Chevron suspended its oil production in Cook Inlet on Sunday because eruptions from Redoubt volcano are threatening the Drift River tank farm that the company needs to store its oil.
"It means that we can't produce oil because we have nowhere to ship it to," said Chevron spokeswoman Roxanne Sinz.
The dominoes began to fall Saturday when an eruption by the volcano prevented the transfer of oil from the Drift River terminal to a tanker and forced workers to seek emergency shelter. Floodwaters caused by rapid melting of the Drift Glacier covered the airstrip at the terminal, though tanks there holding 6 million gallons of oil stayed dry and undamaged.
Officials decided to close the terminal indefinitely Sunday as crews planned to try again at removing millions of gallons of oil from the terminal as early as Sunday night.
The Coast Guard had previously said the project might not start until today, because flood waters damaged a power generator needed to pump oil from the tank farm to the tanker.
"We got (the generator) fixed sooner than expected," said Santana Gonzalez, spokesman for Cook Inlet Pipe Line Co., which owns the Drift River terminal.
Redoubt activity remained unchanged since Saturday morning's massive eruption, Alaska Volcano Observatory volunteer Allana DeRuwe said Sunday.
A plume of steam continued to rise about 15,000 feet from the crater of the volcano, while some observers may see what looks like another plume on the northwest ridge. That's likely caused by hot rocks from the last eruption hitting snow and ice, DeRuwe said.
The Drift River terminal is a key link in the Cook Inlet oil production process as oil producers use it for storage and shipping.
Chevron operates 10 oil platforms representing the majority of oil platforms in Cook Inlet, Sinz said. The company shut in two platforms last week, and stopped production at the remaining platforms Sunday afternoon.
Normally, Chevron's Cook Inlet platforms produced 7,500 barrels of oil a day as of the end of February, Sinz said. That's worth $375,000 each day, at prices of $50 a barrel.
The entire Cook Inlet region averaged about 11,000 barrels a day of oil production in March.
In 1990, following the last series of giant Redoubt eruptions, 10 Cook Inlet oil platforms were shut down for more than a week because there was no place to send the oil.
The latest Redoubt eruptions could last for weeks. There's no way of knowing when production can resume, Sinz said. "Basically what it means for our Cook Inlet oil operations is that we are shut in until the volcanic activity diminishes and the Drift River terminal can be safely operated."
Cook Inlet Pipe Line Co. hasn't received any oil at the terminal since the day before Redoubt began its latest round of eruptions on March 22, Santana said. "Essentially everything's shut down."
PLANS IN PLACE TO REMOVE OIL
A tanker was expected to arrive at the Christy Lee platform, the offshore loading facility for the Drift River terminal, Sunday evening. The plan was to pump 60 percent of the roughly 6 million gallons of oil in the tank farm, said Marti Early, a spokeswoman for the Alaska Department of Environmental Conservation.
The remaining oil was to be mixed with ballast water in order to weigh down the oil tanks, making them more stable in case another eruption floods the area.
But just last week, the unified command dealing with the oil-spill threat from Drift River issued a "fact sheet" explaining why using ballast water would be a bad idea.
The command -- which consists of the U.S. Coast Guard, the Department of Environmental Conservation and Cook Inlet Pipe Line Co. -- listed seven reasons, including:
-- Insufficient water supply at the Drift River terminal to fill the tanks.
-- Once injected into the tanks, the water "becomes a hazardous waste and there are no facilities on site to properly dispose of it."
-- Tankers aren't configured, to transport that much oily waste.
"I'm flabbergasted," said Bob Shavelson, director of the environmental group Cook Inletkeeper, when he found the fact-sheet gone from the unified command's Web site. He said the group is changing its story and was more concerned about maintaining production at the oil terminal than warding off a spill.
Early said that's not true.
"The top priorities have been safety to the people working ... and protection of the environment," she said.
As for why the unified command is changing its plans, she said: "Now that Cook Inlet Pipe Line made the decision to shut down the facility, then that opens up some other options."
Asked what happens if Redoubt erupts while the tanker is at the terminal and loading oil, Early said that the crews would have about three hours warning from the first signs of an eruption to disconnect the tanker.
Reporter Rich Mauer contributed to this story. Find Kyle Hopkins online at adn.com/contact/khopkins .Video: Geologist describes Redoubt's biggest eruption this year 
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By KYLE HOPKINS