The ongoing success of TAPS and its role in the nation’s energy infrastructure is directly tied to healthy levels of Alaska crude oil production. At its peak, the pipeline was used to transport 2.1 million barrels of oil, or 24 percent of the nation’s crude oil production, to the Lower 48 states each day. Today, that number is less than 740,000 barrels, or 14 percent of the nation’s production. These lower throughput levels create serious challenges for the long-term operation of TAPS. Lower throughput means lower crude temperatures. Lower throughput requires large amounts of new investment to accommodate the changing flow, increases in the frequency of maintenance pigging and other activities that assure continued safe operation of the system. The changing hydraulic profile on TAPS already has triggered the replacement of our mainline pumps so lower throughputs can be transported.

As production and throughput continue to decline, pipeline challenges continue to multiply. A team of engineers is exploring these challenges and is designing possible technical solutions. The urgency of these solutions is demonstrated by the significant attention, resources and investment the owners of TAPS have committed to these issues. We will continue to invest the resources needed to ensure the integrity of the system. While these actions can help us address the immediate concerns, we still recognize that without new production coming online, there eventually will come a time when the economic and mechanical challenges become too great.

Based on historical rates of decline, we will be operating at 500,000 barrels per day by 2015, years before the first oil is transported from the Chukchi and Beaufort seas. TAPS was not designed to move oil at throughput rates less than 500,000 barrels per day for a prolonged period, just as your car was not designed to idle for long periods of time.

Secretary Salazar’s decisions factor heavily in the future of the pipeline. Alyeska is at a crossroads, and we are acting swiftly and responsibly based on uncertain throughput projections. A future including offshore production requires investments that ready the pipeline for Prudhoe Bay-like volumes of oil. Without assurance that leases are moving forward, we will make decisions based on declining production and transform TAPS into a low-throughput pipeline — one that cannot handle the large volumes of oil projected in the Chukchi and Beaufort.

As we focus on ensuring that the nation continues to benefit from the investment in this critical energy infrastructure, we support responsible exploration efforts that could result in increased throughput in TAPS and, in turn, see more energy delivered to the Lower 48. Offshore areas in the Chukchi and Beaufort seas have been sparsely explored, yet are predicted to yield robust oil production. For these reasons, Alyeska enthusiastically supports including regular oil and gas lease sales in the Beaufort and Chukchi seas as part of the new five-year leasing program and moving forward as scheduled with sales in those areas. We further urge that the Minerals Management Service and other federal agencies receive the resources required to process permits and other applications from leaseholders in a timely manner. We believe these actions will allow the crude oil stored on the federal OCS to be delivered to the American people through the existing infrastructure of TAPS.

Kevin Hostler of Anchorage has served as president and CEO of Alyeska Pipeline Service Co. since October 2005, the ninth person to hold the position since the company’s creation in 1970. Prior to Alyeska, Hostler spent 27 years with BP in the United States, England, Scotland and Columbia.
source: newsminer.com