Providing coverage of Alaska and northern Canada's oil and gas industry
March 2018

Vol. 23, No.12 Week of March 25, 2018

RCA grants permit for Cook Inlet pipeline

Temporary permit will enable laying of subsea line during open water season; commission still to rule on certificate changes

Alan Bailey

Petroleum News

The Regulatory Commission of Alaska has issued a temporary construction permit to Hilcorp Alaska subsidiary Cook Inlet Pipeline Co. for the laying of the subsea Tyonek W 10 gas pipeline in Cook Inlet between the Tyonek platform and Ladd Landing on the west side of the inlet. The pipeline comes as part of a Hilcorp project to enable the shipment of crude oil by pipeline west to east under the inlet, thus eliminating the use of the Drift River oil terminal near the Redoubt Volcano.

Carry oil through CIGGS

The idea is to ship oil through one of the existing twin pipelines in the Cook Inlet Gas Gathering System under the inlet. The new Tyonek gas line will extend to the west side of the inlet the existing gas pipeline that connects the Tyonek platform to Nikiski on the Kenai Peninsula. Gas transmission capacity through the Tyonek line will replace the cross-inlet capacity lost through the conversion of one CIGGS line to the carriage of oil.

Although Cook Inlet Pipeline is the operator of the oil pipeline system on the west side of the inlet, the company plans to become operator of the Tyonek pipeline, a gas line. Similarly, Kenai Beluga Pipeline LLC, operator of CIGGS gas carrying system, will become operator for the carriage of oil through the CIGGS line. Hilcorp has said that the business structure and regulatory arrangements for the reconfigured pipeline system will result in the cost of the pipeline project being recovered through the rates for the transportation of oil, with the rates for the transportation of gas across the inlet not being impacted.

Three applications

Hilcorp subsidiaries have filed three applications with the commission, requesting approval of the necessary certificate changes associated with the rejigging of pipeline operatorships, and requesting approval for the pipeline modifications and additions. Presumably in reflection of the complexity of the proposed tariff changes, the commission has deferred decisions on the applications from March 8 to July 20.

But, in recognition of the need to accomplish pipeline construction projects during appropriate construction seasons, the commission has been granting temporary construction permits. In late December the commission approved construction work on the onshore components of the pipeline project. The commission is now allowing offshore pipeline laying to proceed during the Cook Inlet open water season.

Certificate changes needed

However, in its latest order, the commission cautioned that, regardless of the construction permits, the Hilcorp subsidiaries cannot take any action that impacts current or future gas flow in CIGGS, pending commission decisions on components of the applications that the commission is still considering. The granting of temporary construction permits does not prejudge the commission findings in response to these certificate change applications, the commission warned.

Hilcorp has told Petroleum News that it does not anticipate the deferral of the commission decisions into July impacting the pipeline project schedule. Hilcorp has previously said that it hopes to have oil flowing through the CIGGS line by the end of this year.

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