Alyeska storage tank at center of conflict with state DEC

Oil pipeline operator attempting to get inspection waiver reinstated.

Petroleum NewsSeptember 15, 2012 

Alyeska Pipeline Service Co. and state regulators are wrangling over the schedule for conducting an internal inspection of one of the giant crude oil storage tanks at Valdez.

Alyeska operates the 800-mile trans-Alaska pipeline and the Valdez Marine Terminal where tankers load North Slope crude.

In February, officials with the state Department of Environmental Conservation granted Alyeska's request for a two-year waiver, until mid-2014, for an internal inspection of Tank 5. The waiver extended the interval between such inspections from 10 years to 12 years.

On May 23, however, the DEC revoked the waiver, saying Alyeska violated conditions related to corrosion control on the tank.

Alyeska is trying to get the waiver reinstated.

Alyeska has sought and received waivers to defer internal inspection of a number of the crude oil storage tanks at the Valdez terminal.

The company generally has said deferring these inspections, which involve draining and cleaning the tanks, does not significantly increase the risk of an oil spill.

The Prince William Sound Regional Citizens' Advisory Council, a Valdez-based nonprofit that watches over tanker and terminal operations, opposes the inspection deferrals.

The terminal has 18 oil storage tanks, each with a capacity of 510,000 barrels. The tanks are about 63 feet high, with a diameter of 250 feet. The tanks hold oil for loading onto tankers docking at nearby piers.

Not all the tanks are in service, as the oil flow down the pipeline has declined by more than two-thirds from its peak of 2.1 million barrels per day in 1988.

In the May 23 revocation letter, DEC officials said the two-year waiver for Tank 5 was granted with six conditions, and some of those conditions were not met.

One condition was that Alyeska would regularly provide the department with "rectifier logs" verifying continuous operation of a protection system in place under the tank's steel floor.

Cathodic protection, or CP, is widely employed in industry to prevent corrosion. It involves the use of "sacrificial anodes" and electrical current to reduce the corrosion rate of a metal structure.

During its last inspection, in 2001-02, the original floor of Tank 5 was replaced with a new steel bottom. The replacement was prompted by corrosion found during the inspection, the citizens' council said.

The cathodic protection system also was installed in the clean sand bedding beneath the bottom plates, Alyeska correspondence to DEC said.

DEC officials, in the May 23 letter, said Alyeska did provide the logs as required, but company data showed the CP system had operated correctly only 26 percent of the time over a six-month period ending in mid-April.

"Stated differently, the cathodic protection system was not operating correctly 74 percent of that time," the letter said.

The department said Alyeska did not offer "an explanation of why technicians failed to recognize, investigate, or correct" the malfunctioning system.

"There is no indication that Alyeska personnel recognized the significance of the problem until contacted by department engineering staff about the rectifier logs," DEC said.

The department said Alyeska had met "neither the spirit nor the letter" of the waiver conditions. DEC revoked the waiver, and said Tank 5 had to be removed from service and internally inspected before Dec. 31.

Since the revocation, Alyeska has pursued reinstatement of the inspection waiver.

In a June 7 letter to DEC, Alyeska's Valdez operations director, Scott Hicks, wrote: "Alyeska acknowledges that some deficiencies occurred in the Tank 5 rectifier monitoring and CP maintenance programs between October 2011 and April 2012, and we take these deficiencies very seriously."

The letter said Alyeska had initiated and implemented "a series of proactive measures to resolve these deficiencies and prevent reoccurrence of similar events."

Hicks' letter continued: "While in no way does Alyeska downplay the seriousness of this malfunction episode, we believe that the integrity impact to the tank floor during the period from October 2011 to April 2012 was negligible."

Under a "worse case scenario," without any cathodic protection to the tank bottom, corrosion could eat away only 0.01 inch of the floor plate thickness, "not a significant impact to the integrity of the tank floor," Hicks wrote.

On the product side of the tank floor, a thin film coating and sacrificial anodes provide internal corrosion protection, his letter said.

In a more recent letter to DEC dated Aug. 24, Alyeska renewed its request for the two-year internal inspection deferral until 2014, citing "significant improvements made by Alyeska to date, including upgrades to the corrosion control and integrity monitoring systems on Tank 5."

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