TAPS Challenges   Leave a comment

Contrary to popular belief, the TransAlaska is not falling apart and spraying oil across the Alaska tundra. Most of the pipeline is visible from the road, so I can actually verify that this is a media myth.

This is not to say that the TAPS does not face a continuum of maintenance challenges. TAPS transports about 15% of America’s domestic crude production and it is THE backbone of Alaska’s economy, delivering 90% of the State’s general fund revenue. That is not, mostly, from taxing the oil companies, but from the sale of Alaska crude that belongs to the State of Alaska and the residents of the state. More on that in a later post. More than 2 million barrels a day once surged through the TAPS. Since peak flow in the late 1980s, TAPS throughput has dropped. Today it is declining more than 5% per year. Less oil means slower-moving oil. Slower oil means colder oil. The slower and colder the oil, the more complicated the challenges for Alyeska Pipeline Service Company, the pipeline’s operator. The best long-term solution is more oil. In the meantime, daily throughput is already lower than it was at pipeline startup in 1977.

Here are some petroleum engineering facts. Crude oil naturally contains small amounts of water. As crude slows and cools, water will begin to separate out from the oil and accumulate at the bottom of the pipeline, increasing the risk of corrosion. This happens today during shutdowns, when water accumulates at low points. As water drops out and everything cools, the risk of ice-related problems also increases. Ice in welds — not a good combination. Alaska North Slope crude oil naturally contains up to 2% wax by volume. When the pipe walls are colder than 70 degrees and colder than the oil, wax crystals gravitate to the pipe wall and stick to it. Wax also precipitates out of the crude oil. Less turbulence, cooler crude temperature and slower flow all may result in more wax sticking to pipe walls and more wax dropping out of the oil and settling in the pipeline.  Wax deposits must be removed by running cleaning “pigs”. Alyeska and its owner companies have analyzed the risks, options and challenges of declining throughput. Some mitigations are already in place. My husband has worked installing cathodic protection to reduce corrosion on the pipeline. Engineers are validating other potential steps through laboratory and field tests. For the immediate future, Alyeska is adding heat to keep the crude warm and to prevent small amounts of water from freezing in the line. The cleaning pig program has been modified – with frequent pigging and redesigned pigs as needed – to keep the pipe clean of wax. Heat is added through recirculation at Pump Stations 3, 4 and 9. Pump Station 7, which was previously decommissioned, is now back online to recirculate oil. A schedule is in place for adding more heat as the crude continues to cool due to declining throughput.

As throughput further declines, continuing to add ever more heat would create new problems. At some point, it appears the most effective approach will be to operate the line in a “cold-dry flow” state. Most of the water is removed from the crude before it enters the pipeline and the system runs much cooler. Such “cooking” requires large amounts of natural gas, which the North Slope has in abundance and is currently stranded for lack of a pipeline. Since the purpose of heat is mainly to prevent ice formation, eliminating most of the water eliminates the need for elaborate heating systems. Once the cold dry flow system has been validated through field and laboratory testing, a transition phase will shift the system from heat-dependent operations to cold-dry flow. Work is in progress to determine how best to manage wax accumulation. The oil companies that run the Trans-Alaska Pipeline suggest that if oil flows drop too low, the line could be compromised. The corrosion problem exists, but the main issue is cost. If it becomes uneconomical to transport the oil because of pipeline maintenance issues, then Alyeska may shut down Prudhoe Bay. There are those who think that’s just a scare tactic to “force” the opening of ANWR and NPR-A, but those who understand business economics say that’s not completely the case. Oil production in Alaska’s Arctic has always been a hard and expensive proposition. It’s only affordable if the price of oil is high or the cost of transportation is low. All the oil produced in the fields near Prudhoe Bay depends on the Trans-Alaska Pipeline System. Although there are still substantial oil reserves left in Prudhoe Bay, which has been drilled for decades, the oil companies say the end is in sight. John Felmy, chief economist for the American Petroleum Institute, says that now those companies believe the most profitable resources to tap will be the easy-to-reach oil in places they’re not yet allowed to drill: parts of the National Petroleum Reserve, the Arctic National Wildlife Refuge, and the Chukchi and Beaufort seas just offshore of the North Slope. ANWR alone holds 10 billion barrels of untapped oil, Felmy says, but drilling there is a huge environmentalism and political hot potato, and so far the U.S. government has not let oil companies in even to explore. Charles Clusen is the Alaska director for the Natural Resources Defense Council, one of the environmental groups accusing the oil companies of manufacturing an argument that doesn’t exist as a reason to open ANWR and the Chukchi and Beaufort seas to drilling. Instead, NRDC is encouraging the industry to invest in the Trans-Alaska Pipeline to get more out of Prudhoe Bay. An NRDC study, released in September, conducted by an independent consulting firm recommends that the industry spend up to $721 million in shoring up the pipeline to withstand flows down to 150,000 barrels per day, possibly generating up to $28 billion by tapping oil in the Prudhoe Bay area that would be left untouched if the pipeline e is shut down. “Making a modest investment with an extremely high payout will mean that TAPS can continue to operate and is not in danger of being shut down in the near future,” the study concludes.

It is true that there are untapped areas of Prudhoe Bay. There are only three active drill sites right now. Why? I don’t know why. There are the officially acknowledged reasons that don’t make sense and there’s the wild accusations that do. The oil belongs to the people of Alaska and we really ought to be asking ourselves why we only have three active drill sites when North Dakota has hundreds. The latest oil tax scheme will either sink us or produce more oil. We’ll see. If it results in more active sites, then that was the problem and we’ve solved it. If it doesn’t … well, let’s hope Alaska can afford that mistake. We just don’t know right now.

What is known is that the best way to ensure TAPS will remain running and in good physical condition for a long time is to make sure there is plenty of oil to produce on the North Slope. The magic formula for getting rid of all these operational challenges is just to increase throughput. More oil, more heat, and less challenges with icing and gelling. If they found another source of oil, they’d just continue to use TAPS. They might not have to make modifications if they had another source of oil.

And, by the way, that would save you guys outside of Alaska money, because whenever Alaskan crude production increases, American gasoline prices go down. Call and write your congressional representatives, folks!

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