Navajo to appeal order accepting Western Refining tariffs

By Felicia Fonseca
Albuquerque, New Mexico (AP) 4-08

The federal government has rejected claims by the Navajo Nation that the tribe would lose millions in annual revenue because of prices set by Western Refining Pipeline Co. to transport crude oil on a pipeline stretching from West Texas to northwestern New Mexico.

The Federal Energy Regulatory Commission ruled last month that the tribe has not shown it has a substantial economic interest in the matter that would warrant a protest.

“... the Navajo protestors lack standing because they are not shippers on Western, they do not intend to ship on Western, and they have not made a valid transportation request to Western for shipments,” the commission said in a March 7 filing accepting Western’s tariffs.

Navajo officials plan to appeal the order.

Western’s tariffs, which went into effect March 10, range from $6.50-$7.50 per barrel on four sections of its 424 miles of pipeline, which briefly crosses the Navajo reservation.

The tribe sees Western’s rates as an attempt by the company to preserve its power over crude oil transportation and crude oil refining in the Four Corners area.

“We just want it to be a fair deal,” said Brad Nesemeier, a geologist at the tribe’s Minerals Department.

The pipeline Western now owns had been idle for seven years before Giant Pipeline Company acquired it in 2005, refurbished it and in 2007, put it back online.

During that time, Resolute Natural Resources Co. and the Navajo Nation Oil and Gas Co. had been able to command their price for crude oil to feed refineries in New Mexico, according to the commission.

The tribe created the Navajo Nation Oil and Gas Co. in 1998 to develop energy resources on tribal lands and to revitalize neglected oil fields, mostly in southeastern Utah. The company now operates producing properties, the Running Horse Pipeline system and seven gasoline stations.

Resolute, its affiliate, Resolute Aneth, LLC., and the Navajo Nation hold oil and gas leases on tribal trust lands and on U.S. Bureau of Land Management land in southeastern Utah. Resolute, Navajo Oil and Gas and other parties jointly produce about 10,200 barrels per day from the properties.

When Western acquired the pipeline system last May, it maintained a south-north directional flow. The tribe contends that keeps it from reaching markets in West Texas.

Under the situation, the commission said the Navajo Nation and Resolute no longer will be the exclusive supplier of crude oil to the New Mexico refineries, which they supply through other pipelines.

“Thus, Resolute and the Navajo Protestors are faced with receiving a lower price from the refineries in New Mexico than is reflected in their existing contract with those refineries,” the commission said.

The Navajo Nation and Resolute claimed in filings that they made a request for transportation on the pipeline in February. But the commission said the letter did not request service based on the terms, conditions and rates that Western had proposed.

“At best, it’s request is nebulous,” the commission said.

Once the tribe files an appeal, the commission will address any arguments and can either reject them, reaffirm its decision or make changes to the order, said FERC spokeswoman Tamara Young-Allen. If either party still isn’t happy with the decision, the matter can be taken to a federal appeals court, she said.