Anticipating high inventories, Trans Alaska Pipeline operator cuts oil flow

FILE PHOTO: The Trans Alaska Pipeline is pictured near the midpoint of the 800-mile line, near Fairbanks, Alaska, U.S. May 31, 2018. REUTERS/Yereth Rosen

ANCHORAGE, Alaska (Reuters) - The operator of the Trans Alaska Pipeline System pared crude oil flow on Friday in anticipation of high inventories in the coming month.

Alyeska Pipeline Service Co reduced flow by 10% from noon on Friday, said company spokeswoman Michelle Egan, in anticipation of higher inventories at the marine terminal at Valdez, on the southern coast of the state.

Global crude oil demand has dropped by roughly 30% as a result of the coronavirus pandemic, and the pipeline company said high inventories will have to be worked off.

The reduction affects all producers. It is likely to last for a few weeks, Egan said. “We did not give producers a date that we would rescind it,” she said. “We see these high inventories continuing into the latter part of May.”

The reduction amounts to about a 50,000-barrel-per day decline. Throughput in the 800-mile pipeline from Prudhoe Bay on the North Slope to the terminal at Valdez averaged 502,919 barrels per day in March, Alyeska reported.

The current proration is shallower than those that have been imposed in the past but likely to last longer, Egan said.

Alyeska, which operates the pipeline and the Valdez marine terminal, is a consortium owned by oil companies that produce on Alaska’s North Slope, including ConocoPhillips and Exxon Mobil.

Reporting by Yereth Rosen in Anchorage, Alaska, editing by Louise Heavens