Saturday, October 8, 2011

Alyeska, PHMSA settle; Trans-Alaska pipeline operator makes work commitments in wake of PS 1 oil leak

Wesley Loy
For Petroleum News

The operator of the trans-Alaska pipeline has reached a settlement with federal regulators, who raised major safety concerns following a January oil leak at Pump Station 1.

Alyeska Pipeline Service Co. signed the settlement, or “consent agreement,” with the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration.

The deal resolves the “notice of proposed safety order” PHMSA issued to Alyeska on Feb. 1, allowing the parties to “avoid further administrative proceedings or litigation,” the consent agreement says.

The consent agreement notes, however, that Alyeska continues to dispute some of the findings in the agency notice.

The seven-page document makes no mention of a fine for Alyeska, but does say the company is subject to daily civil penalties of up to $100,000 per violation if it fails to comply with the agreement, which includes extensive Alyeska work commitments.

The settlement took effect quietly on Aug. 17.

Multiple risk conditions cited

Alyeska is the Anchorage-based consortium that runs the 800-mile oil pipeline on behalf of owners BP, ConocoPhillips, ExxonMobil, Chevron and Koch Industries.
Alyeska’s president, Thomas Barrett, formerly was PHMSA administrator.

PHMSA issued its Feb. 1 notice following an oil leak at Pump Station 1 on Alaska’s North Slope. The leak, discovered Jan. 8 in the basement of a booster pump building, forced two shutdowns of the pipeline, the longest one lasting about 84 hours.

The spill, which resulted in no oil escaping the building, was attributed to internal corrosion in some station piping. The mainline, 48-inch pipe was not involved.

PHMSA said it conducted an investigation of the Pump Station 1 leak and, more broadly, of the “safe operation” of the pipeline system.

“As a result of the investigation, it appears that multiple conditions exist on your pipeline facility that pose a pipeline integrity risk to public safety, property or the environment,” the notice to Alyeska said.

The notice focused on the pipeline’s declining throughput — from a peak of more than 2 million barrels per day in 1988 to an average of about 609,000 barrels in September — and the implications low flow has for pipeline safety, particularly during a winter shutdown.

The agency raised concerns about crude oil cooling down and water freezing inside the pipeline, about potential corrosion in inaccessible piping, and about Alyeska’s “cold restart” procedures and equipment.

PHMSA proposed a laundry list of “corrective measures,” many of which are incorporated in the consent agreement.

Alyeska’s work commitments

Alyeska spokeswoman Katie Pesznecker provided Petroleum News this statement on the consent agreement:
“We are pleased we reached an agreement with PHMSA. We are committed to working with our regulatory agencies to continue to safely operate and maintain the Trans Alaska Pipeline System. Many of the projects in the Consent Agreement are projects that have been underway for some time, including efforts to mitigate the compounding technical challenges related to declining throughput and crude oil temperatures, ongoing modifications to our cold restart plan, and work to identify and isolate or replace certain piping on TAPS. These issues are complicated, and we are engaged in ongoing discussions with our regulators so we can determine the best path to continue to safely maintain and operate TAPS. We believe the simplest solution to mitigate issues related to steadily declining throughput is to get more oil in the pipeline.”

Under the agreement, signed by Mike Joynor, Alyeska’s senior vice president of operations, the company makes numerous work commitments. Among these:

• Alyeska will replace or remove oil piping that can’t be inspected with in-line tools, known as pigs, or some other PHMSA-approved method.

This was a concern in the Pump Station 1 incident, which involved “low-flow, dead-leg” piping installed in the 1970s and encased in concrete.

Alyeska has submitted an evaluation to PHMSA of which piping is to be replaced.

• Alyeska will install an additional pig launcher and receiver on the pipeline between pump stations 5 and 10.

PHMSA had questioned Alyeska’s ability to remove inspection or cleaning pigs that might be inside the line at the time of a shutdown. A pig could “cause a plug in the pipeline” in a cold restart scenario, the agency said.

• Alyeska will study the need for increased tank capacity at pump stations as a way to “mitigate the consequences of a cold weather shutdown,” the consent agreement says.

PHMSA had raised concern about the lack of oil storage capacity particularly upstream of Pump Station 1.

Under the consent agreement, Alyeska must develop a plan for oil storage projects, if any, by Dec. 31. Possibilities include bringing existing tanks back into service, the agreement says.

• Alyeska agreed to submit a revised cold restart plan to PHMSA and pre-position certain equipment during winter. The consent agreement says an agency inspector would make a field visit to see that the necessary workers and equipment are ready.

PHMSA said Alyeska, during the January shutdown, had trouble implementing its cold restart procedures — an assertion Alyeska’s Barrett disputed.

Restarting the pipeline after an outage is always a high-stress event, even in the best of conditions.

Maintaining oil temperature

The consent agreement pays considerable attention to the problem of oil temperature.
“Alyeska has proposed several projects which are aimed at maintaining crude oil temperatures on the pipeline at a level that will allow safe cold-weather operations,” the agreement says. “Based on current operational conditions, including crude oil characteristics, Alyeska will develop a plan and timeline for implementation and completion of proposed projects designed to create sufficient time to allow for safe restart or implementation of the Revised Cold Restart Plan, and safe ongoing cold weather operations. The projects will be designed to maintain the crude oil temperatures at or above the minimum allowable temperature ... in the event of a prolonged shutdown during cold weather conditions.”

Alyeska was to submit its initial plan and timeline to PHMSA by Oct. 1, the agreement says, adding that approved projects “may not be cancelled solely for financial reasons.”

In an Aug. 1 letter to PHMSA, Alyeska provided its evaluation of the minimum oil temperature needed for safe operation of the pipeline.

As part of a recent low flow study, Alyeska said it conducted modeling, simulation and “actual flow loop testing” to determine the effects of temperature on pipeline system crude.

The study determined that if the oil temperature goes below about 31 degrees Fahrenheit, water entrained in the oil can start to freeze.

“Therefore, Alyeska has accepted the temperature of 31°F as the minimum temperature under flowing conditions for safe operation of the pipeline,” the letter said.

However, the letter added: “Taking into consideration throughput and ambient condition variables, the low flow study recommends the minimum crude oil temperature be maintained at or above 36°F. Alyeska has initiated projects with the primary purpose of maintaining the crude oil temperature at or above 36°F.”

PHMSA, in its Feb. 1 notice, said the minimum pipeline oil temperature recorded at a pump station during the January shutdown, as reported by Alyeska, was 25.7 degrees.

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Republished with the permission of the Petroleum News.