Wednesday, October 16, 2013

New crude crossing; Report says construction could begin within months on inlet subsea pipeline

Wesley Loy
For Petroleum News

Construction of a new subsea crude oil pipeline across Cook Inlet could begin as soon as 2014.

That’s the word from the Cook Inlet Regional Citizens Advisory Council, a congressionally sanctioned organization that monitors oil industry activity in the inlet.

“Cook Inlet RCAC has been informed that Tesoro is considering the installation and operation of a trans-Foreland subsea pipeline to transport crude oil from the west side of Cook Inlet to Tesoro’s refining facilities in Nikiski,” the council reported in its October newsletter. “Although still in the planning stages, all indications are that this pipeline is going to be built and construction could begin as early as spring 2014.”

Cook Inlet Energy’s idea

This news seems to build on a proposal that first emerged more than a year ago from Cook Inlet Energy LLC, a west side oil and gas producer. The company had said it was pursuing a 29-mile, $50 million subsea pipeline from its Kustatan production facility near West Foreland point to the Tesoro refinery near East Foreland point. That explains its name — the Trans-Foreland Pipeline.

Cook Inlet Energy is a subsidiary of Tennessee-based Miller Energy Resources Inc.

In January, Miller said Tesoro had agreed to fund up to $1.4 million in design costs for the proposed pipeline.

Petroleum News was unable to reach representatives of Tesoro and Cook Inlet Energy for comment.

Advantages of subsea line

As it stands, crude oil produced on Cook Inlet’s west side is shipped out via tankers. The inlet’s enormous tides and dangerous drifting ice add extra risk to the inlet crossings.

“Cook Inlet RCAC is very supportive of Tesoro’s proposed project,” the council said in its newsletter. “With the installation of the crude oil pipeline, there will be an alternative means of transporting crude oil from Cook Inlet’s west side facilities. We will continue to advocate for the installation of the pipeline and Tesoro has been invited to present their plans and status of the project at the Council’s Board of Directors December meeting in Anchorage.”

Cook Inlet Energy has said a subsea pipeline could offer other advantages, such as reduced oil transportation costs.

Another concern is the threat that nearby Redoubt volcano poses to the Drift River oil terminal, where tankers load. Eruptions in 2009 knocked the terminal out of service and idled oil production on the inlet’s west side for months.

The Cook Inlet RCAC said it had been in contact with Cook Inlet Energy and also Hilcorp Alaska, a major inlet oil producer. Hilcorp “has indicated that they are awaiting additional information before committing to utilizing the pipeline,” the council newsletter said.

The newsletter further said that two consultants, Glosten and Northern Economics, have been engaged to do a cost-benefit analysis of the cross-inlet pipeline.

Read more: http://www.petroleumnews.com/pntruncate/276186980.shtml