The president of Alyeska Pipeline Service Co. is urging lawmakers to find a way to get more oil flowing through the trans-Alaska pipeline; otherwise, the line that carries as much as 15 percent of the nation's oil supply will be in real trouble.
"What I want people to understand is the consequence of declining oil flow into this line," Tom Barrett told lawmakers meeting for an informal "lunch and learn" brown bag information session. A few minutes earlier, he'd given a similar pitch to the House Economic Development, Trade and Tourism Committee.
Barrett is in Juneau to brief legislators on the "low flow" issue surrounding the pipeline. Essentially, if the volume of oil flowing through the pipeline drops too low the oil will become too cold and move too slow. Then pipeline operators will have serious problems because water will drop out and ice will form and wax and sludge will build up, among other issues that could take the pipeline out of commission.
About 630,000 barrels a day are flowing through the pipeline now and even that volume is starting to cause low-flow issues, Barrett said. He gave lawmakers a chart that showed what problems occur the lower the flow goes; it's red line kicks in at just under 700,000 barrels a day.
"There are low flow issues right now," Barrett said, adding that the problem "is not five years from now or 10 years from now, but right now."
Barrett and two Alyeska employees -- Brendan LaBelle-Hamer who manages operations at Pump Station 1 and Betsy Haines, the oil movements director -- gave lawmakers a detailed review of what happened on Jan. 8 when the pipeline had to be shut down for several days in frigid winter temperatures due to a leak at Pump Station 1.
LaBelle-Hamer described the effort to get the leak fixed and the line back in operation, and Haines talked about the threats to the line from low flow and cold weather.
Haines noted that it already takes nine days for a barrel of oil to move the 800 miles from the North Slope to Valdez. As throughput declines and transit time increases, the oil is in the pipeline much longer, which allows water to drop out. At colder temperatures, that water can freeze.
Haines said TAPS still is not back to the same operating conditions it was before the Jan. 8 shutdown -- although the volume of oil is about the same -- because Alyeska is running special cleaning "pigs" through the line to make sure there are no issues.
Barrett called the January shutdown "kind of a wake up call to us on a number of levels ... And it should be a wake up call to the state."
"Every day we're in new territory," he said about the dropping flow of oil. "The declining flow is behind most of our problems."
Barrett urged the legislators to address the declining flow with more urgency. He didn't say what lawmakers should do to get more oil in the pipeline and said that was their policy decisions.
However, oil companies -- including three of the five companies that own Alyeska -- have been urging lawmakers to revamp the state's oil tax structure, which they say is too high and a disincentive to new investment on the North Slope. That new investment is needed if the state hopes to encourage new production that would keep the volume of oil from dropping.
Gov. Sean Parnell has introduced a bill that lawmakers are considering to substantially lower taxes on the major North Slope producers.
But many lawmakers think the tax system, put in place in 2007, has been working well and has brought the state billions of dollars it will need to pay for essential state services in the future, when the oil fields are played out. They are concerned that the state will lose at least $1.5 billion in the first year if the governor's proposal passes.
Legislators also are investigating how the oil companies have spent billions of dollars in tax credits the state has given them in the past few years to see if those are helping encourage new exploration and more development.
Barret said Alyeska has been studying the low-flow issue and is continuing to work on a report that is expected in a few months. The company has been looking at ways to add heat to the line to keep the oil from cooling as flows dwindle, he said.
"But the problem is declining flow and it's not looking good to me," he said, adding "if I could ask for one thing it's figure out how to get more oil in this pipe."
Contact Patti Epler at patti(at)alaskadispatch.com