US denies tariff waiver for Cactus 2 pipeline: Update

Adds comment from Plains All-American Pipeline

President Donald Trump's administration this week shot down a new request to remove import tariffs on steel for the $1.1bn Cactus 2 crude pipeline but agreed to lift them on steel for the $1bn Midship natural gas pipeline.

The US Commerce Department on 15 May denied a request from Plains All-American Pipeline to waive import tariffs on hundreds of miles of steel pipeline imported from Greece for its Cactus 2 pipeline. The waiver request was not a "complete submission," the agency said.

Plains last year said having to pay the tariff would add $40mn to the cost of the 562-mile project that would transport crude from the Permian basin to Corpus Christi, Texas. Commerce's denial comes 10 months after it denied a nearly identical request from the company, also on the grounds it was incomplete.

Plains last year asked Commerce to lift tariffs on 155,500 metric tonnes of pipeline imported from Corinth Pipeworks. The tariff waiver denials are not expected to have an effect on plans to start partial service in the fourth quarter.Plains said it is disappointed with the Commerce decision, while noting that it ordered the pipeline before Trump imposed tariffs in March 2018.

"These unjust steel tariffs caused Plains to incur additional costs on our projects," Plains said. "We disagree with the basis of our denial and will continue to evaluate all options for appeal."

Commerce on 14 May separately lifted the tariff on 90,000 metric tonnes of pipeline that US LNG company Cheniere Energy has proposed to import from Canada for its planned 1.4 Bcf/d (40mn m³/d) Midship natural gas pipeline that would connect Oklahoma to Gulf coast markets and LNG export facilities.

The oil and gas industry has lost the majority of its requests to win exemptions to steel import tariffs that Trump set at 25pc for most countries. Commerce has rejected waivers for 517,600 metric tonnes of steel and granted them for 153,700 metric tonnes of steel, according to an Argus compilation of nearly 200 requests that major oil and gas companies have filed since April 2018.

Oil and gas companies have been waiting upwards of 10 months to receive decisions on many of their waiver requests, but Commerce has recently acted on a large number of requests from the industry.

Commerce over the last week, for example, denied six waiver requests from Plains for 22,300 metric tonnes of steel pipeline it imported from Germany to build its El Mar to Wink crude pipeline in the Permian. The agency said the type of pipeline it bought was adequately available in the US and ineligible for waivers.

Commerce last month denied a request from Kinder Morgan to lift tariffs on 151,000 metric tonnes of steel pipeline for its $1.75bn Gulf Coast Express natural gas pipelines. The agency said the type of pipeline it imported could not receive a waiver because US manufacturers produced it in a "sufficient and reasonable amount."