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August 2018

Vol. 23, No.33 Week of August 19, 2018

RCA receives Oliktok connection agreements

Kristen Nelson

Petroleum News

The Regulatory Commission of Alaska said in an Aug. 13 order that applications for approval of connection agreements for the Oliktok Pipeline have been accepted as complete and final orders in the proceedings will be issued by Jan. 23.

Oliktok Pipeline Co. filed for a permit to connect the pipeline to the Kuparuk River unit and an application requesting approval of a connection agreement for that connection, and an application for a permit to connect the pipeline to the Prudhoe Bay unit and an application for approval of a connection agreement for that connection.

The pipeline

In its applications Oliktok Pipeline Co. described the Oliktok Pipeline as a 16-inch line from Skid 50 in the Prudhoe Bay unit near Pump Station No. 1 of the trans-Alaska oil pipeline to the Kuparuk River unit Central Processing Facility No. 1.

The Oliktok line received a certificate of public convenience and necessity in the 1980s to provide natural gas transportation service. The certificate was suspended in 1988 when the line ceased to provide natural gas transportation service.

In 1995, Oliktok requested a certificate for the transportation of natural gas liquids and the commission granted a certificate covering both natural gas and NGL transportation. The line carried NGLs from 1995 through 2013, with NGLs from the Prudhoe Bay unit injected into the Kuparuk reservoir for enhanced oil recovery.

In 2003, RCA granted a permit and approved a connection agreement for a new connection between the Milne Point Pipeline and the Oliktok Pipeline.

Oliktok Pipeline requested approval to discontinue NGL service in 2013 and approve rates for natural gas transportation service. Because the line was already certificated for both NGL and natural gas service, RCA found there was no need to approve discontinuance of NLG service, which ceased on Aug. 1, 2014. The pipeline facilities were modified to accommodate natural gas transportation, which began in November 2014.

In December 2016, ConocoPhillips, operator at Kuparuk, notified Oliktok that it would cease natural gas shipments beginning Jan. 1, 2017. At the request of Oliktok, RCA approved suspension of natural gas service on the line, and no NGLs or natural have been shipped on the line since Jan. 1, 2017.

ConocoPhillips has indicated it intends to begin NGL shipment from Prudhoe to Kuparuk beginning in August.

Connection agreement

While the Oliktok-Kuparuk connection has been in place since 1985, there is no approved connection permit or connection agreement, and Oliktok and ConocoPhillips have now entered into a connection agreement to accommodate both natural gas and NGL shipment. Oliktok is seeking RCA approval of that agreement and issuance of a permanent connection permit between Oliktok and Kuparuk.

The same issue exists between Oliktok and the Prudhoe Bay unit - the connection has been in place but there has been no connection agreement.

BP Exploration (Alaska) Inc., the Prudhoe operator, and Oliktok have entered into a connection agreement accommodating both NGLs and natural gas, and Oliktok seeks approval of that agreement and issuance of a connection permit.

The issue of connection permits and agreements was resolved by an RCA decision in 2013. While the Prudhoe Bay unit and the trans-Alaska oil pipeline had been physically connected, for reasons described as unknown and lost in history there was no approved connection permit or agreement. RCA determined in 2013 that the commission was obligated by statute to require a permit, thus requiring connection permits for existing as well as planned connections.






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