Milne Point asks for pipeline changes

Planned suspension of Oliktok Pipeline changes supply issues at Milne Point, which now plans to use local natural gas supplies

Eric Lidji

For Petroleum News

A proposed suspension of the Oliktok Pipeline is reverberating through the pipeline grid.

The Hilcorp Alaska Inc. subsidiary Milne Point Pipeline LLC recently asked state regulators to eliminate certain requirements related to a proposed connection between the Oliktok Pipeline and the Milne Point Product Pipeline. “Due to Oliktok’s suspension of service, there are no current plans for reconnecting the Milne Point Product Pipeline to Oliktok for transporting natural gas,” Milne Point Pipeline wrote on April 4. “As a result, for the foreseeable future the Milne Point Product Pipeline will only be transporting natural gas from the Milne Point Field to Module 68 to fuel the generators located there.”

In early May 2016, Milne Point Pipeline applied to amend its certificate to allow for natural gas shipments. The company was planning to connect the Milne Point Product Pipeline to the Oliktok Pipeline to obtain gas supplies to fuel Module 68 at Milne Point.

The Regulatory Commission of Alaska approved the certificate amendment request in early November 2016. The approval included several provisions. One required Milne Point Pipeline to submit a connection agreement at least 45 days before connecting to the Oliktok Pipeline. Another required Milne Point Pipeline to verify, at least 30 days before connecting to the Oliktok Pipeline, that its pipeline had been “properly flanged and that the section of the Milne Point Product Pipeline downstream from Module 68 will remain filled with nitrogen.” Milne Point now wants the commission to waive those provisions.

Changing demand

Its primary customer, ConocoPhillips Alaska Inc., had announced in late 2016 that it was planning to discontinue natural gas shipments on the pipeline for the immediate future.

The Oliktok Pipeline connects the Prudhoe Bay unit to the Kuparuk River unit, with a connection at the Milne Point unit. The pipeline is certificated to carry either natural gas or natural gas liquids, although natural gas liquids shipments were discontinued in 2014.

In its February 2017 filing, Oliktok Pipeline said it had not made shipments to the Milne Point unit since 2002. Without the demand of ConocoPhillips at the Kuparuk River unit, “there is no current need for natural gas transportation service on the Oliktok Pipeline.”

Without a way to obtain supplies through the Oliktok Pipeline, Milne Point Pipeline now intends to use natural gas from the Milne Point field to fuel the Module 68 generators.

One result of using a local supply of natural gas is that the company will be changing the direction of flow along the Milne Point Pipeline. As such, “the flanging requirements will be changed such that the flange will need to be placed at the Oliktok side of Module 68 rather than the Milne Point Field side. The unused, flanged-off portion of the Milne Point Product Pipeline will be the segment running from Module 68 to the flange at the Oliktok Pipeline, a distance of approximately 400 feet,” according to the recent company filing.

The 10.4-mile Milne Point Pipeline was built in 2001 to transport natural gas liquids to the Milne Point unit from an interconnection with the Oliktok Point Pipeline. But natural gas liquids shipments were suspended in December 2002, after an injection pump failed.

The Milne Point unit no longer requires natural gas liquids for enhanced oil recovery and has no potential customers looking to use the line for natural gas liquids. The RCA allowed the company to isolate the Milne Point Product Pipeline from the Oliktok Pipeline in 2007 and allowed it to begin operating as a natural gas pipeline in late 2016.