Alaska pipeline undergoing $250 million upgrade

Mary Pemberton

Monday, Sept. 19, 2005 | 10:19 a.m.

ANCHORAGE, Alaska -- The trans-Alaska oil pipeline is undergoing an upgrade costing more than $250 million -- the biggest single investment in the pipeline since oil began flowing from Prudhoe Bay nearly three decades ago.

Electric pumps will replace outmoded and more costly gas- and diesel-powered turbines in the project, which should be completed in about a year.

Alyeska Pipeline Service Co., which operates the 800-mile pipeline from Prudhoe to the marine terminal in Valdez, estimates the upgrade will save about $50 million a year in operating costs.

"It extends both the economic life of the pipeline more to the future and also helps improve the economics of North Slope oil," said Alyeska spokesman Mike Heatwole.

Project manager Ian Livett said increasing pipeline efficiency should encourage more North Slope oil development.

"It opens up opportunities for more development, and hence more product volume. It is a domino effect," Livett said.

The upgrade is needed because the turbines were designed to carry twice as much crude as now flows down the pipeline from Prudhoe Bay.

"They are at peak efficiency when working at the maximum amount," Livett said.

The first oil began flowing through the pipeline in 1977. A record of more than 2 million barrels a day was marked in 1988. Now, the pipeline carries about 900,000 barrels a day as reserves on the North Slope are being drawn down, with production falling at about 3.5 percent a year. Since startup, more than 14 billion barrels of crude has flowed from the North Slope, with more than 17,000 tankers leaving from Valdez.

The pipeline has 11 pumping stations, but not all are operational. When production began falling in the 1990s, several stations were eventually pulled off-line. The introduction of drag reduction agent -- a slippery substance that reduces the friction of oil moving through the pipeline -- also reduced the need for pump power.

Three of the stations are needed to pump the oil over mountains in the Brooks Range. The other is needed to get the oil over two passes in the Alaska and Chugach mountains farther south. Gravity mostly does the rest to get the oil to Valdez for shipment to the West Coast.

"We just need four pump stations to pump 1.4 million barrels of oil a day," Livett said.

The four pump stations, along with one reserve station, will each get three new electric, 100-ton pumps. The new equipment, unlike the turbines, is designed to be flexible and can easily be controlled to match the amount of oil flowing through the pipe.

"It will be very easy to produce anything from 300,000 barrels per day to over 1 million barrels per day," Livett said.

The stations also will be capable of being operated remotely. Currently pump stations are staffed 24 hours a day, every day of the year. About 350 of 1,600 jobs companywide are expected to be cut because of the project.

While Alyeska envisions a fairly significant reduction in production over the next 25 to 30 years, the opposite could prove true. It all depends on if more oil fields are discovered and developed. If that is the case, Livett said, the system could handle it.