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Alyeska CEO says streamlining business key in right of way renewal Staff cuts, simplified operating procedures and rebuild of pump stations will make company more viable, safe, David Wight tells chamber Jen Ransom PNA Staff Writer
On June 17, three days before the 25th anniversary of the start-up of the trans-Alaska oil pipeline, the president and CEO of its operating company said his organization needs to simplify and get smaller in the next 25 to 30 years — a process Alyeska Pipeline Service Co. President and CEO David Wight says is important in getting the pipeline’s 30-year federal and state right of way leases renewed. The leases are due to expire in 2004.
Running the trans-Alaska oil pipeline has grown overly complicated, Wight told the Anchorage Chamber of Commerce. “We’ve allowed ourselves to get larger than we needed to be. This is a timely point in progress to talk about the future.”
Wight said the principal goals of Alyeska are to operate the pipeline safely for employees, nearby residents and the environment and to operate with integrity. These goals can be attained with fewer employees, manuals and functions, he said.
In order to do this, Alyeska is focusing on diversifying both skill sets and employee backgrounds, bringing down costs and simplifying operating procedures. The company is also working on ways to replace employees planning to retire.
Thirty percent of Alyeska employees will reach optional retirement age within the next four years, Wight said. Employee cuts and demographics So far, Alyeska has reduced its workforce by 15 percent and has reduced its contractors by 10 percent, Wight he said. The pipeline now runs with 300 fewer people than it did a year ago.
Wight said some sectors within the company, such as accounting and human resources, have grown too large and Alyeska will be consolidating functions in order to be more efficient.
Although there have been employee cuts, the employees that remain on staff at Alyeska well represent the population of Alaska, Wight said: Twenty-nine percent are minority hires and 18.5 percent are Alaska Native.
The company’s workforce is comprised of 30 percent women, a number that Wight expects to continue growing.
“In my mind that is the only one off of Alaska’s demographics,” Wight said. “We need to work on that.”
According to the 2000 U.S. Census, 48 percent of Alaska residents are female. Thirty-one percent are minorities, with 12 percent Alaska Native. Simplifying procedures When Alyeska first started running the pipeline, the company worked off of two operating manuals, Wight said. The number of manuals has grown to more than 400 in the last 25 years.
Alyeska is in the process of a five-year systems renewal, meaning that Alyeska is auditing its own business, consolidating some manuals and completely throwing out others.
Now a year into the renewal, Wight said that with streamlining of operating procedures, fewer people will be need to run the pipeline, fewer regulators will be needed to govern the pipeline and the entire company will be a better business investment for Alaska.
Along with simplifying manuals, Alyeska has recently asked for engineering contract proposals to rebuild the pump stations along the pipeline. Wight says that by making the stations smaller and replacing the prime drivers, the pipeline will be ready to operate another 25 years.
Alyeska, in hopes of a serious rethinking of the pump stations, has hired a firm out of Canada and a vendor, General Electric, to look at the stations. Proposals should be in by the end of the summer.
This replacement procedure should take $100 million out of operating costs in the next three to five years. Why so much effort? A little over a year ago Alyeska officially started the process to renew the rights of way to operate the pipeline for 30 more years.
The environmental impact statement that is part of that process will be completed by the end of this year, and six public hearings are scheduled for July. The estimated cost to complete the application is $36 to $40 million.
“Each activity (I’ve) described is aimed at demonstrating we should be re-licensed,” Wight said.
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