Federal agency calls for major work on trans-Alaska pipeline

INTEGRITY: Regulators concerned about corrosion and restarting.

February 11, 2011 

Federal pipeline regulators have proposed that the trans-Alaska pipeline operator begin major work to make the 33-year-old, 800-mile line less susceptible to accidents as the amount of oil flowing through it declines.

The Pipeline and Hazardous Materials Safety Administration's proposed actions this month were triggered by its ongoing investigation of the oil spill and emergency shutdowns of the pipeline in January. The culprit was a cement-encased, buried pipe that was discovered leaking into a basement at Pump Station 1, near Prudhoe Bay, on Jan. 8.

The agency is concerned that Alyeska Pipeline Service Co., the oil-company-owned business that runs the pipeline, can't check part of the pipeline system for corrosion and that it takes too long to restart the line after shutting it down, among other issues.

Michelle Egan, a spokeswoman for Alyeska, said the company doesn't agree with all of the agency's findings and recommendations.

The company does agree with the agency on other matters and is already working on some projects the agency has asked for, Egan said.

To fix the leak, the trans-Alaska pipeline was shut down twice for a total of 142 hours. Due to limited storage, oil companies had to severely curtail output from North Slope oil fields, disrupting as much as $300 million worth of production. The leak was contained inside a building at Pump Station 1 and did not cause environmental contamination, according to regulators.

In an enforcement letter this month, the safety administration told Alyeska that "multiple conditions exist on your pipeline facility that pose a pipeline integrity risk to public safety, property or the environment."

The agency also found fault with the company's procedures to restart the pipeline after a protracted shutdown.

The agency's crackdown comes at a time when budget cuts, spills and corrosion along the trans-Alaska pipeline are attracting congressional scrutiny.

At the same time, the declining flow rate of oil through the line is creating concerns that the pipeline will be even more risky to operate without major upgrades, such as adding heat to the line. At lower flow rates, the oil cools and creates freezing and waxy buildup problems that can lead to corrosion and spills. Today's flow of about 640,000 barrels a day is one-third of the peak flow achieved in 1988.

PIPELINE UNDER SCRUTINY

U.S. Sen. Mark Begich, D-Alaska, has called for a congressional hearing about the pipeline's declining oil flow rate and what it means for the future of Alaska oil production. The oil companies that own Alyeska and the pipeline -- BP, Conoco Phillips, Exxon Mobil, Koch Industries and Chevron -- are finalizing a two-year study on how to manage the risks involved in operating the pipeline as the oil flow rate declines.

Alyeska is also paying for a third-party risk assessment of the pipeline from the North Slope to the ship-loading arms at the Valdez tanker port. The study was requested by U.S. Sen. Lisa Murkowski, R-Alaska, after a big oil spill last year at a Pump Station 9 near Delta Junction.

The two studies are expected to be finalized in the first half of this year.

"The entire low-flow issue they've been sitting on for years. It's almost unthinkable that we've reached this stage without having answers," said Richard Fineberg, a pipeline watchdog and energy policy analyst based in Ester.

State Rep. David Guttenberg, D-Fairbanks, raised similar concerns. "They haven't done the work they should have been doing," he said.

CORROSION WORRIES

Among the problems the pipeline administration found:

• Some buried lines at pipeline pump stations cannot be inspected for corrosion. Neither the federal agency nor Alyeska has publicly stated yet how many of these buried lines exist.

• Alyeska cannot extract or launch pipeline-cleaning devices along 600 miles of the pipeline between the northern foothills of the Brooks Range and the Valdez oil tanker port, even though this segment is susceptible to freezing or waxy buildup that can damage the line and cause spills.

• The company's approved plan to restart the pipeline after a lengthy shutdown is problematic and needs to be revised. One problem -- it takes too long to move equipment to where it's needed.

• Alyeska lacks sufficient storage on the North Slope to hold produced oil when it shuts down the pipeline. The limited storage creates risks for major interruption of oil field production and additional spills.

In its letter, the pipeline administration proposed eight specific safety measures for Alyeska to take this year to resolve those concerns. The proposed measures include a third-party investigation of the Pump Station 1 leak and evaluating the need for more storage tanks at the line's pump stations.

Alyeska said it plans to respond to the letter within the 30-day deadline given and it has requested a meeting with the pipeline administration. The company has begun the third-party investigation of the leak at Pump Station 1 proposed by the agency, Egan said.

The pipeline company can appeal the agency's safety measures and it can ask for more time to implement them.

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