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Vol. 14, No. 29 Week of July 19, 2009
Providing coverage of Alaska and northern Canada's oil and gas industry

Drift River restart

CIPL to restart oil terminal, bypassing the tank farm to offload inlet oil

Alan Bailey

Petroleum News

Following three months of speculation about the future of the Cook Inlet oil industry after the April 4 shut-in of most western Cook Inlet oil fields, after an explosion at the erupting Redoubt Volcano had sent a second flood of mud-laden water around the beleaguered Drift River Oil Terminal on the volcano’s flanks, Cook Inlet Pipe Line Co. announced July 13 that, with the volcano quieting down, the company hopes to start shipping oil from Drift River again, starting mid-August.

CIPL plans to pump oil delivered from the Cook Inlet pipeline directly into tankers moored at the terminal’s Cindy Lee platform, without using the terminal storage tanks but instead depending on oil storage in tanks located in Chevron oil production facilities at Granite Point and Trading Bay. The CIPL-operated Cook Inlet pipeline connects Granite Point and Trading Bay to Drift River, with the pipeline also collecting oil from Pacific Energy’s production facilities for the West McArthur River and Redoubt Shoal fields.

“CIPL plans to transport oil stored at facilities at Granite Point and Trading Bay and ship it through CIPL’s 42-mile pipeline for direct delivery to tankers which will be berthed at its Christy Lee platform located near its Drift River Terminal,” CIPL said in a July 13 statement. “This modified procedure is designed to bypass the tanks at the Drift River Terminal, and crude oil storage operations at the terminal will remain suspended.”

New equipment

CIPL spokesman Santana Gonzalez told Petroleum News July 17 that CIPL is replacing pumps and metering systems at the terminal, as a result of which it will be possible to increase oil flow rates, to enable efficient transfer of oil direct to the tankers.

Startup of the modified procedure at the terminal depends on compliance with regulatory requirements, including an approved oil discharge prevention and contingency plan for the terminal — the Alaska Department of Environmental Conservation needs to determine whether any changes to that plan as a consequence of changes to the terminal procedures would impact CIPL’s ability to respond to an oil spill, Betty Schorr, manager of the Division of Spill Prevention and Response’s industry preparedness program, told Petroleum News July 17.

Schorr said that ADEC staff has met with CIPL and that ADEC is now waiting for CIPL’s revised plan. Were ADEC to determine that the revised plan changes CIPL’s oil spill response capability at the terminal, a 30-day public review period for the revised plan would be necessary, she said.

Chevron, operator of the west Cook Inlet oil fields that had to be shut-in at the beginning of April, says that it plans to resume field production once transportation of oil through Drift River restarts. However, the company must first offload about 90,000 barrels of oil currently stored at Granite Point and Trading Bay.

Offloading this oil will likely take about 28 hours, Gonzalez said.

Field restart

Chevron says that it expects two shipments of oil per week from Drift River to be necessary, once the oil fields are back in production. However, company spokeswoman Roxanne Sinz told Petroleum News July 14 that it would not be possible to determine the impact of the oil field shut-in on continuing field production rates until the wells are restarted, a process that will be carried out well by well. The shut-in will likely have degraded well performance.

“We expect the production will be at a reduced rate,” Sinz said.

Sinz said that Chevron had to furlough some contractors in April when the oil fields were shut-in, but that no Chevron employees had been laid off.

Modification of the facilities at Drift River to accommodate the new offloading arrangements and the subsequent restart of oil shipping and oil production are contingent on the Redoubt eruption not flaring back into life — the eruption started with multiple explosions on March 22.

Despite the buildup of a lava dome in the volcano after the early-April explosion, the Alaska Volcano Observatory in late June reported a decline in seismic activity, coupled with a slowdown in lava extrusion and gas emissions, all possibly signaling an end to the eruption. And AVO has lowered the volcano’s alert level to “advisory.”

The latest AVO reports indicate steam rising from the volcano, with seismic activity only just above background levels.

In March and early April, mud flows resulting from eruption-driven flooding of Drift River, adjacent the terminal, had lapped against the terminal tank farm’s protective dike and encroached the facility’s airstrip, causing CIPL to take the precautionary move of offloading oil from the terminal’s active storage tanks into tankers, in two operations, under the guidance of a unified command that was formed to address the Drift River emergency. Following the second offloading operation, water was pumped into the tanks to act as ballast, to ensure that the tanks would not float from their foundations in the event of a flood inside the terminal site.

Remove ballast

According to a July 10 situation report issued by the Alaska Department of Environmental Conservation, the unified command has now approved plans to remove the ballast water and residual oil from the tanks in late July or early August, lest the freezing of the water during the winter threatens the tank integrity. The exact timing of the operation depends on the availability of a tanker to receive the oil and water that is pumped from the tanks.

And once the tanks are empty two tanks will be isolated from the piping system at the terminal by removing the appropriate connecting valves, with a third tank left on standby, for oil surge protection, the report says.

CIPL has not yet determined whether in the longer term to bring the Drift River storage tanks back into operation or to continue bypassing the tank farm, Gonzalez said. If the company elects not to use the tanks in the future it will clean out the two disconnected tanks in the summer of 2010, he said.

And according to the situation report the tank cleaning, “an intensive operation that requires cleaning crews and equipment to remain on site for an extended period of time,” has been deferred to 2010 in case there is further eruptive activity at the volcano.

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