By Selam Gebrekidan
NEW YORK, March 6 (Reuters) - The U.S. federal energyregulator ruled in favor of Seaway Crude Oil Pipeline CompanyLLC last week after it upheld rates the company had negotiatedwith committed shippers for space on its Oklahoma-to-Texaspipeline.
The Federal Energy Regulatory Commission (FERC) issued theorder on Friday, reversing an Administrative Law Judge'sSeptember decision that had found the transportation serviceagreements Seaway entered with committed shippers "unjust" and"unreasonable."
FERC struck administrative judge Karen Johnson's decision todetermine committed shippers' rates based on costs, saying herarguments "misconstrue long-held commission policy."
The regulator remanded the case back to the judge forfurther action.
The ruling is a welcome relief to pipeline companies who decide the fate of their projects based on committed rateagreements they secure with long-term shippers, which are thenused to finance these costly undertakings.
FERC honors these rates but at times reviews the moreexpensive uncommitted rates that are available to shipperswithout a binding long-term agreement.
With its Friday decision, the commission affirmed that itwill not open for review transportation service agreements andnegotiated rates that have already been executed and signed bycompanies.
The September ruling, which addressed committed rates, haddrawn fire from energy companies who said it could jeopardizebillions of dollars in investments.
The case arose from contests filed by oil companies againstthe uncommitted rates they were charged to ship oil on thepipeline.
In April 2012, oil companies including Apache Corp.,Chevron Products and Cenovus Energy, amongothers, had filed a motion contesting Seaway's proposal tocharge non-contracted shippers $3.82 per barrel for light crudeand $4.32 for heavy grades.
The Seaway pipeline can ship up to 400,000 barrels-per-dayof oil from the Cushing, Oklahoma storage hub to the Jones Creekterminal near Freeport, Texas.
Enterprise Products Partners and Enbridge Inc., who share ownership of Seaway Crude Oil PipelineCompany, reversed flows on the line in 2012.
The companies are building another 30-inch pipeline, dubbedthe Seaway Twin, that will double Seaway's capacity to 850,000bpd when it comes online in the second quarter.
