Alyeska owners won’t overhaul Valdez port

The Associated Press

Owners of the trans-Alaska oil pipeline have decided not to overhaul the Valdez tanker port because of high costs, but will still make smaller changes to the nearly 30-year-old terminal.

The changes include building a lake on the mountainside above the port that would release a torrent of fresh water to fight fires. The port currently relies on a pump-driven seawater firefighting system.

Alyeska might also retire some of the port’s 18 oil storage tanks, each of which holds 510,000 barrels of oil, or just over half a day’s North Slope production.

Another change at the port will be to move the Operations Control Center to Anchorage, said Alyeska spokesman Mike Heatwole. The center, which employs about 30 people, controls oil flow down the pipeline as well as tanker loading.

Large components of the port overhaul proved uneconomic or impractical, at least for now, Heatwole said. He said no figures for the project had been released publicly.

Some industry observers believed a port overhaul would cost around $250 million, the Anchorage Daily News reported.

Plans had included shutting down the power plant in favor of possibly buying electricity from a local power utility and fitting the port’s immense oil storage tanks with internal floating lids to more easily control dangerous vapors.

Stan Jones, spokesman for the Prince William Sound Regional Citizens’ Advisory Council, said his organization has mixed feelings about Alyeska’s downsized port modification plan. The council, based in Valdez, is a congressionally mandated watchdog set up after the 1989 Exxon Valdez oil spill.

Jones said the lake-fed firefighting system, and the possible reduction in oil storage tanks, raise some worries.

An earthquake could drain the lake and leave the port without a way to fight fires, he said. And fewer storage tanks could lead to a backup of North Slope oil, possibly encouraging tanker operators to take more chances to haul away oil in winter when weather is worst and North Slope oil production is highest, Jones said.

But Heatwole said the goal is to make port operations less complex and more efficient and the plan doesn’t include taking more chances with the environment or reducing regulation.

Alyeska Pipeline Service Co., the Anchorage-based industry consortium that runs the 800-mile pipeline, had been studying the overhaul idea since 2003. Alyeska managers say the idea behind the work on both the pipeline and the port is to drive down costs now that the flow of North Slope crude is less than half what it was in the late 1980s. Average daily flow today is just over 900,000 barrels.

Alyeska’s owner companies, which include BP, ConocoPhillips and Exxon Mobil, already have approved a major project to overhaul the pipeline connecting the Prudhoe Bay oil field and Valdez.