Pump station oil spill may close Alaska pipeline until Friday

May 26, 2010 

The North Slope oil producers late Wednesday were asked to slow production even more to give operators of the trans-Alaska pipeline more time to deal with a big oil spill and get the pipeline restarted.

By telling oil producers that they can deliver only 8 percent of their normal production, Alyeska Pipeline Service Co., which runs the pipeline and the pump station where the spill occurred, is buying itself until noon Friday to get the pipeline running again, said company spokeswoman Michelle Egan.

"We don't want to move too quickly or miss something that could cause a longer shutdown by some subsequent action," she said.

Egan said she still does not know when the pipeline will be running again.

The 800-mile pipeline between the North Slope oil fields and the Valdez tanker port is shut down due to a spill Tuesday of several thousand barrels of oil at Pump Station 9 near Delta Junction. A spill of that size -- totaling over 100,000 gallons -- is one of the largest ever for the 33-year-old pipeline.

The shutdown is disrupting about $45 million a day of North Slope production and about $13 million a day in state revenue. The pipeline carries about 650,000 barrels a day of crude oil, about 10 percent of U.S. production.

The North Slope production slowdown is the second Alyeska has requested since Tuesday's spill. Alyeska asked that production be slashed to 16 percent of normal right after discovering Tuesday's spill.

Less than a day's production can be stored on the North Slope, and the new production slowdown means the storage tanks there won't be full until midday Friday.

Investigators from six state and federal agencies headed to the pump station to investigate the accident.

Although the spill was contained within the pump station site, "some procedures weren't properly implemented, apparently" said Mike Thompson, the state pipeline director at the Joint Pipeline Office, a group of federal and state agencies that regulate the pipeline.

The spill occurred while the pipeline was shut down for routine maintenance, Alyeska said. At 10:20 a.m. Tuesday, Alyeska turned off its main power to test its battery-controlled backup system. But the batteries failed.

The power outage triggered valves to open and divert oil from the pipeline into a partially filled 2.3 million-gallon storage tank, according to Alyeska. The valves protect the trans-Alaska pipeline from too much pressure.

The storage tank quickly filled and workers noticed it overflowing at 11 a.m. The valves then were closed by 11:15, Alyeska said.

The oil spilled into a large, outdoor bermed containment area and hasn't escaped the site, company and state officials said.

The tank is damaged, and oil continued to seep from it Tuesday night and Wednesday. Alyeska said the dripping is from thermal expansion of the oil as the sun bakes the tank. On Tuesday, a state Department of Environmental Conservation official estimated about 5 gallons a minute was escaping, but it was unknown how much was leaking Wednesday.

Why did it take Alyeska 40 minutes to realize the valves were open and the storage tank was overflowing?

Egan said workers were focused on getting power back and they didn't know what was happening in the tank. Thompson, the state pipeline director, said it's not clear why the backup power failed and why no one anticipated at that point that the storage tank would begin filling with oil.

"They may have dropped the ball on that," he said.

To stop the oil flow into the storage tank, workers manually cranked a series of other pipeline valves. Even though the pipeline was shut down, there was still oil in it that was moving because of gravity, Egan said.

Alyeska evacuated the pump station and kept power shut off to avoid igniting volatile fumes.

Crews were able to go into the spill area Wednesday morning to stir the oil, said Tom DeRuyter, state DEC on-site coordinator. That enabled them to estimate how much of the lighter components -- including benzene, ethylbenzene, toluene and xylene -- had dissipated. Those lighter components are flammable and are known toxins that can be absorbed by the lungs and through the skin.

Egan said late Wednesday night that Alyeska would try to restore power to the pump station overnight. Oil recovery work would also begin, she said.

The pipeline will likely be operating before all of the spilled oil is cleaned up, said Egan, Alyeska spokeswoman.

Alyeska is owned by an oil-company consortium. The companies that own Alyeska and the pipeline are BP (46.9 percent), Conoco Phillips (28.3 percent), Exxon Mobil (20.3 percent), Koch Industries (3.1 percent) and Chevron (1.4 percent).

Egan said it is fairly common for Alyeska to advise North Slope producers to deliver less oil, for example when there's bad weather in Valdez preventing oil shipments. But she said Alyeska usually asks for at the most a 50 percent reduction.

Analysts expected the temporary shutdown to have a minimal effect on oil prices and gasoline supplies, although Wednesday's price for Alaska oil -- $71.01 a barrel -- was up 9 percent since Monday.

While the shutdown may have been a "supportive factor" in the price rise, "I don't think it was an overwhelming factor," said Phil Flynn, a senior market analyst for PFGBest. "The market is pretty well supplied right now, and we probably could miss it for a short time."

State revenue depends on the continued flow of North Slope from the state-owned oil fields. Revenue Commissioner Pat Galvin said the state anticipates down-times and that production has been far ahead of projections so far this year.

"If they are able to get it back on line fairly quickly it wouldn't necessarily change our budget expectations for this fiscal year," Galvin said.

Alyeska must get approval from federal and state regulators before restarting the pipeline, according to DeRuyter.

Find Megan Holland online at adn.com/contact/mholland or call 257-4343. Find Elizabeth Bluemink at adn.com/contact/ebluemink or call 257-4317.

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