Watson Millican & Company ’s technical experts were retained by counsel for several shippers of natural gas liquids (NGLs) transported on a Texas intra-state common carrier pipeline to evaluate prevailing market rates for NGL pipeline tariffs. The shippers were engaged in a dispute concerning proposed pipeline tariffs before the Texas Railroad Commission.
The Dispute
Several shippers of NGLs transported on an intra-state common carrier pipeline from West Texas to the Texas Gulf Coast filed with the Texas Railroad Commission alleging the pipeline owner’s significant increase of their NGL pipeline tariffs was in violation of Texas intra-state common carrier rules. The Texas Railroad Commission is the State of Texas regulatory body that deals with such issues.
Watson Millican & Company Scope
Watson Millican experts were requested to perform a market study of all NGLs pipelines in the State of Texas that provided transportation services from West Texas to the Texas Gulf Coast including capacities, spot tariffs, incentive tariffs, allowable product specifications, and available pipeline origin and delivery locations. An exhaustive analysis was performed to identify prevailing tariffs, terms, and incentives for NGL pipelines correlated to location, age of the pipeline, and capacity of the pipeline. Watson Millican experts determined that there existed a wide disparity in pipeline tariffs principally correlated to the original date and cost of construction for the pipelines, including recovery of the initial installed or purchased costs for the pipelines. Watson Millican experts provided opinions to the Texas Railroad Commission, including live testimony, for a prevailing market-based tariff for the NGL pipeline at issue based on the market study.
Project Scope:
Value: US $20 million
Services: Market Studies, Asset Valuation
Sectors: NGLs, Pipelines, Refining and Chemicals