Steel tariff adds US$40 million ‘tax’ to pipeline project

That is the message Willie Chiang, Chief Operating Officer at Plains All American Pipeline LP, carried to the US Congress yesterday in comments before the House Ways and Means Committee. The company’s request for an exemption from US steel tariffs in its push to build a pipeline in the biggest North American oilfield was rejected in July by the US government.

The ultimate cost of the rejection: Roughly US$40 million, said Chiang, calling it a ‘tax’. While the pipeline project will go forward, he said the financial impact for both the company and the industry is worrisome, mirroring comments made by the company last month.

Plains sought the exemption for high-grade steel from Greece as it prepares to begin building the 585 000 bpd Cactus II pipeline which is scheduled to start shipping crude from the Permian Basin in West Texas and New Mexico to the coastal port of Corpus Christi, Texas, late next year.

“Clearly, grandfathering is what we asked for,” he said. “We can’t let trade officials determine product specification for companies. It’s our pipeline, it’s our asset."