The Wall Street Journal-20080215-Regulators Investigate Snag at Alaska Oil Pipeline
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Regulators Investigate Snag at Alaska Oil Pipeline
Full Text (533 words)Federal regulators say they are looking into an equipment malfunction at the Trans-Alaska Pipeline, the latest setback for a project to automate a conduit that is crucial to West Coast oil needs.
Officials at Alyeska Pipeline Service Co., which is owned by major oil companies and operates the pipeline, say the incident didn't disrupt the flow of oil. Alyeska is owned by a consortium that includes BP PLC, Exxon Mobil Corp. and ConocoPhillips.
Industry critics say the incident illustrates the problems Alyeska is facing as it seeks to improve on efficiency and cost by automating the pumping stations along the 800-mile pipeline, which ferries crude from Alaska's North Slope to the ice-free port of Valdez, Alaska.
An internal memo outlining the problem was obtained by Charles Hamel, an Alyeska critic. Mr. Hamel passed the memo to state and federal regulators.
"It's troubling we still have bugs to work out," said Chris Hoidal, Western region director of the federal Pipeline and Hazardous Materials Safety Administration. He said investigators from his office would be deployed to the pipeline in the next two weeks to look into the latest problems.
Federal officials acknowledge that undertaking such a project in Alaska's harsh climate is difficult. "We knew this project was going to have challenges and we remain committed to the same high level of safety, reliability and system integrity we have for the existing system," said Mike Heatwole, an Alyeska spokesman in Anchorage.
The pipeline is designed to carry as much as two million barrels of oil a day, but as northern Alaska fields have been drawn down, production has fallen to about a third of that.
The malfunction resulted in new pumps at the pipeline's Pump Station 3 being sidelined for five weeks, from Jan. 7 until Tuesday, after pipeline operators said equipment designed to heat frigid air around power generation equipment wasn't working properly. In its internal memo, company officials said they ran old pumps while the new equipment was repaired.
Alyeska launched the modernization project in early 2004 with an initial budget of about $250 million and a targeted completion date of the end of 2005, say former Alyeska officials. But the cost ballooned to $400 million by early 2006 and delays have pushed the completion back to 2010. Alyeska has declined to provide a new budget estimate.
Among other issues, Pump Station 9 -- the first facility to undergo automation in February 2007 -- has encountered vibration problems that the company says it has since resolved. Lesser vibrations have also shown up in the new equipment at Pump Station 3, which the company plans to fix in the next six months. Alyeska officials say the vibrations, which they say are associated with the new equipment and piping at each station, don't pose a risk to the pipeline.
Other problems included a small fire in January 2007 at Pump Station 9 and a leak of 900 gallons of crude oil on a bypass line that month. The pipeline agency has recommended fines totaling $817,000 for alleged violations related to the fire and leak. Alyeska officials said they are requesting a hearing before the Department of Transportation, which oversees the pipeline agency, on the issue.
