|
Alyeska says NRDC report based on flawed assumptions, forecasts
On Oct. 2 Petroleum News published a story about a new report commissioned by the National Resource Defense Council claiming that Alyeska Pipeline Service Co. has been overstating the urgency of the issues associated with low and declining rates of oil flow through the trans-Alaska pipeline. Since that story went to press, Alyeska has responded to a request from Petroleum News for comments on the NRDC report.
Alyeska agrees with the NRDC report over issues such as the serious challenges that low oil flow poses for pipeline operations — pipeline heat and insulation are needed and projects are “in the works” to implement low flow mitigation measures, Michelle Egan, Alyeska corporate communications director, told Petroleum News in an Oct. 2 email.
But some of the conclusions in the NRDC report rely on flawed assumptions, Egan said.
Threshold volumes For example, based on the findings of a Mustang Engineering Inc. report prepared for Alyeska and presented as evidence in a TAPS valuation court case in 2010, the NRDC report says that, without low flow mitigation measures, low flow issues such as ice and wax formation will start to occur at flow rates below 500,000 barrels per day, a significantly lower figure than the 550,000 barrels per day threshold stated by Alyeska in its low flow report, published in June. The lower threshold throughput rate would push back the date at which low flow problems start to appear, thus making the problem less urgent.
The NRDC report also said that the lower limit of oil throughput, at which problems would likely occur, regardless of any mitigation measures, was also likely to be significantly lower than what Alyeska had indicated.
But the Mustang Engineering report relied on an analysis done on paper, while the later Alyeska study used current pipeline samples, updated thermal models and the results of field and laboratory testing, Egan said. And as a consequence the two studies ended up with a number of different assumptions, leading to different results — for example, the Mustang Engineering study assumed an oil intake temperature at the northern end of the line of 140 F, while the Alyeska study used an actual measured intake temperature of 110 F. Also, Mustang Engineering assumed that oil flow problems would occur at temperatures below 38 F while Alyeska relied on a more up-to-date threshold of 36 F, Egan said.
Optimistic forecasts Using North Slope oil production forecasts from the Alaska Department of Natural Resources and the U.S. Department of Energy, coupled with lower figures for the threshold throughputs, the NRDC report said that low flow mitigation measures would not in fact be needed until sometime in the range 2020 to 2046, and that with mitigation measures in place the pipeline could continue operating until 2036 to 2046.
But the Department of Energy forecast, for example, has a track record of being overoptimistic in its predictions for North Slope production, Egan said.
“Our study is based on the actual decline rate,” she said. “Alyeska cannot afford to use throughput projections that are too high when we are planning work to address the coming low flow issues.”
Alyeska declined to comment on issues raised in the NRDC report about the future viability of operating TAPS in a low flow environment, saying that the cost of taking mitigation measures would depend on the specifics of mitigation projects, and saying the TAPS owners, not Alyeska, are responsible for issues relating to TAPS tariffs and oil production profits.
But Egan re-iterated what Alyeska sees as a very serious low oil flow problem.
“Alaskans and others around the country need to recognize that the issues associated with declining throughput are real and have serious consequences for the pipeline, for state revenue and for domestic energy supply,” Egan said. “We can quibble about which numbers are more precise, and we stand firmly by our study, but the bottom line is declining throughput has serious technical implications for the pipeline and economic implications for the state and nation.”
—Alan Bailey
|
