TAPS After Forty Years
Increased output key to recovery, says Governor Walker
The Trans Alaska Pipeline System near Dearhorse: the 800-mile pipeline travels from here to Valdez.
© Alyeska Pipeline Service Company
There are few, if any, in Alaska who can say they haven’t been affected by the Trans Alaska Pipeline System (TAPS)—in one way or another.
To be sure, there’s the massive economic impact of an 800-mile, 48-inch diameter pipeline that transports crude from North America’s largest oilfield, Prudhoe Bay. At its peak, the pipeline pumped more than 2 million barrels of oil a day over Alaska’s tough terrain: frozen ground, mountain ranges, rivers, and earthquake faults. And though throughput has dwindled to roughly a quarter of that heyday delivery in the late 1980s, the pipeline remains the state’s economic heart, forty years on.
“The past four decades did a lot more than just build the fields,” says Janet Weiss, president of BP Alaska. “Four decades of oil and gas development in Alaska have changed Alaskan lives and provided opportunities for people across the state. Prudhoe Bay will continue as an important foundation for Alaska’s oil and gas industry well into the future.”
Employment for Tens of Thousands
The pipeline’s first impact was the creation of jobs. From 1969 through 1977 alone, 70,000 individuals worked on the huge construction project, from engineers and carpenters to construction workers. Among those who toiled on the pipeline are a virtual who’s-who of Alaska’s upper crust.
Image courtesy of Hawk Consultants
Dave Norton, Principal/Owner at Hawk Consultants and former field engineer during construction of the TAPS pipeline.
Governor Bill Walker worked on the pipeline as a youth and during college and even met his wife, Donna, while working there. Dave Norton, owner at Hawk Consultants, worked as a field engineer during the pipeline’s construction. Charlie Riddle, senior vice president at R&M Consultants, also was among the thousands of Alaska residents who worked on the pipeline.
For some, it has been a family affair.
Julie Redington, director of projects for Alyeska Pipeline Service, which is made up of the major oil companies that own and operate the pipeline, is one of four family members who work on the pipeline.
There are her brothers, Dan and Ron Flodin, and her father, Steve, who was a contractor for the SERVS Vessels of Opportunity Program. Dan is supply chain management director and Ron is the system’s pipeline and civil maintenance coordinator and works mostly in the field. “Alyeska,” Redington says, “is a great company to work for and the pipeline is really significant and iconic in the state. It’s a meaningful job, great for jobs for the family, and it helps the state.”
Redington aptly sums up how those who worked for the pipeline feel about it even today. There are pipeline memories floating all over Alaska. “I’ve been here going on sixteen years and have spoken to a lot of people who worked here and have gone on or retired,” she says. “There’s really a sense of loyalty. There’s almost like an ownership to contributing to the success of the performance of the pipeline.”
Alyeska President Tom Barrett in a company report shares Redington’s feelings. “We feel TAPS pride,” he says. “TAPS people are special. We know our work, what we do, and how well we do it matters all across Alaska.”
The pipeline’s economic run continues, as it enters the territory of the middle-aged with its 40th birthday, and there’s plenty of promise for the next forty years.
“TAPS,” Weiss says, “laid the foundation for further oil and gas development on the North Slope.”
“Another promising part about the future of Alaska’s North Slope is the list of companies operating successfully and the list of companies exploring: Caelus, Hilcorp, Eni, Repsol, and Armstrong. The interest of these companies demonstrates that Alaska is open for business,” she says. “It’s important for the future that we keep Alaska open for business.”
Alyeska Pipeline Service Company leadership doing a walkdown of shutdown work at Pump Station 1 in late 2016. From left: John Baldridge, Senior Director Pipeline Operations; Rod Hanson, VP Pipeline Operations; Don Neff, Construction Manager; Mike Hale, Prudhoe Bay Area Manager; and Dave Welsh, ExxonMobil Owner Representative.
Photo by Bill Bailey / Courtesy of Alyeska Pipeline Service Company
Where It All Began
Everything started with Alaska’s life blood: oil. With the discovery of Prudhoe Bay’s massive oilfield—North America’s largest—in 1967, the stage was set for Alaska to undergo major change.
The 213,543-acre oilfield triggered actions by multinational oil companies, Alaska, and Congress that resulted in the construction of the 800-mile pipeline to funnel crude oil from the North Slope to Valdez, the state’s northernmost ice-free port.
The field is about 650 miles north of Anchorage—between the Arctic National Wildlife Refuge and the National Petroleum Reserve–Alaska. The land is owned by the state and operated by BP. Other major players in the oilfield include ConocoPhillips and ExxonMobil.
The motto of the first employees charged with taking on the world’s largest privately-funded construction project was simply: “They didn’t know it couldn’t be done,” according to Alyeska.
Nonetheless, obstacles were everywhere.
