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Proposed Cook Inlet pipeline advances Miller says Tesoro pledges up to $1.4 million for design of subsea line, which could reduce or end tanker runs across icy inlet Wesley Loy For Petroleum News
Miller Energy Resources Inc. is reporting continued progress toward construction of a new subsea pipeline across Alaska’s Cook Inlet.
Miller’s subsidiary, Anchorage-based Cook Inlet Energy LLC, has oil-producing properties on the west side of the inlet, including the West McArthur River field and the offshore Redoubt unit and Osprey platform.
In a Jan. 9 press release, Miller said refiner Tesoro had agreed to fund up to $1.4 million in design costs for the proposed Trans-Foreland Pipeline.
The press release further stated that Michael Baker had been chosen as the lead design and engineering firm for the project.
Miller is a publicly traded company based in Tennessee.
Installation in 2014 The 29-mile pipeline would start at Cook Inlet Energy’s Kustatan oil production facility, near West Foreland point, and cross beneath the inlet to the tank farm at the Tesoro refinery, which is near East Foreland point.
Cook Inlet Energy on Nov. 26 applied to the Alaska Department of Natural Resources for a right-of-way lease for the pipeline.
The company says it aims to install the line in 2014.
The goal is to create a cheaper and more secure means of transporting oil across the inlet to the refinery.
Currently, west Cook Inlet oil moves along the Cook Inlet Pipe Line system to the Drift River oil terminal. CIPL is a subsidiary of Hilcorp.
At the terminal, the oil is loaded onto tankers for a short but risky voyage across the often ice-choked inlet.
A big problem for the Drift River terminal is its location in a flood plain downstream of the active Redoubt volcano. Eruptions in 2009 closed the terminal and idled west inlet oil production for months.
Tariff reduction In a Jan. 10 press release, Miller announced the rate it will pay in 2013 to move crude oil on the CIPL system will drop from $6.17 per barrel to $3.21. The reduction comes under terms of a tariff settlement Cook Inlet Energy reached with CIPL in 2010.
The lower rate is expected to save Cook Inlet Energy in excess of $1 million in 2013, the press release said.
“Even with the reduced CIPL tariff, we believe there is a compelling business case to be made for the Trans-Foreland Pipeline,” said Scott Boruff, Miller chief executive. “Even if that tariff went to a buck, you still have to add on the cost of a tanker to move the oil to market, and that is another $2 to $5 a barrel. Then you’ve got the business interruption risk of the volcano, and the environmental risks. The Trans-Foreland Pipeline will be a safer, more reliable and more cost effective way to move crude.”
Cook Inlet Energy has said the proposed 8-inch pipeline will have a capacity to move 90,000 barrels of crude per day. The estimated cost is $50 million.
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