Keeping Alaska Fueled Up

Mar 5, 2018 | Energy, Transportation

Vanessa Orr

Customers on the road system are served by Crowley’s linehaul fleet, which includes 35 power units and roughly 200 pieces of equipment including trailers.

Fuel delivery via truck, ship, and even a rolling drum

While many Alaskans are daydreaming of warmer days ahead, those who deliver fuel to the state’s residents remain knee-deep in winter work until temperatures rise regardless of the calendar date. Trying to keep customers warm and companies running in temperatures that can sometimes reach 50 below is challenging—especially in a business in which margins are small and competition fierce.

While many Alaskans are daydreaming of warmer days ahead, those who deliver fuel to the state’s residents remain knee-deep in winter work until temperatures rise regardless of the calendar date. Trying to keep customers warm and companies running in temperatures that can sometimes reach 50 below is challenging—especially in a business in which margins are small and competition fierce.

Most of Petro Star’s fuel sales are produced at its North Pole and Valdez refineries, and it delivers fuel to residential, commercial and military consumers via pipeline, barge and truck. Here, a fuel barge loads in Valdez.
Image courtesy of Petro Star, Inc.

Where Does the Fuel Come From?

A family-owned business, Crowley operates out of offices in twenty-one Alaska cities from Kotzebue to Ketchikan to Hooper Bay. “Historically, we look at markets as either highway-served or marine-served,” says Hall. “Cities, towns, and villages on the road system are served by our linehaul fleet, which includes 35 power units and roughly 200 pieces of equipment including trailers. We use the highway system to transport fuel from the three refineries in the state to serve Anchorage, Fairbanks, and all points in between.”

In southcentral Alaska, for example, Crowley transports fuel from Petro Star and Tesoro terminals in Anchorage to areas including Palmer and Wasilla, where it is stored in terminals for use by smaller end users served by the company’s local delivery fleet of about ninety trucks. Southeast cities are slightly different, as their fuel supply is transported over water to local terminals.

Delta Western, which provides jet fuel, diesel, heating oil, and aviation gas to Anchorage, Juneau, Fairbanks, Ketchikan, and Sitka, buys fuel at truck racks or in Kenai or Valdez to serve Anchorage and Fairbanks. “For our other locations, particularly southeast, we pull from the Pacific Northwest and transport fuel via barge,” says Kirk Payne, vice president of supply and terminals.

Petro Star is a little different from other fuel delivery services in that it both produces and distributes its own fuel. “From its beginnings in North Pole with only one small refinery, Petro Star and ASRC [its parent company] understood that vertical integration—being able to deliver and sell its own products directly to consumers—was key to its success,” explains Doug Chapados, president and CEO of Petro Star Inc. “Through its thirty-four-year history, Petro Star has grown via vertical integration and acquisition, expanding sales and operations into the Aleutians, Kodiak, and southcentral Alaska through its marine distribution division, North Pacific Fuel, as well as its Interior heating oil division, Sourdough Fuel.”

Most of Petro Star’s fuel sales are produced at its North Pole and Valdez refineries, and it delivers fuel to residential, commercial, and military consumers via pipeline, barge, and truck. The company operates divisions in Fairbanks, Anchorage, Kodiak, Valdez, and Unalaska/Dutch Harbor.

According to Chapados, residential deliveries in the Interior areas are delivered by truck directly to customers’ tanks, as well as via bulk fuel deliveries to Petro Star’s bulk plant facility in Fairbanks. Military deliveries include barge deliveries to Defense Logistics Agency storage in Anchorage/JBER and pipeline deliveries to Eielson Air Force Base. “Road accessible installations are served by truck, and our commercial deliveries can be picked up directly from truck racks located at both refineries and several terminals, via barge or via truck,” he adds.

Alaska Fuel Services also provides home heating oil to locations in Fairbanks and North Pole, as well as occasional deliveries to Delta, Nenana, and a few other outlying communities. “The majority of our fuel comes from the refinery in North Pole, though if the season is going well and a lot of fuel is being used, we might also start sending A trains (fifty-three-foot tankers with thirty-foot pumps that can carry 13,000 gallons) to Anchorage or Valdez,” according to Ben Wilker, owner and operational manager.

He continues, “When it’s 40 below in Fairbanks, you’re sucking down a lot of fuel; Interior prices go up while coastal prices remain the same, so if the margins hit a certain number, we send trucks that way.”

Alaska Aerofuel, which serves North Star Borough areas within one hundred miles of Fairbanks and is also contracted for remote site work, gets its fuel from Petro Star Refinery and Flint Hills Tank Farm in North Pole. “We pick up via tanker truck from both of those locations; when reloading, we will travel to those locations or load product at our own facility,” says Paul Gibson, president and CEO, adding that the company has its own tanks for storage. “The reasoning for this is that time is money, and it helps with congestion at the load racks.”

Alaska Aerofuel serves North Star Borough areas within 100 miles of Fairbanks and is also contracted for remote site work. Here the company refuels a corporate jet.
Image courtesy of Alaska Aerofuel

Delivering in Alaska

In addition to the effort that it takes and the distances involved just to get trucks loaded, fuel companies face many other challenges as well—some of which may be unexpected.

“Of course we face weather and road conditions; for example, the road to Valdez may be closed due to avalanches, so we constantly monitor weather conditions which dictate where we go and how we can do it safely,” says Hall.

“Believe it or not, traffic is also a problem,” he laughs. “In the Anchorage bowl, traffic is a consideration in summer or winter. An incident on the Glenn Highway impacts our ability to schedule deliveries, and a tourist in the middle of the road taking pictures of wildlife can also slow us down.”