Among them were fault lines, rivers, and steep mountain ranges that had to be crossed, and Alaska’s frozen permafrost meant that much of the pipeline had to be built aboveground. To get the job done, construction camps were built along the pipeline’s path for workers. The biggest obstacle at the front end, says Riddle, was land ownership and right-of-way status. The company he works for, R&M, was formed because of the pipeline and has provided many services throughout the years. Permits to build the pipeline, Riddle says, could not be granted until Native land claims were settled.
That issue was resolved in 1971 with the passage of ANCSA (Alaska Native Claims Settlement Act). The legislation, he says, didn’t just pave the way for construction. “It provided land and money to the various Native corporations that were established under ANCSA,” Riddle says.
Land ownership rights were settled in 1973 when the US Senate approved construction of the pipeline in a tight vote, he says. “The initial vote was a 49-49 tie with Vice President Spiro Agnew casting the tie-breaking vote to approve the Trans-Alaska Pipeline Authorization Act,” Riddle says.
But those were hardly the only issues, he adds. Among the most severe technical problems: About 600 miles of the pipeline are within areas of perennially frozen ground, which meant there had to be multiple designs drafted.
“Should heat transmitted from the hot oil pipeline or any ground surface disturbance created by construction activities cause thawing of the underlying permafrost soils, subsequent thaw settlement of the pipeline would create pipeline stability concerns,” Riddle says. “Different construction modes were established for different soil and permafrost conditions anticipated along the alignment. Conventional buried pipe was specified for most areas where permafrost was not anticipated or where permafrost was considered thaw-stable. An elevated pipeline mode was designed for areas of thaw-unstable permafrost. Several areas required special refrigerated burial.”
It was no easy feat. But, according to Alyeska, construction on roads and facilities, as well as the pipeline, started in April 1974. About three years later, in June 1977, the project was completed. Oil first started flowing June 20, 1977 and the first tanker loaded with Alaska North Slope crude left Valdez August 1.
It was a staggering accomplishment.
Norton remembers the successes and some key moments as pipeline construction rolled on, both as an early employee and as a current contractor for Alyeska providing embedded professional staff when needed.
In 2002, for instance, when it came time for the renewal of the thirty-year lease of right-of-way from federal and state governments, a new environmental impact statement was required, including a retrofit of the seismic design.
“Thirty years later, the government was saying that the state-of-the-art seismic had changed. We said nothing needs to be retrofitted. We were at a standstill not knowing how to convince the government it was okay and the government was not willing to take our word for it,” Norton recalls. That’s when nature stepped in. Alaska was hit by a 7.9 earthquake on November 3, 2002. “It was the biggest at that time since the big one in 1964,” Norton says. “The Denali fault slipped like a dozen feet. The pipeline was specially designed, crossing that fault on sliding skids. The fault slipped and the pipeline performed like it was supposed to. This was like a full-scale bench test and it worked, which was funny in a way, but also good for the pipeline and successful. After that, there wasn’t any more talk about seismic retrofitting.”
Supercharging the Economy
Walker calls the pipeline, “one of the most significant events that impact Alaska in many ways.”
“I can’t think of another one that has had a greater impact on our economy than the pipeline,” he says.
He should know.
He was there at the start, loading ships in his hometown of Valdez, when the first ships started coming in. During college, he worked on coating the pipe and worked as a journeyman carpenter in a pipeline camp. “I’ve had a long history with the pipeline,” Walker says. It was, he remembers, critical to get the pipeline built, but not just for Alaska.
There was a gas crisis in America. “For a time, Alaska was providing a significant portion of the crude oil to the Lower 48,” Walker says. “There was a time when cars were lined up, you had to queue up, [and] license plates had odd and even days to go to service stations in various states. It was very critical for the continental United States to have this pipeline built.”
© Alyeska Pipeline Service Company
Experts: Pipeline is forty years old, but the pipe itself has unlimited lifespan. Steel doesn’t age as long as it is maintained.
BP first began working in Alaska in 1959, according to a written statement. BP started drilling at the Prudhoe Bay oil field in 1968 and helped build TAPS in the mid-1970s.
Since Prudhoe Bay began production, it has generated more than 12.5 billion barrels of oil—an increase of 30 percent from the original projected ultimate recovery of 9.6 billion barrels and planned field life of thirty years. Four decades after start-up, Prudhoe Bay is the most prolific oilfield in US history and supports thousands of American jobs.
TAPS oil recovery has been influenced by an evolution of technology through increased use of the produced gas for reinjection and cycling; enhanced drilling, multilateral, coiled tubing; Prudhoe Bay’s large scale EOR—enhanced oil recovery using enriched gas; gas cap water injection; and the application of 3D seismic.
BP’s Alaska operations have resulted in significant contributions to Alaska’s fiscal health and economy. For instance, today Prudhoe Bay supports more than 16,000 Alaska direct and indirect jobs and BP employs 1,700 workers in Alaska, 78 percent of whom are Alaska residents. “Recruiting, training, and hiring Alaskans remain among our top priorities,” says Dawn Patience, BP press officer. “There are also nearly 5,000 contractors doing work for BP in Alaska.” Beyond jobs, in 2016 BP spent nearly $1.3 billion with 300 Alaska vendors.
