Legislators push to get oil flowing

Lawmaker says jobs at stake, shutdown could influence oil prices

Posted: Wednesday, April 15, 2009

KENAI - The impact of Mount Redoubt's activity has made it to Juneau.

Rep. Kurt Olson, R-Soldotna, and House Speaker Mike Chenault, R-Nikiski, are asking for the governor, the state's congressional delegation and state and federal agencies to assist in rebooting oil production in Cook Inlet.

Olson, Chenault and a dozen other representatives sponsored House Joint Resolution 33 on Monday in the hopes of seeing fast action on the situation in the inlet.

"There's a number of people that won't be working until we get (production) back up," Olson said.

The volcano's eruption and ensuing flooding in the Drift River Valley has resulted in a production shutdown on the west side of the inlet.

Cook Inlet Pipe Line Co., which operates the Drift River Oil Terminal, a storage facility at the foot of the volcano, secured and closed the site, following a reduction in the level of oil being stored there early last week.

CIPL said it would assess resuming operations there when volcanic activity subsided.

Ten platforms on the west side of the inlet operated by Chevron no longer have a place to hold their product before it can be transferred. Two other storage facilities on the west side, Trading Bay and Granite Point Tank Farm, which also are operated by CIPL, are no longer able to accept any more crude.

As long as production remains at a standstill, Olson said jobs are at stake. He said he's also concerned the shutdown could influence gas prices.

He said his intent is to push state and federal agencies to expedite permitting for any proposed solutions to the shutdown.

"I'm not asking them not to do their job, just to do it in a timely manner," he said.

Contracted employees of CIPL and Chevron are already feeling the impacts of the shutdown. CIPL contracted spokesperson Casey Sullivan, of Marketing Solutions in Anchorage, said IPL has not laid off any of its own employees so far, but has let go of some of its contracted help.

"They do have some contracted employees that they use regularly, and my understanding is that most contractors have been asked to not return at this particular juncture," he said. "All CIPL employees are being retained and reassigned to other jobs at Trading Bay or elsewhere while they're continuing to evaluate their future options."

Additionally, Chevron has kept its employees on board but let go of contractors responsible for things like light maintenance and general labor.

As for gas prices, the Tesoro Refinery in Nikiski gets 25 percent of its raw product from Cook Inlet, according to Lynn Westfall, a spokesperson for Tesoro in San Antonio.

Westfall said last week that he didn't expect the shutdown to influence gas prices.

"In terms of impacts, in the short term we have enough inventory on hand that a short-term production shutdown won't have any impact. In the medium-term, we could fill a shortfall with Arctic North Slope crude. In the longer term, we have five refineries on the Pacific Coast, so we have an extensive supply network that could make up for any loss," he said.

With the legislative session due to end this week, Olson said he is optimistic the resolution will still pass. It comes out of the resources committee today.

"If it passes (today), it will be on the floor on Thursday, and it has moved fast already," he said.

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