State predicts long life for oil pipeline

Official says minimum flows can go far below earlier predictions

Posted: Tuesday, January 26, 2010

A top state official is saying that the trans-Alaska oil pipeline will continue to carry oil at capacities far below what proponents of oil tax cuts have been claiming.

With Alaska's oil running out, industry advocates have been urging the state to cut the tax rate in order to pump what remains more quickly.

It's urgent, some say, because the trans-Alaska pipeline system can't operate below 300,000 barrels per day.

That was the message former Gov. Frank Murkowski brought to the Juneau Chamber of Commerce and the Juneau Empire last fall.

Department of Revenue Commissioner Pat Galvin disagrees.

He told the House Finance Committee that the state believes TAPS can be operated at 200,00 barrels per day, and perhaps as little as 100,000 per day.

However, he acknowledged the pipeline and its pump stations were originally designed for a minimum of 300,000 barrels per day.

"Historically, we have used the number 300,000 (barrels) a day as sort of an operational viability issue," Galvin said. "That was based on the construction design, and that was the way it was designed."

Work on the pumping systems by pipeline operator Alyeska Pipeline Service Co., have reduced that amount, he said.

"With the strategic realignment with the systems within the TAPS structure, they've been able to reduce the operational viability (number) to a significant extent," Galvin said.

"What is the 'magic volume?'" asked Rep. Alan Austerman, R-Kodiak, questioning how little oil can be produced until the pipeline is shut down.

Galvin said the state based its estimate on public statements from company officials, but acknowledged that there was some dispute between the state and the owners because that information is used to assess property taxes.

Alyeska spokesperson Michelle Egan did not dispute Galvin's assessment, and said Alyeska had never claimed TAPS couldn't operate below 300,000 barrels per day.

"No one has a finite number," she said. "What we have said was 300,000 (barrels) was going to be an area where we knew we had significant issues."

Those challenges range from ice forming in water mixed with the oil, to wax dropping out of the oil and clogging the pipe.

An extensive study, scheduled for completion this year, will provide more detail about those issues.

Galvin told the legislators that operating at 100,000 to 200,000 barrels per day could be expensive.

"There would be additional costs associated with operating the line at that level, but it would not affect the operational viability of that line," he said.

Egan said the pipeline's owners' goal was to extend the life of TAPS as long as possible.

"Our whole focus is trying to make sure the pipeline lasts as long as it can," Egan said.

The oil companies that own TAPS - BP, ConocoPhillips Co. and ExxonMobil Corp. - have stated in court and financial filings that they expect the pipeline to be operational for 30 years or more.

• Contact reporter Pat Forgeyat 586-4816 or

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