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Overstating the case? NRDC commissioned report says that TAPS low flow issues can be easily solved Alan Bailey Petroleum News
A new report, prepared by Innovation & Information Consultants Inc. for the National Resource Defense Council, an environmental action organization, says that Alyeska Pipeline Service Co. is overstating the potential problems associated with low oil flow down the trans-Alaska oil pipeline, and that the pipeline can continue viable operations for many years without any need to seek new oil fields to bolster oil throughput.
Low flow problems arise primarily from the increased cooling of oil in the line, as the transit time down the line increases.
In June Alyeska published the results of a lengthy internal study into the consequences of declining oil flow through TAPS, with the report saying that mitigation measures to counter issues such as ice and wax formation in the pipeline would be needed at flow rates below about 550,000 barrels per day and that, even with mitigation measures in place, flow rates below 350,000 barrels per day would become problematic. Although the report listed a series of mitigation measures that could be implemented to counteract the low flow problems, Alyeska President Tom Barrett commented that the simplest and most cost effective way of addressing TAPS low flow would be to produce more oil on the North Slope.
Threshold throughputs The NRDC report does not question the issues that are likely to arise as a consequence of low oil temperatures in TAPS, as the oil flow declines, but says that operational problems will not start to appear until the flow rate drops to 500,000 barrels per day, a situation that is unlikely to arise until sometime around 2020 to 2046. This timeline is based on Alaska production forecasts from the Alaska Department of Natural Resources and the U.S. Department of Energy for existing oil fields and fields under development.
The report also says that the lower limit of pipeline throughput, after implementing low flow mitigation measures, would be 150,000 to 200,000 barrels day, with the flow rates not dropping to those levels until 2036 to 2046, using the same DNR and DOE forecasts. Moreover, the required low flow mitigation measures could be implemented at a cost in the range $539 million to $721 million, a cost level that would enable the pipeline owners to make healthy profits from continuing North Slope oil production — the pipeline tariff would be substantially lower than current and projected future oil prices, even with the low flow mitigation costs factored into the tariff rates, the report says.
“Our study exposes Alyeska’s big lie that more drilling should be allowed — so that more oil can be shipped through its pipeline,” said Chuck Clusen, NRDC’s director of national parks and Alaska projects, when announcing the release of the NRDC report. “Contrary to the industry’s ‘the sky is falling’ claim, TAPS is not in danger of being shut down without drilling in environmentally sensitive areas such as the Arctic National Wildlife Refuge and the Arctic Ocean.”
Balash: win-win Alaska Gov. Sean Parnell has been promoting a campaign to boost TAPS throughput to a rate of 1 million barrels per day by 2020 through new oil development onshore and offshore northern Alaska, in part to head off TAPS low flow issues. In a Sept. 28 email to Petroleum News Joe Balash, deputy commissioner of Alaska’s Department of Natural Resources, questioned what appeared to be a lack of engineering involvement in the NRDC report preparation, saying that the State Pipeline Coordinator’s Office has for several years been expressing concerns about issues relating to TAPS low oil flow and the ability to restart the pipeline after a shutdown in cold conditions. Engineering staff in the Joint Pipeline Office have arrived at similar conclusions to Alyeska’s most recent prognosis on the low flow issues, and although there is general agreement that measures can be taken to allow TAPS to operate at lower flow rates, the optimum choice of these measures is unknown, Balash wrote.
“Achieving the governor’s goal of one million barrels per day by 2020 would appear to be a win-win situation — more barrels means less time required (for oil) to travel in the coldest parts of the pipeline during winter,” he wrote.
According to the NRDC report, the report’s 500,000 barrels per day figure for the threshold for low flow problems comes from a report prepared for Alyeska by Mustang Engineering Inc. and presented as testimony in a TAPS valuation court case in 2010. The NRDC report says that in that same court case Alyeska had said that the installation of heaters on TAPS would enable the pipeline to operate at flow rates as low as 200,000 barrels per day, with an expert witness also testifying that with the installation of heaters, the completion of a major pipeline reconfiguration that Alyeska has been implementing, and perhaps the addition of some new stations for operating pipeline “pigs,” the minimum flow rate might be reduced to 150,000 barrels per day.
The range of potential mitigation measure costs quoted in the NRDC report is based on cost estimates from the Mustang Engineering report and the expert witness’s court testimony.
Temperature estimates The NRDC report says that a prime reason for the difference between the Alyeska figure of 550,000 barrels per day for the onset of low flow problems and the Mustang Engineering figure of 500,000 barrels per day appears to result from differences in the estimates for the temperature profile in the pipeline at different flow rates. And other factors, such as the heat flow between the pipeline and the external environment, and the warming effect of pumping the oil over mountain passes, may render even the Mustang Engineering estimates overly pessimistic.
At the time Petroleum News went to press Alyeska had not responded to requests for comments on the NRDC report.
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