Says Weiss: “Prudhoe Bay produces 55 percent of all the production in the Trans Alaska Pipeline System. That’s a huge responsibility—one I do not take for granted, not just as the first woman in the job, but the first long-time Alaskan to earn this job.”
The best way to measure the economic impact of the pipeline is to look at the economic impact of oil on the state’s economy. “The impact on the state treasury and the economic activities that resulted from it [are] extremely significant,” Norton says. “Look around the state. Look around Anchorage. The infrastructure, the library in Anchorage, the arts center, the university system, all resulted from the revenue generated by the pipeline, not to mention the jobs.”
The McDowell Group was recently charged with assessing the statewide and local impact of oil and gas industry spending in the Municipality of Anchorage; Fairbanks North Star Borough; Kenai Peninsula Borough; Mat-Su Borough; North Slope Borough; and the City of Valdez. Additionally the group studied and reported on the statewide employment impacts of taxes and royalties paid by the oil and gas industry in 2016.
According to the report, released at the Alaska Oil & Gas Association’s 2017 Annual Conference, the industry’s fourteen primary companies employed 5,033 workers in Alaska, including 4,275 Alaska residents who earned $749 million in wages in 2016. Alaska residents represent roughly 85 percent of hires by the primary companies.
Including all employment and wages, direct, indirect, and induced, industry spending accounted for 45,575 jobs and $3.1 billion in total wages in the state’s private sector last year.
Overall, the study measured 103,875 oil and gas industry-related jobs and $6 billion in wages in 2016. The group reports that 32 percent of all wage and salary jobs and 35 percent of all wages in Alaska can be attributed to the oil and gas industry. State and local government impacts include state agency operations that comprise 19,500 jobs; state programs that created 19,600 jobs; capital spending responsible for 10,400 jobs; Permanent Fund Distribution created 4,200 jobs; and local government operations and projects were responsible for 4,600 jobs for a total of 58,300 jobs and $2.9 billion in wages in 2016.
The fourteen companies included in “The Role of the Oil and Gas Industry in Alaska’s Economy” are:
- Alyeska Pipeline
- Blue Crest Energy
- Caelus Alaska
- Great Bear Petroleum
- Petro Star Inc.
© Alyeska Pipeline Service Company
TAPS: The Next 40 Years
While declining throughput has affected pipeline performance, experts nonetheless see promise ahead. But the answer for the future is the same answer that got things started in the first place: oil. The lower volume means oil moves slower through the pipeline, which has translated into problems for a pipeline designed for max performance and load. As a result, pipeline temperature has dropped. Heaters have been installed to protect against the cold, which allows water in the crude to separate.
Another issue is the fall in oil prices.
“It’s a challenging environment today, where hydrocarbons are actually more abundant and therefore low-cost oil is the name of the game,” says Weiss. “Like other Alaska oil and gas companies, BP is challenged to become more competitive in a low oil price environment.”
Alaska’s oil and gas industry, she says, “cannot wait for oil price to save us. We need to ensure that we continue to have options that compete at these lower oil prices. I believe it takes three things to make this change: it takes efficiencies; it takes technologies; and it takes Alaska fiscal policies that keep us competitive.”
There’s a simple solution, says Alyeska spokeswoman Michelle Egan. “Increase the throughput—or, add more oil,” she says. “Engineering work continues as we look for solutions to the challenge posed by declining throughput. In the near term, that includes things like adding heat to the pipeline, changing our pigging regime, and applying new technology to our operation. Teams are working on longer range solutions.”
The goal, says Walker, “is to increase the thoughput of oil, now that [TAPS is at] 25 percent of capacity.”
“We need to diversify, but we are a resource-rich state—oil, gas, [and] coal. It’s all about the development of our resources,” he says.
A recent order by Interior Secretary Ryan Zinke that calls for more input in North Slope oil and gas development from local and state entities should help. The move, Walker says, gets rid of obstacles “so Alaska can play a greater role in securing the nation’s energy dominance.”
Egan notes that key to success is creating policies that increase access, streamline regulation, and create a favorable fiscal climate for the industry and for TAPS. “Alaska’s North Slope contains considerable oil resources that have not yet been produced and TAPS is proven infrastructure for moving that oil to market,” she says.
A lot of work has been done on the pipeline to deal with the oil decline and prepare for the future, Norton says. Jet turbines that were initially installed on the pipeline to run pumps have been replaced with variable speed electric drives that adjust for varying flow. All the electronic control systems, he says, have been upgraded. “We got the pipeline basically ready for another thirty years of operation with variable outputs.” The pipeline now also has new instrumentation that allows for constant monitoring. “The pipeline is forty years old, but the pipe itself has unlimited lifespan. Steel doesn’t age as long as it is maintained,” Norton says. “And now that the pumps and the equipment that [go] with it have all been upgraded, the system is ready for another forty years. It’s state-of-the-art.”
Garrison Wells is an award-winning business writer.
This article first appeared in the August 2017 print edition of Alaska Business.