Providing coverage of Alaska and northern Canada's oil and gas industry
December 2013

Vol. 18, No. 50 Week of December 15, 2013

Tesoro reports steady progress toward new Cook Inlet pipeline

Plans to lay a new subsea crude oil pipeline across Cook Inlet are proceeding apace, a manager for project owner Tesoro told the Regulatory Commission of Alaska on Dec. 11.

The proposed Trans-Foreland Pipeline will be a common carrier, so it will need a certificate of public convenience and necessity.

An application for that certificate will be submitted to the RCA in January, said Jim Wentworth, capital projects manager for Tesoro.

Tesoro already has a pipeline right-of-way application pending with the State Pipeline Coordinator’s Office, a unit of the Alaska Department of Natural Resources.

“We see no issue at this point slowing us down,” Wentworth told the RCA.

Horseshoe shape

The project currently is in the front-end engineering and design, or FEED, stage, Wentworth said.

The pipeline will run 29 miles in all, including the 22-mile segment that will rest on the seafloor.

The line is named for two land features it will connect on either side of the inlet — the West Foreland and East Foreland.

On the west side, the line will begin at Cook Inlet Energy LLC’s Kustatan oil production facility. It will take a U-shaped path across the inlet, coming ashore south of the industrial facilities at Nikiski. From there, the pipeline is to run north, buried, along the Kenai Spur Highway to the tank farm supporting Tesoro’s Nikiski refinery.

The subsea segment will make the horseshoe bend to avoid deep water between the forelands. This will make installation easier, and will aid in pipeline maintenance, Wentworth said.

For many years, Tesoro’s refinery has used oil produced on the inlet’s west side. This oil has been hauled aboard tankers across the inlet, which is notorious for its extreme tides and drifting winter ice.

Wentworth told the RCA it now appears a subsea pipeline would be an economical way to move crude from west to east. He cited the risk of interruption in oil supply, and hopes for greater westside oil production.

Project has fans

Industry observers including the Cook Inlet Regional Citizens Advisory Council generally have applauded the subsea pipeline idea.

The line could provide a safer alternative to tanker runs, they say. What’s more, the westside Drift River terminal where tankers load is vulnerable to nearby Redoubt volcano. Eruptions in 2009 knocked the terminal out of service, hampering oil production for months.

Tesoro took over the Trans-Foreland Pipeline from Cook Inlet Energy, which pursued the project originally. Cook Inlet Energy operates westside oil properties including the Osprey platform, and sells oil to Tesoro. It sees the cross-inlet pipeline as a way to potentially reduce oil transportation costs.

The project, however, has a substantial price tag of $50 million, Tesoro has told state officials.

At a relatively small 8 inches in diameter, the line will offer a lot of flexibility in terms of the volumes it can handle, from less than 5,000 barrels per day up to 40,000 barrels, Wentworth told the RCA.

An important factor will be Hilcorp’s ultimate posture toward the Trans-Foreland Pipeline. Hilcorp owns the Drift River terminal and is the inlet’s dominant oil producer. To date, the company has seemed less than enthusiastic about the project.

Wentworth said talks were progressing with all westside oil producers.

Construction schedule

Tesoro has indicated it wants to start construction in February and commence pipeline operations by October 2014.

The pipeline originally was to run close to the industrial docks at Nikiski, but that’s been changed. Now, the pipeline will make landfall much farther south, to avoid any chance of damage from dragging ship anchors.

Care will be taken during construction to avoid disruption to commercial salmon fishermen, endangered Cook Inlet beluga whales, and fiber-optic cables, Wentworth said.

—Wesley Loy

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