Kenai Pipe Line modifications proposed

Kristen Nelson

Petroleum News

Kenai Pipe Line Co. has applied to the Regulatory Commission of Alaska for permission to modify its existing facilities to allow blocked crude operations, permitting the company to segregate sweet and sour crude to meet new low-sulfur marine fuel standard taking effect next January.

KPL receives crude oil from four receipt points - Swanson River Oil Pipeline interconnection, Middle Ground Shoals Pipeline interconnection, KPL’s truck rack and Kenai marine terminal. The crude is stored for delivery to Tesoro Alaska Co. LLC’s Kenai Refinery. All crude oil used at the refinery comes through KPL facilities. KPL provides crude to the refinery in amounts and types that the refinery requested.

Both modification of existing facilities and construction of new facilities would be required.

The existing lease automatic custody transfer, or LACT, facilities would be modified “to facilitate block crude operations,” allowing the refinery “to segregate and process sweet and sour crude oil” to meet new International Maritime Organization standards.

The current limit for sulfur in fuel oil used on ships is 3.5 percent mass by mass, a standard met by the Kenai Refinery. The new standard, however, is 0.5 percent mass by mass, and “in order to effectively and efficiently produce fuel oil that complies with the new IMO standard, operations at both KPL and the Refinery will require changes,” KPL told RCA in an April 1 filing.

Services will remain the same, KPL said, with the manner in which transportation is done changing.

“Instead of moving a continuous blended stream of oil as is presently being accomplished, KPL will be able to provide flow of crude oil of a specific type (sweet or sour) as needed by the Refinery.”

The projected cost of the project, at a plus-or-minus 30 percent estimate level, is $5.25 million, KPL said.

KPL tankage to refinery

Among changes, the project includes a new booster pump to permit crude oil to move directly from Tank 2402 to the LACT unit, a process which currently requires the crude to flow first through the Pump 2400 area. The existing LACT unit power system, controllers and explosion-proof starters will be removed and replaced with a new motor control center, the company said, housed in a new electrical module, with a new power system.

A new system, provided by the refinery, will allow refinery operators to control the flow rate into the LACT unit building.

Changes to KPL, in conjunction with changes at the refinery, will allow more efficient and economic production of low sulfur fuel oil, the company told RCA.

KPL said the proposed block crude operations “will facilitate the segregation and processing of sweet and sour crude” to meet the new IMO standards.

“Currently, fuel oil is effectively blended together as refined,” KPL said, but the change in IMO standards requires segregation of low sulfur oil to avoid contamination - the blending of low and high sulfur fuel. That blending, the company said, “would make the fuel oil from the Refinery much less valuable and marketable.” With the proposed changes, the refinery “will be able to produce runs of low sulfur fuel oil and segregate it so as to make it more valuable and marketable.”