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Vol. 12, No. 15 Week of April 15, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

End in sight for massive TAPS pipeline upgrade

Owners reveal completion date for Strategic Reconfiguration Program at Alyeska Pipeline Service Co. to federal regulators

Rose Ragsdale

For Petroleum News

Owners of the trans-Alaska oil pipeline told federal regulators April 5 that strategic reconfiguration of the 800-mile crude oil conduit, currently under way, will be completed in 2010, and asked for more time to prepare for litigation over the program.

Officials at Alyeska Pipeline Service Co., operator of the pipeline, had said as recently as March that they did not have a specific timetable for completing the multimillion-dollar project, a massive upgrade of the 30-year-old pipeline system with pumps and other equipment using the latest technology.

The changes are aimed at improving the efficiency of the pipeline and at making the line more flexible in hauling varied volumes of crude and other hydrocarbon liquids from the North Slope to tidewater at Valdez.

At a pre-hearing conference at the Federal Energy Regulatory Commission in Washington, D.C., April 5, representatives of the five trans-Alaska oil pipeline owners told an administrative law judge that Alyeska’s Strategic Reconfiguration Program is taking much longer than originally anticipated.

The State of Alaska filed a complaint before FERC last year, seeking relief from what it called certain “imprudent” costs incurred by the owners in their strategic reconfiguration of the line and included in the pipeline’s 2004, 2005 and 2006 interstate tariffs.

In February 2006, the FERC consolidated the complaint with others in ongoing litigation regarding the pipeline tariffs.

But in September 2006, the pipeline owners told FERC that it couldn’t consider the “SR” issues until after the project was completed, and no firm date had been set for the work to be finished.

At that point, FERC Chief Administrative Law Judge Curtis L. Wagner Jr. separated the SR issues from the ongoing trans-Alaska oil pipeline tariffs case and put on hold the process of establishing a schedule for hearing arguments on the SR issues.

Strategic reconfiguration to be completed in 2010

At the April 5 pre-hearing conference, BP Pipelines (Alaska) Inc., ConocoPhillips Transportation Alaska Inc., ExxonMobil Pipeline Co., Koch Alaska Pipeline Co. LLC and Unocal Pipeline Co. not only informed the court that the SR project would be finished in 2010, they also requested a six-month extension on time to prepare for a hearing in the case.

Attorneys for the State of Alaska concurred with the request and joined the pipeline owners in also asking to begin discovery immediately.

Wagner granted the extension until Oct. 4, and ordered the owners and the state to develop a proposed schedule for hearing the case.

The pipeline owners and the state also argued that since the SR issues affect the ongoing pipeline tariffs case, they should be weighed along with other issues in those deliberations.

“The parties stated that it would likely be more efficient to address the project as a whole to avoid duplicative litigation and six months would allow the parties the opportunity to determine the most efficient way to proceed in this case. This includes settlement discussions and the possibility of bifurcation of the issues by completed pump stations and/or costs affecting the 2005/2006 rate base,” wrote FERC Presiding Judge Carmen A. Cintron in an order granting the request April 6.



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