Alyeska's Barrett calls for urgent action to increase oil production

JUNEAU, Alaska - Alaska's economic artery, the trans-Alaska pipeline, could require expensive upgrades or even shut down if more oil doesn't begin coursing through it soon, the line's operator said on March 18.

"This needs to be a wake-up call for the state," Tom Barrett, president of Alyeska Pipeline Service Co., told the House Finance Committee.

The testimony comes in the midst of a heated debate over whether to cut oil production taxes, as Gov. Sean Parnell has proposed.

Oil provides nearly 90 percent of Alaska's unrestricted revenue, and Parnell believes the tax change is needed to boost investment and increase declining production. He is getting support from prominent House Republicans, including Rep. Mike Hawker.

But House Democrats see the plan as little more than a corporate giveaway, and members of the Senate's bipartisan majority are have questioned whether the proposal will work as intended and not deplete the state's multibillion-dollar reserves.

While Barrett did not endorse Parnell's plan, he said in an interview that he would encourage lawmakers to do whatever they could "to get me more oil."

Barrett said he would like to move between more than 800,000 and one million barrels of oil a day. The total currently averages around 640,000 b/d and is declining.

He said it would take at least five years for an oil development project to get online; for a larger field, it would be about 10 years, he said.

"We are already, from my perspective, behind," he told the committee.

Alyeska CEO: Low volume biggest threat to safety of trans Alaska pipeline system

JUNEAU, Alaska - Alyeska Pipeline Service Co.'s new president, Tom Barrett, on Feb. 17 told legislators that the biggest problem facing the trans Alaska pipeline is the low volume of oil being shipped from the North Slope.

, Alaska

Designed to deliver up to two million barrels of oil per day, it is now carrying a little more than six hundred thousand b/d.

Barrett and members of his staff specifically addressed the most recent oil spill on the line that began Jan. 8.

Barrett, a former commander of the Coast Guard, says his Coast Guard experience has taught him to throw every tool available into responding to an emergency, and low oil flow is an emergency.

Betsy Haines, the oil movements director for Alyeska, explained the effects of low volume in the line. She said TAPS was designed to handle warm oil and to carry that oil for shipment relatively quickly. But at current low flow rates, it is taking 15 days for oil to get from pump station one on the North Slope to the terminal at Valdez.

PHMSA calls for major work on trans-Alaska pipeline

ANCHORAGE, Alaska - The U.S. Pipeline and Hazardous Materials Safety Administration has given Alyeska Pipeline Service Co. a list of proposed corrective measures tied to challenges that have spun off from having too little oil in the 48-inch diameter, 800-mile pipeline.

The agency is concerned that Alyeska Pipeline Service Co., the oil-company-owned business that runs the pipeline, can't check part of the pipeline system for corrosion and that it takes too long to restart the line after shutting it down, among other issues.

A PHMSA investigation found that the trans-Alaska pipeline poses a risk to public safety and the environment and that issues tied to corrosion, inspection and pipeline restarts after shutdowns must be addressed.

The pipeline currently operates at less than one-third capacity from its peak of 2.1 million barrels per day. Less throughput means decreased crude oil temperatures and conditions that lead to corrosion.

The cooler oil allows more buildup on pipeline walls of paraffin, a corrosion hazard. Alyeska inserts cleaning pigs inside the pipe to scrape the paraffin from the walls. "Smart pigs," on the other hand, perform other pipeline maintenance jobs, such as the detection of abnormalities in metal, but the inline inspection tools are at risk of being stopped by paraffin.

Lower temperatures also means water mixed in with crude oil is susceptible to freezing in Alaska's extreme cold if the pipeline is shut down, making re-starts more risky if the pipeline has been involved in a long shutdown.

"There is a risk of water accumulation in low points freezing and creating ice plugs which could impede restart of TAPS and damage valves, instrumentation, and other pipeline components," the letter said. The water itself is another corrosion hazard.

The oil companies that own Alyeska and the pipeline - BP, Conoco Phillips, Exxon Mobil, Koch Industries and Chevron - are finalizing a two-year study on how to manage the risks involved in operating the pipeline as the oil flow rate declines.

Alyeska is also paying for a third-party risk assessment of the pipeline from the North Slope to the ship-loading arms at the Valdez tanker port. The study was requested by U.S. Sen. Lisa Murkowski, R-Alaska, after a big oil spill last year at a Pump Station 9 near Delta Junction.

The two studies are expected to be finalized in the first half of this year.

The proposed safety order in a letter prepared this month follows a January leak at Pump Station 1 on Alaska’s North Slope. A containment vault collected an estimated 13,326 gallons of oil that leaked from a pump station pipe. Still, the pipeline was shut down for days and producers for a time were limited to extracting five percent of capacity.

To fix the leak, the trans-Alaska pipeline was shut down twice for a total of 142 hours. That disrupted as much as $300 million worth of production. The leak was contained inside a building at Pump Station 1 and did not cause environmental contamination, according to regulators.

The agency proposed 13 corrective measures, including replacement of any piping in the system that cannot be assessed with smart pigs or other technology it approves.

