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Vol. 15, No. 4 Week of January 24, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Cutting the cost of pipe

BP Alaska puts together direct imports of Japanese tubing to Port of Anchorage

Wesley Loy

For Petroleum News

It was 5 o’clock on a Saturday morning, Aug. 8, down at the Port of Anchorage.

Steve Sautel, logistics coordinator for BP Alaska, was there to greet a cargo ship that had sailed across the North Pacific Ocean, bringing a vital commodity and a new style of doing business to the state.

“It was a great feeling,” he said, “to see the hatch open up and see pipe coming out.”

Yes, pipe. A lot of it.

So far, three ships have made unusual stops to the Port of Anchorage to deliver a total of 17.6 million pounds of well tubing and casing, what folks in the energy industry term OCTG — oil country tubular goods.

That such ships come direct to Anchorage is something new, the result of a lot of collaboration among BP procurement managers, the Anchorage port, Japanese pipe maker Sumitomo Metals and its subsidiaries in Alaska.

The direct imports are helping save time and money as BP prepares to drill ultraextended-reach wells to tap its Liberty offshore oil deposit, and continues development drilling in Prudhoe Bay and other North Slope fields.

Roundabout journey

Usually, pipe for BP’s operations in Alaska takes a circuitous route to get here.

Pipe from a variety of steel mills generally goes first to Houston, or sometimes Washington state.

From Houston, the pipe proceeds by railroad to the Seattle area, where the rail cars are loaded onto barges bound for the Alaska port of Whittier.

From there, the Alaska Railroad delivers the pipe to either Anchorage or Fairbanks, with trucks hauling it up the rugged Dalton Highway to feed drilling rigs on the Slope.

The full journey can take several weeks.

Sautel and Bob Talbott, BP Alaska’s chief procurement officer, began to think about a better way. It was in keeping with BP’s recent efforts to work with suppliers and contractors on controlling costs and doing things more efficiently.

Liberty presented the opportunity to import pipe directly to Anchorage, Talbott told Petroleum News in a recent interview.

That’s because of the volume of pipe Liberty will require for its extreme horizontal wells, some of which are expected to reach up to eight miles out to pierce a reservoir with an estimated 100 million barrels of recoverable oil. A powerful Parker rig already is on site, with drilling expected to start this spring.

Liberty demands big enough loads of tubing and casing to justify cargo ships making stops in Anchorage, Talbott said.

Three ships have arrived so far: one in August, one in December and one in early January.

Alaska connections

The pipe arriving at the Port of Anchorage comes from Sumitomo Metals, a major pipe manufacturer in Japan.

Sumitomo Metals, with head offices in Osaka and Tokyo, has a long-term supply contract for pipes with London-based BP.

Sumitomo Corp. of America in 2003 won a contract to provide tubular goods and logistical services to BP in Alaska, which led to the founding of a local Sumitomo subsidiary called Tubular Solutions Alaska.

Tubular Solutions coordinates BP’s pipe stock, managing the oil company’s pipe yard in Fairbanks, Talbott said.

Another local Sumitomo company, Unique Machine, also is an integral piece of BP’s OCTG pipeline.

Based in Anchorage, Unique Machine bills itself as “Alaska’s largest machine shop.” It provides critical services such as threading, and has the capability to work with the large-diameter pipe required for Liberty, Talbott said.

The pipe arriving at the Port of Anchorage can be big stuff, up to 17 inches.

To receive the pipe, a lot of logistical arrangements had to be hammered out, Sautel said.

North Star Terminal & Stevedore Co. workers unload the pipe from the ships, and Sourdough Express trucks it away.

Stuart Greydanus, director of operators for the Port of Anchorage, said the port has ample room to accommodate the pipe in its laydown yards.

Cranes lift the pipe out of the ship and set it on the ground. Forklifts then stack the tubing on a chassis for hauling, Greydanus said.

Working out the details was easy, he said: “A few meetings.”

Having the pipe shipped directly to Anchorage is a welcome development for the city’s growing port.

“Absolutely, it’s good for the port,” Greydanus said. “It’s added dockage revenue and it’s added wharfage revenue.”

More imports likely

Typically, it takes about 45 days to move pipe from Houston to a drilling rig in Alaska, a Sumitomo Corp. of America Web site says.

That’s a long, expensive journey, one Sautel and Talbott are aiming to reduce with the direct pipe imports to Anchorage.

But the Japanese mill can’t supply all the pipe BP needs, so direct imports aren’t a comprehensive solution, Talbott said.

“It’s another tool in the toolbox,” he said. “We’re going to pick our spots and use it where we can.”

Besides saving distance, time and cost, Talbott noted the direct imports have one other benefit — safety.

“The less handling we have to do with this pipe, the less opportunity for something unfortunate to happen,” he said.

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