“Alaska weather is unpredictable and often extreme, both on the land and seas,” agrees Chapados. “Wintertime storms can generate mountainous waves and heavy icing conditions that pose serious safety concerns for Petro Star’s two ocean-going charter barges, and Cook Inlet ice formations can at times be so severe that the US Coast Guard actually closes the Port of Alaska to barge traffic.

“Icy roads are routine obstacles for Petro Star’s heating oil delivery drivers, regardless of where they are located. While delivering fuel, the Interior’s negative 50 degree cold snaps are equally hard on drivers and their equipment,” he adds.

Delivering fuel in northern Alaska can be especially grueling, not only because of plunging temperatures but because even the more “urban” areas are not really urban. “Fairbanks proper is about 30,000 people; more people live out of town than in town,” says Gibson. “You have five miles of city congestion and the amenities of a big city—and five miles later you can be in the middle of nowhere.

“Sometimes you’re delivering to cabins on the side of mountains, so you drive up as far as you can drive, unload fuel into a drum, and roll it down the trail where it’s hand-pumped from the barrel into the tank at the house,” says Gibson, who has even delivered fuel by following a frozen snow machine trail. “This is for a smaller percentage of customers, but it’s definitely still happening today.”

“It can be tough, even when you make it to the house,” agrees Wilker. “Some houses are marked and near the street, and that’s great. Other times, you’re dealing with steep driveways that aren’t plowed and stuff piled in front of tanks. It takes a lot of manpower to drag a 1.5 inch hose full of fuel around.”

A home fuel delivery.
Image courtesy of Alaska Aerofuel

Intense temperatures can wreak havoc not just for drivers but for the equipment as well. “When you’re dealing with a ten-day long cold spurt, there are environmental concerns like leaking valves,” says Gibson. “A duck pond—a neoprene tarp surrounded by foam—is used under suspect areas while pumping to ensure that we capture every drop. When you’re making equipment to deal with conditions from 90 above to 60 below, there’s no way to create something useable across this temperature zone without exceptions.”

Other challenges facing Alaska’s fuel suppliers don’t have anything to do with the weather. “Regulatory burdens placed on refiners throughout the US, as well as the special regulatory requirements found only in Alaska, can present unique hurdles to producing and delivering fuel,” says Chapados. “As new regulations are developed and implemented, whether in DC or Juneau, Petro Star must continuously invest in additional processes and personnel to first understand and then work to mitigate impacts to its customers.

“The speed with which the new regulations come out can be daunting; for example, new AQ regulations in the Interior are being developed right now with plans for implementation by 2019,” he adds. “These new regulations could require a change in our home heating oil specifications, making it necessary to transport more fuel from our Valdez refinery rather than produce it locally in North Pole. These types of changes can have serious ramifications across Petro Star’s operations and can add significantly to fuel prices, harming consumers.”

Giving Back

While fuel providers are most appreciated during Alaska’s long, cold winters, they contribute to the state’s well-being year-round.

“We employ more than 300 people across Alaska in good-paying jobs with good benefits; these are people who live in the communities where they work,” says Hall. “Our team members take part in hundreds of hours of volunteer efforts, doing community cleanups, charity runs, serving on nonprofit boards, working with youth in sports, and more. On the corporate level, we support events across Alaska including the Iron Dog, Kuskokwim 300, military appreciation events, fishing derbies, and the Iditarod.”

Crowley is an official sponsor of the Iron Dog, “The world’s longest, toughest snowmbile race,” and routinely participates in other sponsorship opportunities in the communities it serves.
Image courtesy of Crowley Maritime Coroporation

In 2010, the company established the Thomas B. Crowley Sr. Memorial Scholarship that provides four scholarships annually to the University of Alaska Fairbanks College of Fish and Ocean Sciences. “For the past five years, we’ve also provided an Alaska Air Carriers Association scholarship for students earning degrees or certifications in aviation maintenance, administration, or professional piloting, which is our way of supporting the future of aviation in Alaska,” says Hall.

Through the Crowley Cares Foundation, employees can also set aside a certain amount of money to be designated to a charity each pay period with Crowley matching it 100 percent.

Petro Star also supports the communities where it does business either monetarily or through employee support/volunteerism. Groups helped over the past few years include the Arctic Education Foundation, Arctic Slope Community Foundation, Boys & Girls Clubs-Alaska, Coast Guard Foundation, Covenant House Alaska, Food Bank of Alaska, and United Way of Alaska, among others.

Alaska Fuel Services sponsors kids’ sports and also provides discounts to military families and seniors. Through its Community Rewards Program, customers can save money and also give to their favorite organizations. “Families whose children go to Fairbanks Montessori School, for example, receive a 10 percent discount on fuel, and we add that discount up and write a check every month to the school,” explains Wilker. “We do this for several organizations in town, with some checks totaling more than $1,000.”

“We’re a 100 percent local business, and we believe in keeping the money in town,” he adds. “Everything we make, we put back into the community.”

Delta Western also supports the communities it serves, with the majority of its philanthropic donations revolving around youth development and secondary education. “These causes are very important to us, which is why every year we provide one $10,000 scholarship to a graduating high school senior in every community where we operate,” says Payne.

Alaska Aerofuel provides discount rates to specific groups of customers, as well as contributes to community organizations. “We are very engaged but would rather give silently,” says Gibson. “We have a widow rate for example, and we are also regular contributors to the local food bank, as well as several humanitarian outlets like Love INC and the Fairbanks Rescue Mission in addition to Explore Fairbanks, the Chamber of Commerce, and more.”

While it’s not an easy job, fuel suppliers are essential to the operation of the state. “You have to make sure that you’ve done everything you can, and that the customer is happy,” says Wilker. “You have to go that extra mile.”

Vanessa Orr is a freelance writer and former editor of the Capital City Weekly in Juneau.

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