Tweaking TAPS for Lower Flows

Falling crude oil output in Alaska is complicating operation of the Trans-Alaska Pipeline System from the North Slope to Valdez, and the high costs facing producers is the biggest challenge to reversing the trend, according to Tom Barrett, US Coast Guard Admiral (Ret.) and President of Alyeska Pipeline Service Company.

The 800-mile TAPS pipeline “was brilliantly engineered when built”, Barrett told attendees of the USAEE/IAEE North American Conference in Anchorage this week. “You have some of the worst weather on the planet, you have enormous distances, and you have very thin logistics. But that was overcome.”

TAPS was designed for about 1.5 million barrels per day of throughput, and peaked at about 2.1 MM bbl/d. “We’ve been on a general steady decline since then,” at about 5-6% per year, said Barrett.  As of July 29, 2013, throughput was running at just 457,000 bbl/d.

The pipeline includes 420 miles of above-ground line for seismic and permafrost reasons. “Most pipelines are below ground – it’s safer, you’ve got more stability,” said Barrett. And the above-ground portions add a layer of complexity to ensuring that the pipeline keeps running smoothly, especially as pipeline throughput has declined.

“It’s more difficult for us to operate with less than more,” Barrett said.

Barrett explained that the pipeline is always full, but it now takes much longer for oil to move from its origination point on the North Slope to the port at Valdez. “When the line first started, it took 4 days to move a barrel down to Valdez. Now it takes about 15,” Barrett said.

This leaves more time for the water or wax content of the crude to harden, and potentially disrupt the flow of oil. During extended periods of 30-50 degrees below zero, “we have a concern with that water turning to ice in the line”, Barrett said.

Alyeska is looking into options for managing lower flows. Steps can be taken to reduce the water content of the crude, though that entails costly construction of tankage and handling systems. The company can also install recirculated heat or direct-fired heaters at pump stations, and add launch and receiver stations for pigs – devices used to clean pipelines. “The biggest obstacle to those type of activities up here is not our capability or infrastructure capability, it’s the economics of it,” Barrett said.

“Our cost per barrel is going steadily up,” said Barrett. “It’s costing us a lot more to move less oil.”

The best option for TAPS, but one that it does not control, is more Alaskan oil to fill the line. And Alaska has the resources to reverse declining volumes, Barrett said. “There is tremendous potential out there. It’s enormous.”

But he identified two major impediments to boosting production – high costs and a lack of political will at both the state and federal levels.

Obstacles to exploitation are generally economic, said Barrett. He noted that independent operators are sometimes surprised at what it will cost them to move oil if they manage to find it in Alaska, “particularly if it’s in smaller quantities”. He added that Alaska must have the right fiscal regime to compete with other opportunities for exploration and development.

“It’s a policy issue. It’s fiscal policy, it’s environmental policy, it’s regulatory policy. I have 22 oversight agencies looking at what I do every day,” said Barrett. “Fundamentally, the opportunity to explore, the conditions under which exploration can take place, are very heavily federally-tilted in the US. That’s the principal obstacle.”