The Cactus II pipeline was one of the main projects meant to alleviate the lack of pipeline capacity problem that the Permian faces.

Plains has already applied to receive exemptions, however the U.S. government denied an exclusion from the tariff.

Source:
Seeking Alpha

Oil Companies Disappointed with Trump Administration’s Steel Tariffs

The American Petroleum Institute said Friday that the White House’s decision to deny an exemption request for tariffs on imported steel that is being used on certain parts of oil and natural gas industry operations has been disappointing.

A report from Argus Media said that the Commerce Department has only processed 241 requests for exclusion from the tariffs and is working through a backlog of more than 20,000 requests.

Last week, the Trump administration rejected a request from Borusan Mannesmann Pipe US for an exclusion on 135,000 tons of Turkish steel that is imported to its Baytown facility every year.

Other companies like Chevron and Royal Dutch Shell were granted exclusion and allowed to buy Japanese steel used in drilling in the Gulf of Mexico.

The approval allowed Shell to be exempt from additional tariffs for 243 metric ton of steel casing and production tubing that would be used when drilling wells in the US Gulf of Mexico. Chevron’s approval was for 50 metric tons of corrosion-resistant stainless steel and tubing. Both waivers will only last for a year and are exclusive to those two companies.

"The administration's arbitrary process to determine these exclusions lacks transparency as it's not clear how and why certain exclusion petitions are granted or denied," said API Vice President for Regulatory and Economic Policy Kyle Isakower. "What is clear, though, is that implementation of tariffs on imported steel undermines domestic energy production and the future of our nation's energy infrastructure which is critical to bringing American energy to market."

Source:
Houston Chronicle

Steel-Import Tariffs Result in Major U.S. Oil Pipeline Companies Seeking Exemptions

Major oil pipeline companies are worried that the high cost of importing steel due to the Trump administration’s new tariffs will increase oil prices, among other problems.

Companies have specific steel requirements and seek manufacturers who can meet those requirements within a timeline constraint, all while ensuring the required volume is met.

Most companies are arguing that without the specific capabilities of select steel manufacturers in countries like Turkey, who has a manufacturer for Kinder Morgan, it would be increasingly difficult to maintain production volume without sacrificing current production schedules.

Analysts warn a bottleneck of crude could force some producers to shut down production.

A Japanese steel provider helps oil and gas producer Hess guarantee corrosion resistance in deepwater operations, which is something Hess would not be able to do if it had to find a different provider.

Benchmark steel oil prices have increased 50 percent since last year, and with 77 percent of steel used in pipelines being imported, over 500 petitions have been submitted for exclusions and exemptions from steel-import tariffs.

Initial decisions are expected to be made this month.

Source:
Reuters

U.S. Pipeline Developers Plan to Seek Exemption to Steel Tariff

Pipeline developers in the U.S. are intending to pursue exemptions to the Trump Administration's proposed 25 percent tariff on imported steel as worry looms over the impact that the cost increase would have on a number of pipeline projects.

Energy companies have argued against the tariff that was declared last week, saying the U.S. does not provide key metal grades or diameters needed for some pipeline projects. They also argue that U.S. manufacturers have a longer production time than importers overseas, which would impede pipeline development.

According to a 2017 study conducted for the pipeline industry, steel imports account for 77 percent of the steel used in U.S. pipelines.

NAmerico Partners, which is planning a multibillion dollar pipeline from the Permian to the Gulf Coast, said it estimates the tariff would raise the cost of the project to its customers by two to four percent. Construction has not yet started on the project.

The U.S. Commerce Department is working to come up with a procedure for companies to apply for exemptions from the tariffs on steel and aluminum. The department has 10 days to do so.

Austin attorney Adrian McTyre said tariffs could still raise costs and slow down projects even with exemptions because of the development of a new regulatory hurdle and the many unknowns to that process right now.

Source:
Reuters

Trump Infrastructure Proposal Would Speed Up Pipeline Approvals, Permit Processes

The Trump administration released its infrastructure proposal Monday, which aims to expedite the process for approving and issuing permits for U.S. natural gas pipelines.

In its attempt to boost U.S. oil and gas development by slashing red tape and regulations, the Trump administration released its $1.5 trillion infrastructure proposal that would give the interior secretary the authority to approve natural gas pipelines that cross national parks instead of keeping that authorization exclusive to Congress.

The proposal would also speed up the time states have to issue water permits, or section 401 certificates, that companies need in order to construct interstate natural gas pipelines.

The proposal would delegate more decision-making to the states and enhance coordination between state and federal reviews, according to the proposal. Projects will then become less costly and more time efficient.

The administration aims to make the approval process for major projects to take no longer than 21 months instead of two years.

The administration also wants to direct one federal agency rather than several agencies to conduct the review.

The proposal would have a significant impact on the permitting process for pipelines, especially in places like the Northeast where pipelines have been struggling to receive permits from those states.

Source:
Reuters

Sioux Tribes Plan March at National Mall to Protest Trump Administration, Dakota Access Pipeline

Members of two Native American tribes and their allies from around the U.S. are marching for four days near the National Mall in D.C. to protest the Trump administration and the Dakota Access Pipeline as construction on the line nears completion.

The protestors plan to camp on the National Mall starting Tuesday, bringing with them teepees, cultural workshops, speakers, and putting on a ceremonial fire. The march will begin Friday for two miles from the U.S. Army Corps of Engineers office building to the White House, where the protestors will rally.

Time is running short for the pipeline fighters as a decision by a federal judge to approve or deny a request by the Standing Rock and Cheyenne River Sioux tribes to halt construction of the last section of the pipeline is to be decided this week.

The tribes argue the one-mile section of pipeline that will cross under Lake Oahe, which is just north of the Standing Rock Sioux reservation, will contaminate their water supply, destroy sacred sites, and threaten their religious rights.

The U.S. Army Corps of Engineers last month gave pipeline builder Energy Transfer Partners permission to restart construction of the line. Energy Transfer Partners estimates oil will be flowing through the 1,172-mile line sometime this month.

Although the federal government disputes the claim, the tribes believe they were not properly consulted about the line and argue that the Dakota Access Pipeline and have been "pushed aside to benefit corporate interests and government whim," according to chairman of the Standing Rock Sioux tribe Dave Archambault.

Source:
PBS

Trump Plans to Approve Keystone XL, Dakota Access Construction

Dakota Access Oil Pipeline, by Tony Webster from Minneapolis, Minnesota -  BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=54799766

Dakota Access Oil Pipeline, by Tony Webster from Minneapolis, Minnesota -  BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=54799766

President Donald Trump is planning to sign two executive actions today that would allow construction of the Keystone XL and Dakota Access Pipeline to proceed, according to Bloomberg reporting.

Under the Obama administration, TransCanada's Keystone XL pipeline was rejected after a six-year review. Construction of the Dakota Access Pipeline was nearly complete this past summer until the U.S. Army Corps of Engineers denied Energy Transfer Partners a permit to build underneath a reservoir of the Missouri River.

These major executive actions come during Trump's fourth day of office and marks a significant transition from the previous administration relating to controversial pipelines. It is a first sign of Trump's promise to ease regulations on America's energy industry and promote expansion of infrastructure.

Source:
Bloomberg
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