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Alaska oil pipe may flow only 10 more years-report
June 30, 2011 / 12:20 AM / in 6 years

Alaska oil pipe may flow only 10 more years-report

* Operator makes projection from current dwindling rates

* Says pipeline viable at 350,000 barrels or more per day

* Report suggests safety improvements for flow that low

By Yereth Rosen

ANCHORAGE, Alaska, June 29 (Reuters) - The Trans Alaska Pipeline System, Alaska’s main economic artery, may only have 10 years of service left if oil flows continue to dwindle at current rates, according to a report issued on Wednesday by the system’s operator.

The pipeline can operate reliably with oil flows as low as 350,000 barrels per day, but throughput below that threatens its viability, said the report by Alyeska Pipeline Service Co, which manages the pipeline for owners BP, ConocoPhillips, Exxon Mobil and other oil companies.

That threshold -- expected to be reached in about a decade if oil production continues to decline at current rates -- is the first ever identified as a specific minimum throughput for reliable operations.

The 800-mile pipeline shipped an average of about 605,000 barrels per day in May, less than a third of the 2 million barrel peak achieved in 1988. The pipeline system carries all of the crude oil produced on Alaska’s North Slope, at Prudhoe Bay and other fields, to the shipping port at Valdez. Flow has declined as production from maturing fields dwindles.

Alyeska, the consortium that operates the pipeline and its Valdez marine terminal, issued the report at the conclusion of a $10 million, two-year research project.

Operating safely at 350,000 barrels per day would require a series of improvements, the report said. They include enhanced insulation or introduction of heat sources to keep oil warm, better storage and shipping management to prevent interruptions, better use of corrosion inhibitor and an overhaul of the cold-restart procedures to help prevent freezing problems.

Without those improvements, the threshold for reliable operations is 550,000 barrels per day, the report said.

Cold oil, associated with low flow, is a major problem that could trigger a cascade of dangerous complications, the report said. During peak flow in the late 1980s, crude in the pipe flowed at 100 degrees Fahrenheit (38 degrees Celsius); currently, temperatures are down to 38 degrees in some parts of the line, the report said.

Alyeska has started work on some of the mitigation measures recommended in the report, but the simplest solution is to increase pipeline flow through new production, said Michelle Egan, the company’s communications chief.

Alaska’s U.S. senators said the information was sobering.

“This report clearly spells out the importance of finding and producing more oil to fill the pipeline if it is going to continue to operate consistently and provide the economic benefits the state and the country have come to rely on since 1977,” Senator Lisa Murkowski, a Republican, said in a statement.

Senator Mark Begich, a Democrat, also weighed in.

“With about 80 percent of state revenue and some of Alaska’s best private sector jobs riding on the oil pipeline, its continued operation is obviously a top priority for our state,” he said in a statement.

“Every day I tell members of Congress and the administration this is a national asset that delivers about 12 percent of American oil production. If we don’t act quickly to get more oil in the pipeline, that could go away in just a decade.”

Alyeska is owned by energy companies with interests on the North Slope. BP (BP.L), ConocoPhillips (COP.N) and Exxon Mobil (XOM.N) are the major owners. (Editing by Bill Rigby; Editing by Gary Hill)

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