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June 2018

Vol. 23, No.23 Week of June 10, 2018

Hilcorp seeks RCA Drift River approval

Wants to discontinue use of terminal and associated infrastructure following startup of pipeline oil transportation under Cook Inlet

Cook Inlet Pipe Line Co., a subsidiary of Hilcorp Alaska, has asked the Regulatory Commission of Alaska to authorize the permanent decommissioning of the Drift River Terminal and its associated infrastructure on the west side of Cook Inlet. Hilcorp is engaged in a project to reconfigure its Cook Inlet pipeline system to enable the transportation of oil by pipeline west to east under the inlet. Currently, oil from the fields on the west side of the inlet is transported by the onshore Cook Inlet pipeline south to Drift River, from where it is carried by tanker to Nikiski on the east side of the inlet.

Close to volcano

The Drift River terminal lies at the foot of Redoubt Volcano. In particular because of the risk of the terminal being impacted by an eruption of the volcano, Hilcorp wants to eliminate the terminalís use. In 2009 an eruption of Redoubt forced an evacuation of the terminal and an emergency drawdown of oil stored at the terminal site.

In addition to the decommissioning of the terminal and its tank farm, CIPL has asked RCA to approve the decommissioning of the terminalís Christy Lee tanker loading platform, and the portion of the Cook Inlet pipeline that runs south from the Trading Bay pipeline junction to the terminal and the loading platform.

CIPL told the commission that there is no evidence of any plans for oil development in the Drift River area that might need the terminal facilities. Moreover, the facilities would require significant investment to remain compliant with agency requirements, CIPL said.

Decommissioning

The company envisions that decommissioning would begin on Jan. 1 and will involve oil removal and cleaning for the pipeline and terminal facilities, and the dismantlement and removal of all above ground components of the disused section of the Cook Inlet pipeline. The Christy Lee platform would be placed in lighthouse mode, in anticipation of being removed in conjunction with the eventual removal of Cook Inlet oil platforms. CIPL would also arrange remediation of any contaminated soil.

The company anticipates the cost of decommissioning, excluding the cost of removing the Christy Lee platform, to be $21 million.

Currently CIPL provides oil transportation services through the Drift River Terminal and its associated pipeline and loading platform under an RCA certificate of public convenience and necessity - hence the need for RCA approval of the decommissioning.

Converting a CIGGS line

Hilcorpís oil transportation project involves switching over one of the existing twin Cook Inlet Gas Gathering System pipelines to the transportation of oil rather than gas. That would provide the means of shipping oil west to east under the inlet. The western end of the CIGGS line will be hooked up to the northern end of the Cook Inlet pipeline system via a new short length of onshore oil pipeline. To maintain an adequate capacity for the carriage of natural gas under the inlet, following the conversion of the CIGGS line, Hilcorp is laying a new subsea gas line from the Tyonek gas platform to the west side of the inlet, and is upgrading part of the existing gas pipeline that runs from the Tyonek platform to Nikiski.






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