Eastman-Westlake pipeline decision may be near
The Texas Railroad Commission soon might be wrapping up a 3-year-old pipeline dispute between Eastman and Westlake chemical companies.
And it looks like Eastman may be winning.
The dispute, which is over what Westlake is charging Eastman for shipping ethylene from Longview via pipeline to a natural gas and liquids hub in Mont Belvieu. It appears Railroad Commission staff is siding with Eastman.
The commission conducted a proceeding this past Tuesday in Austin. While providing a link to the 46-page docket, railroad commission spokeswoman Ramona Nye declined Friday to comment because the case remains an ongoing legal proceeding.
However, Eastman spokeswoman Candy Eslinger stated in an email response to questions that her company expects the commission to issue a ruling soon — and in Eastman’s favor.
The docket states the administrative law judge and technical examiner for the commission determined Westlake “failed to meet its burden of proof” to establish a tariff rate of $3.50 per 100 pounds of ethylene was “just and reasonable.” Instead, they recommended a cost-of-service-based rate as presented in the original hearing: $2.45 per 100 pounds.
However, if the commission determines a “market-based rate” is appropriate, the administrative law judge and technical examiner recommend adopting the highest end of the average actual 2013 tariff rate: $2.12 per 100 pounds.
Representatives from Houston-based Westlake were not available for comment.
The case goes back to July 2013, when Westlake changed a tariff that had governed the operation of the common carrier pipeline for longer than 11 years, Eslinger said. Eastman filed a challenge with the commission July 29, 2013, objecting to changes Westlake made to the pipeline’s tariff and the terms of its usage, costs and service.
Eastman prevailed in the first phase of the proceedings Oct. 24, 2014, before the commission, which later denied a request by Westlake for a hearing.
As of early 2014, Eastman produced about 1.4 billion pounds per year of ethylene at its Longview plant but used only about half of it for its own operations, according to News-Journal archives.
Eastman Chemical Co. is one of the biggest employers in Longview, with more than 1,500 employees, while Westlake has about 200 employees at its operations here.
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