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Vol. 16, No. 9 Week of February 27, 2011
Providing coverage of Alaska and northern Canada's oil and gas industry

Alyeska answers federal pipeline critic

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Barrett says operator of trans-Alaska pipeline is on top of challenges associated with declining oil flow; talks begin with PHMSA

Wesley Loy

For Petroleum News

Alyeska Pipeline Service Co. is challenging many of the concerns federal regulators raised in a proposed safety order.

The U.S. Pipeline and Hazardous Materials Safety Administration didn’t specify any fines or other penalties. But in its Feb. 1 notice to Alyeska, the agency said corrective measures appear necessary to address “multiple conditions” on the trans-Alaska pipeline system posing a risk to public safety or the environment.

These measures include replacing potentially corroded pump station piping; adding new pig-handling equipment; expanding oil storage tank capacity; and revising the pipeline cold restart plan.

PHMSA issued the notice following an oil leak at Pump Station 1 that forced two pipeline shutdowns in January, the longest one lasting about 84 hours.

In a Feb. 15 response, Alyeska President Tom Barrett challenged much of PHMSA’s proposed safety order. Barrett himself formerly headed the agency.

“We support actions in the proposed order that will enhance safe operation of TAPS,” said Barrett’s letter dated Feb. 15. “However, Alyeska believes that some of PHMSA’s preliminary findings and proposed actions fail to reflect sound operational practice, propose out of sequence activities or address matters external to TAPS.”

‘To the contrary’

Alyeska is an Anchorage-based consortium that runs the pipeline for owners BP, ConocoPhillips, ExxonMobil, Chevron and Koch Industries. The pipeline has been moving North Slope crude oil since 1977.

Barrett took issue with PHMSA’s suggestion that Alyeska isn’t dealing adequately with integrity challenges arising from declining oil throughput and temperature, including potential freeze-ups and increased waxing inside the pipeline.

“Alyeska has been, and will continue to be proactive to address risks resulting from declining flow,” Barrett wrote. Steps include more aggressive pigging of the line and “multiple changes in operations as a result of studies conducted of low flow conditions.”

Barrett also pushed back against criticism that Alyeska had difficulty implementing its cold restart procedures during the January shutdown, partly due to an “inability to quickly move equipment” into position along the pipeline.

“To the contrary, Alyeska successfully executed the Cold Restart contingency plan as written,” Barrett said. “Moving equipment up and down the 800 miles of pipeline was conducted in a measured manner. The pipeline was not in a circumstance that dictated the need to implement the plan, so moving equipment into place was precautionary. There was no need to hastily move heavy equipment on winter roads in limited daylight in a hurried or unsafe manner. We will not compromise personnel safety because PHMSA or anyone else thinks we should perform some operational activity more quickly.”

Equipment used in a cold restart includes piping, pumps and generators to help circulate oil and warm the system, Alyeska spokeswoman Michelle Egan told Petroleum News. The pipeline never has gone through a true cold restart, and was many days away from such a scenario after the January leak, she said.

On pigs and tanks

In its proposed safety order, PHMSA suggested the pipeline might need additional pig launchers and receivers. A pig is a device that slides through a pipeline to clean its inner walls, or to test for problems such as corrosion.

The agency noted that two cleaning pigs were in the southern half of the pipeline at the time of the January shutdown, but the only permanent pig receiver to remove them was at the end of the line in Valdez.

Alyeska’s “inability” to capture pigs at interim locations between Pump Station 4 and Valdez is a risk condition, as a pig could “cause a plug” in the pipeline during a shutdown and cold restart situation, PHMSA said.

Barrett, in his reply letter, said Alyeska “has a spool piece of pipe that can be, and was, successfully and safely used” to capture one pig at Pump Station 8, located 311 miles north of Valdez. “Alyeska just demonstrated that a permanent pig receiver is not the only method capable of safely recovering pigs,” he wrote.

However, Alyeska agrees a permanent pig launcher and receiver “may be desirable” between pump stations 5 and 10, Barrett said.

PHMSA also suggested increased oil storage tank capacity at pump stations might be needed “to assist during prolonged outages and the implementation of a cold restart.”

During a TAPS shutdown, a lack of storage, particularly just upstream of Pump Station 1, means production from oil fields must be limited among companies or halted, which can damage production facilities and increase the risk of spills in cold weather, PHMSA said.

Barrett said the agency reached “questionable conclusions” about the impact of a TAPS shutdown on North Slope production facilities.

“Storage facilities upstream of PS 1 are not something that Alyeska has the ability to control operationally or legally,” Barrett wrote. “This statement does not belong in any enforcement action against Alyeska. Further, the size of storage facilities along the pipeline has no causal connection to the length of prorations or increased risk of product release in cold weather.”

What next?

Alyeska requested an “informal consultation” with the regulators to talk about the proposed safety order.

These talks already have begun.

On Feb. 17, Mike Joynor, operations senior vice president for Alyeska, and Joe Robertson, compliance and ethics director, met in Denver with PHMSA Western Region officials based there.

Alyeska and PHMSA could sign a “consent agreement” on a work plan to address risk conditions on the pipeline.

Barring that, Alyeska could request an administrative hearing. If the pipeline is found to pose a public, property or environmental risk, then PHMSA could issue an actual safety order.



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