The Alaska Oil and Gas Conservation Commission, informed by ConocoPhillips Alaska at the end of November that the company and the North Slope Borough have agreed to install custody transfer meters meeting petroleum measurement standards of the American Petroleum Institute for the borough’s gas conditioning skid at Alpine, said Dec. 21 that it will review ConocoPhillips’ plans for installation of the custody meters before making a decision on the borough’s pending request for a meter variance.
The borough and ConocoPhillips said at a Nov. 28 public hearing (see story in Dec. 3 issue of Petroleum News) that the meters installed in the borough’s gas conditioning skid at Alpine did not meet requirements in the commission’s regulations.
The borough said the design of its skid assumed custody transfer and royalty measuring would be done upstream of the Alpine conditioning facility. While the gas is provided free of cost to Nuiqsut as a condition of the company having surface use of village lands for its facilities, royalties are still paid and the State of Alaska (both the departments of Natural Resources and Revenue commented on the proposal) was concerned about the accuracy of the meters for calculation of the state’s royalties.
The borough is involved because it funded the gas pipeline to the village.
David Hodges, the borough’s program manager for the project, told the commission at the November hearing that the difference in royalties as measured by the meters in the skid and approved custody transfer meters would be in the hundreds-of-dollars range per year, while replacing the meters would cost $25,000 to $40,000 and — if the meters were replaced now — could delay startup of gas until next spring or summer. Nuiqsut, he told the commission, has been waiting for gas for years.
Where meters will go subject of engineering and design work
In its Nov. 30 letter to the commission, ConocoPhillips said the borough and the company had further discussions on the custody meters and agreed to the installation of custody transfer meters meeting the commission’s standards. The company said the custody transfer meters would be installed upstream of the borough’s gas conditioning skid or at the outlet of the skid. “Additional engineering and design work must be performed to determine which location will work best,” the company said.
However, if startup of the Nuiqsut Natural Gas Pipeline occurs before March 1, ConocoPhillips said it may not be possible to install the new custody transfer meters prior to start-up of the system. In that case the meters would be installed during the first shutdown of the system, likely next summer during the Alpine field’s annual maintenance turnaround.
ConocoPhillips said it supports the borough’s request for a variance, “but on a temporary basis to cover the period between startup and first shutdown.” It said the borough has agreed to reimburse it for any additional royalty payments resulting from meter uncertainty.
The commission said Dec. 21 that because circumstances have changed since the hearing it wants to review ConocoPhillips’ proposed installation plans for the custody transfer meters before making a decision on the borough’s request for a meter variance.
ConocoPhillips and the borough have until Jan. 16 to submit proposed plans for installation of the meters and the departments of Natural Resources and Revenue have until Jan. 22 to respond to the proposed plans.
