2. Background
Crimson California Pipeline (Applicant) is a California limited partnership authorized to do business in the State of California. Its general partner is Crimson Pipeline Management, Inc., a California corporation, whose parent, Crimson Resource Management Corp., a Colorado corporation, currently operates in excess of 30 petroleum production properties located in four different California counties, with the bulk of its operations in Kern County. Crimson is a public utility, subject to the Commission's jurisdiction pursuant to Pub. Util. Code § 216. Specifically, Crimson is a pipeline corporation as defined by Pub. Util. Code § 228, which owns and operates certain oil pipeline facilities in Southern California. Crimson currently owns and operates six common carrier crude oil pipeline systems. Two of these systems, the Line 600 pipeline system and its associated gathering pipelines and the East Crude (Line 700) pipeline system and its associated gathering pipelines, were recently acquired from ConocoPhillips Pipeline Company (ConocoPhillips) with approval by the Commission in Decision (D.) 07-12-046.
These systems are currently unencumbered and are the utility assets that Crimson seeks authority to encumber through this Application. The Line
600 pipeline system includes approximately 100 miles of pipe, three tanks with over 200,000 barrels of storage capacity and a crude oil truck unloading facility. The Line 700 system includes over 30 miles of pipe, one tank with approximately 5,000 barrels of storage capacity, and a crude oil truck unloading facility. As noted in D.07-12-046, as part of the purchase and sale agreement between Crimson and ConocoPhillips, portions of both the Line 600 and Line 700 pipeline systems will be idled because these pipeline systems run generally parallel with the pipeline systems that Crimson already owns. However, all receipt and delivery points on both the Line 600 and the Line 700 system will be maintained.
Following the issuance of D.06-05-004, Crimson, its general partner and an affiliated partnership, Cardinal Pipeline, LP that owns and operates non-public-utility pipeline assets in California, entered into1 the Credit Agreement with the Bank of Oklahoma (BOK). The three Crimson entities are co-borrowers under the Credit Agreement, which calls for BOK to extend up to $4 million in revolving credit with any outstanding loan due and payable May 1, 2010. The Credit Agreement further provides that BOK may, at its sole discretion, increase the maximum credit available from $4 million to $10 million.
1 D.06-05-004 voided a credit agreement between the Crimson entities and BOK because it was entered into without prior approval by this Commission in violation of Pub. Util. Code § 851. However, the decision authorized the parties to enter into a substantially identical agreement on a prospective basis. Pursuant to the authority granted in
D.06-05-004, in December, 2006 the parties ratified the previously existing credit agreement to make it effective as of the date of issuance of D.06-05-004.
