NEWS BULLETIN

May 14, 2012 --- Vol. 18, No. 36May 2012

State approves partial reopening of Drift River tank farm

Plans are moving ahead to bring a key west Cook Inlet crude oil tank farm out of mothballs, three years after volcanic eruptions jeopardized the facility.

In fact, Alaska officials already have granted the operator permission to use one storage tank through the summer.

The tank farm is at the Drift River terminal, where tankers load west Cook Inlet crude for delivery to refineries.

Oil storage was halted at the tank farm after a series of eruptions at nearby Redoubt volcano in 2009 sent mud flows known as lahars down the Drift River. A levee built around the tank farm saved it from a potentially disastrous inundation.

Hilcorp subsidiary Cook Inlet Pipe Line Co. operates the terminal. Hilcorp has applied to the state for a renewal of the oil spill prevention and response plan for the terminal and the pipeline that feeds into it.

Hilcorp, which took over operation of the terminal Jan. 1 after buying Chevron’s Cook Inlet oil and gas assets, wants to resume using two of the terminal’s seven giant oil storage tanks as a way to improve handling of west inlet oil production.

Each tank has a capacity of 270,000 barrels. Hilcorp plans to raise the height of the protective barriers around the tank farm to better safeguard against potential flooding.

The company is planning a “public workshop” on the Drift River terminal reopening on May 23 at the Soldotna Sports Center.

Meantime, the state Department of Environmental Conservation on April 27 approved Cook Inlet Pipe Line’s request to use Tank 3 for oil storage. The approval is good until Sept. 30.

The company cited a number of circumstances as the basis for its April 24 request, including a disruption in tanker arrivals at the Drift River terminal.

Since the eruptions that forced the tank farm shutdown, operators have used a “tight line” technique for piping oil directly onto tankers.

But due to unscheduled maintenance on one of the ships hauling for refiner Tesoro, west Cook Inlet oil producers were facing shut-ins for lack of storage and tankers calling often enough at Drift River.

As a condition, the DEC is requiring the terminal operator to schedule a tanker to respond right away to drain Tank 3 should the Alaska Volcano Observatory raise the alert level for Redoubt.

—Wesley Loy

See story in May 20 issue, available at 11 a.m., Friday, May 18, at www.PetroleumNews.com


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