Volcano forces officials to consider oil removal

ANCHORAGE, Alaska, March 30 (Reuters) - Chevron CVX.N said on Monday it has trimmed Cook Inlet oil production as Alaskan and U.S. officials debated whether crude oil stored at a terminal near the base of erupting Redoubt Volcano should be removed.

At issue is 6 million gallons of crude oil stored in two tanks at the Drift River oil terminal on western Cook Inlet, at the mouth of the river that flows from the volcano. The area has been hit by mud flows resulting from snow and ice melt triggered by repeated eruptions of Redoubt, a 10,197-foot volcano 106 miles southwest of Anchorage.

Operators of the facility, a consortium called Cook Inlet Pipe Line Co owned by Chevron and Pacific Energy Resources PFE.TO, shut down the terminal and the 42-mile pipeline that leads to it and evacuated workers on the day of the first eruption, March 22.

For now, the two oil-laden tanks at the deserted terminal have been effectively protected by a system of dikes deflecting mud flows and floods, federal and state officials said at a news conference Monday.

“The safest place for that oil is inside that tank at this time,” said Coast Guard Commander Jim Robertson, who has been appointed deputy incident commander of the team managing the Drift River protections.

Gary Folley, on-scene coordinator for the Alaska Department of Environmental Conservation, said his department wants to move at least some of the crude oil currently stranded at the Drift River floodplain.

“The straightest path to eliminate that threat is to remove the oil from these tanks. The DEC favors that approach, provided it can be done in a safe manner. That’s easier said than done,” Folley said at the news conference.

Environmentalists say regulators and the oil companies should have started the task in January, when scientists warned that a Redoubt eruption was imminent.

“We had a lot of time to plan for this and that time has passed. So now we’re starting to scramble because of an emergency situation,” said Bob Shavelson, executive director of Cook Inletkeeper, a Homer-based environmental group. “The irony is certainly not lost that we’re at the 20th anniversary of the Exxon Valdez oil spill.”

Robertson said a series of safety tasks, both onshore and offshore, must be completed before a tanker can arrive to drain the tanks.

“We’re not going to bring in a tanker unless it’s safe to do so,” he said.

Tesoro Petroleum Corp. TSO.N is currently scheduled to bring in a tanker in about a week, but regulators are still in discussions with the company to see if that will be possible, Robertson said. Oil stored at Drift River is generally shipped by Tesoro to the company's Kenai refinery.

Meanwhile, Chevron, which operates three of the four units that feed crude to Drift River, is running short of storage space at the platforms and has trimmed production, a spokeswoman said.

Chevron spokeswoman Roxanne Sinz said the company’s Anna and Bruce platforms at the Granite Point unit will be shut in later Monday. Granite Point and Trading Bay, another Chevron-operated unit, have only a few days of remaining storage capacity, Sinz said.

Pacific Energy, which operates the Redoubt Shoal unit, has enough storage capacity to continue producing for a month or two, said David Hall, the company’s Alaska production manager.

The Drift River facility opened 41 years ago, and the oil fields that feed into it are mostly mature and low producers. The facility has five other tanks that are empty and out of use.

During January and February, a total of about 8,000 barrels a day of crude oil was produced on average at the Granite Point, Trading Bay, McArthur River and Redoubt Shoal units, according to data from the Alaska Oil and Gas Conservation Commission.

Redoubt Volcano has erupted several times since March 22, sending ash clouds at times more than 50,000 feet above sea level. The eruption has showered ash on several communities, including a light dusting on Anchorage, and intermittently shut down air travel.

By Monday, the volcano was still erupting but with smaller explosions, said officials from the Alaska Volcano Observatory, the joint state-federal office that monitors Alaska volcanoes.

“We’ve seen a change in the style of eruptive activity,” Stephanie Prejean, a seismologist at the observatory, said at the news conference. “You can think of this as a continuous ash plume.” (Reporting by Yereth Rosen; Editing by Gary Hill)