Plains' Cactus II Denied Tariff Exemption

A request by Plains All American to exclude its Cactus II Permian-to-Gulf Coast crude oil pipeline from the tariff on imported steel was rejected by the Commerce Department on grounds that suitable product is available from domestic producers. 

Houston-based Plains said it will proceed with the project and is reviewing its options to challenge this decision. 

It was the first ruling of its kind affecting a major U.S. energy project since the tariff went into effect.  Others, including Kinder Morgan, are awaiting rulings on their requests for exemption from the 25% tariff imposed by the Trump Administration this spring on imported steel.

A Plains spokesperson told Reuters the government's process of reviewing exclusion requests is flawed and appears “to rely on comments that are not required to be substantiated, and on a review of undisclosed data by staff without meaningful interaction with the applicants.”

Plains had ordered material for part of the pipeline last year from a producer in Greece.

The Cactus II project is one of numerous planned to add needed capacity to deliver growing crude oil production from the Permian Basin to Gulf Coast markets. 

The Cactus II pipeline, with an initial capacity of 585,000 bpd extending from the Permian to the Corpus Christi/Ingleside area and costing a total of US$1.1 billion, is one of the major pipelines planned to secure an outlet for Permian oil to the markets and alleviate takeaway capacity constraints. The pipeline is targeted to be operational in the third quarter of 2019.

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