RCA clears ways for discontinuing berths

Opening docket to intervening parties and public hearing; without opposition, construction work on tanker berths could start in May

Eric Lidji

Petroleum News

State regulators have cleared the way for the owners of the trans-Alaska oil pipeline to discontinue two Valdez Marine Terminal berths for loading crude oil onto tankers.

The five companies with ownership interests in the pipeline made the request at the end of last year, saying declining throughput on the 800-mile pipeline has meant fewer tankers traveling through Prince William Sound, making the berths unnecessary.

The owners said the berths have been idle for years. Berth 1 hasn’t been used for loading oil since February 2001, while Berth 3 hasn’t been used for loading oil since June 2002.

The owners also said upgrading the two berths to meet federal environmental regulation would cost around $40 million. These upgrades have been made to the remaining berths.

With final regulatory approval, the owners will start a five-month construction project to boost the integrity of the piping system around the two tanker berths, according to filings.

The work is scheduled to run between May and September. The workload involves removing “dead-leg” pipeline, or sections of the system where oil remains stagnant, and removing “meter sets,” or various pieces of equipment used to measure flowing oil.

Berth 1 is the only floating berth at the marine terminal. It measures 390 feet long and 96 feet wide, and weighs 3,250 tons. The owners said Berth 1 “may be sold and relocated.”

Berth 3 is one of three fixed berths. It measures 122 feet long and 46 feet wide. The companies have said it “will continue to be used and useful as a layover berth where tankers and other vessels can be moored for purposes other than loading crude oil.”

Berths 4 and 5 remain in normal operation. Although an opening for a Berth 2 has been around since the construction of the pipeline, the berth was never actually constructed.

Discontinuing the tanker berths is a new issue in the history of the pipeline and originally the owner companies were not entirely sure they needed regulatory approval.

The pipeline moved more than 2 million barrels of oil daily at its peak in 1988, but currently moves less than 700,000 barrels per day and throughput continues to decline.

BP Pipelines (Alaska), ConocoPhillips Transportation Alaska, Exxon Mobil Pipeline Co., Koch Alaska Pipeline Co. and Unocal Pipeline Co. all own shares of the pipeline.

Tesoro concerned about DR&R

The owners believe around half the cost of the project, or between $3.2 million and $4.05 million worth of work, could be considered part of retiring the marine terminal facilities.

As a result, the owners could fund part of the work using “dismantlement, removal and restoration” funds, a portion of the fees paid by companies moving oil down the pipeline.

The owners said the work would lead to “no substantial change or modification” to the shipping rates, but the filing still drew concern from one perennial pipeline customer.

Tesoro, which operates a refinery in Nikiski, said the proposal to use retirement funds opens up larger questions about how these funds are collected and how they will be used in the future as the pipelines gets closer to the inevitable day when it is no longer needed.

The Regulatory Commission of Alaska decided not to consider those issues in this case.

The RCA is accepting petitions from those with an interest in the case through May 15, after which a decision will be made whether to issue a construction permit for the work.