Alyeska completes report on spill causes but says it’s confidential

JUNEAU - Alyeska Pipeline Service Co., the operator of the 800-mile trans-Alaska pipeline system, said on July 28 that an internal company review found that power failure and lack of "situational awareness" contributed to an oil spill in May.
Michelle Egan, a spokeswoman for Alyeska, said the company isn't releasing the report, “wanting to ensure worker privacy and a candid flow of communication.” The report, she said, is intended to be an internal working document, to help identify any shortcomings or areas in which the company can improve.
Egan said that lessons learned, including a need for greater situational awareness, are being put into practice during scheduled maintenance shutdowns of the line this summer.
In late May, the TAPS line was idled for nearly 80 hours, after Alyeska
said a power failure during a planned shutdown caused normally closed
valves to open, leading to an overflow of oil from a storage tank to
a containment area.
Estimates of the oil spill ranged from about 4,500 barrels to around
5,000 barrels.
Egan said the review deemed the power failure the "number one root cause." But she said another big issue was that workers were so focused on restoring power, they "didn't have the situational awareness to anticipate the tank filling and overflowing."
With power down, the operations center in Anchorage couldn't see what was happening at the affected pump station - and provide a needed backup to workers focused on restoring power, she said.

Alyeska CEO Hostler, BP appointee, retiring early under fire

JUNEAU, Alaska - Kevin Hostler, a former BP executive, is retiring in September as head of the Alyeska Pipeline Service Co., which runs the trans-Alaska pipeline.
Hostler's decision comes as two congressional subcommittees investigate Alyeska Pipeline Service Co.'s maintenance and safety records, and amid allegations that employees who expressed safety concerns were ignored or even punished.
Hostler had earlier announced plans to retire from Alyeska by the end of the year but didn't want recent reports about the company to be a distraction, company spokeswoman Michelle Egan said.
His retirement will be effective Sept. 30.
A replacement wasn't immediately named. The pipeline system owners' committee will choose his successor.
BP Pipelines (Alaska) is the largest single owner of the 800-mile TAPS line that carries oil from Alaska's North Slope to Valdez, where tankers pick it up for shipment to refineries in the lower 48. The other pipeline owners include ConocoPhillips Transportation Alaska Inc., ExxonMobil Pipeline Co., Unocal Pipeline Co. Inc. and Koch Alaska Pipeline Co. LLC. The line is independent of BP.
Recent questions have been raised stemming from an internal report that found "widespread" employee dissatisfaction with the pipeline's operation and raised serious concerns with the management culture at Alyeska, U.S. Rep. Bart Stupak said.
Stupak, a Michigan Democrat, sits on the House Energy and Commerce committee. He said staff from his Subcommittee on Oversight and Investigations met with Hostler recently to express concerns.
"Mr. Hostler's early retirement does not come as a surprise and I wish him the best in his retirement," Stupak said.
He said he expects that the group that will choose Hostler's replacement will find someone with "the character and management style to move the company forward."
Dan Lawn, a former Alaska Department of Environmental Conservation employee, has documented years of safety complaints targeted at BP and Alyeska, many of which were not corrected. In addition, he said, at least one senior BP official who came up with a list of concerns was fired a week later.
The federal Pipeline and Hazardous Materials Safety Administration has filed eight enforcement actions against Alyeska over conduct dating to 2004, alleging safety, maintenance and procedural violations, and is seeking more than $1 million in fines. The company is contesting most of the actions.
Richard Fineberg, a senior advisor on oil and gas policy to the Alaska governor in the 1980s and author of several reports on pipeline operations, said "I can also tell you that the repressive atmosphere (inside Alyeska) is as bad as anything I've seen."

Alyeska to test hydraulic clamp designed to repair bullet hole leak

ANCHORAGE - Alyeska Pipeline Service Co. is planning a field exercise this year to test a hydraulically powered clamp designed to stop oil from spewing out of the trans-Alaska oil pipeline through a bullet hole.
The bullet-hole exercise is planned for a site at the Chatanika River.
A test piece of 48-inch mainline pipe will be placed at the scene and
pressurized with water to simulate a high-pressure oil spray through a bullet hole, an exercise description says. Equipment including Alyeska's HC 320 hydraulic clamp will be dispatched from the company's Fairbanks Response Base.
A simulated 60-barrel release is expected over the course of the planned 12-hour exercise, and Alyeska and regulators will time and evaluate all the activities, the exercise description says.
The drill is scheduled for the third quarter of this year, though Alyeska spokesman Matt Carle said it could come sooner to avoid conflicts with planned summer maintenance shutdowns along the pipeline.

Hawk awarded personnel services contract by Alyeska Pipeline

ANCHORAGE - Hawk Consultants LLC has been awarded a multi-year contract by Alyeska Pipeline Service Co. to provide professional personnel services to support operation and maintenance of the trans-Alaska pipeline.
Hawk is an Alaskan-owned firm specializing in project management services supporting client organizations with people and resources to ensure project success.

Alyeska blunder leads to massive escape of natural gas in pig run

ANCHORAGE, Alaska - A massive release natural gas at Prudhoe Bay that
escaped into a trans-Alaska pipeline pump station could have destroyed the building and caused an extended shutdown of Alaska's North Slope oil fields, pipeline operators and investigators have determined in a preliminary inquiry.
The incident on Jan. 15 occurred as workers for BP PLC used pressurized natural gas to move a cleaning pig through a corroded 34-inch pipeline that was being prepared for decommission.
When the pig became stuck, a large volume of gas bypassed it and went to Pump Station 1.
The rush of natural gas overwhelmed systems before escaping out of storage tanks into the atmosphere.
An investigation by federal and state authorities is under way into the incident, a federal regulator said on Feb. 6.
Officials at Alyeska Pipeline Service Co., the company that operates the 800-mile pipeline, acknowledge that a fire or explosion could have endangered the station's 60-plus workers and caused a shutdown of oil fields.