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TAPS Reaches Milestone While Surpassing Previous Production Forecasts

Dec 11, 2019 | Monitor

Trans-Alaska Pipeline near pump Station 4.

Kim Mincer | BLM Alaska

ANCHORAGE—The 18 billionth barrel of Alaska North Slope crude recently started down the Trans Alaska Pipeline System (TAPS) from Pump Station 1 in Prudhoe Bay.

“This marks another significant operational milestone for TAPS, for Alaska and Alaskans, for the oil and gas industry, and countless individuals whose work carries on the remarkable legacy of this unique infrastructure,” said Tom Barrett, President of Alyeska Pipeline Service Company, TAPS’ operator. “This milestone brings justifiable TAPS Pride among the smart, tough people at Alyeska Pipeline and our contractors who run TAPS safely every day.”

Alaska Oil and Gas Association (AOGA) President and CEO Kara Moriarty congratulated Alyeska Pipeline Service Company for safely moving the 18 billionth barrel.

“TAPS is our economic lifeline and a source of great pride for Alaskans,” said Moriarty. “It’s hard for many of us to imagine life without the pipeline, but it’s worth emphasizing the enormous economic contribution the oil industry makes in Alaska. We know this proud legacy can continue as industry considers approximately $24 billion in new opportunities in legacy and new fields in the coming decade, and Alyeska continues to harness new technology and innovation.”

In forty-two years of moving oil through the pipeline, the State of Alaska has collected approximately $145 billion in revenue from TAPS oil (revenue number from Department of Revenues is not adjusted for inflation and does not include oil from other basins, like Cook Inlet).

“Billions of barrels of oil remain on Alaska’s North Slope,” said Moriarty. “Alaska’s economic future is under our feet, and with the right investment climate, we will bring that oil to market, preserving Alaska jobs and funding vital services. Alyeska’s team is also to be commended for its impeccable safety record as it manages the challenges associated with moving oil through the pipeline 365 days a year.”

The launch of the pipeline transformed Alaska from a frontier state to an economic force. June 20, 1977, marked the startup of TAPS operations, with the first barrel of oil arriving in Valdez on July 28, and the first tanker departing the Valdez Marine Terminal a few days later. TAPS’ billionth barrel arrived on January 22, 1980. The 17 billionth barrel started down TAPS on July 19, 2014.

Other recent major operations landmarks include: the fortieth anniversary of TAPS operations in 2017; the number of tankers loaded (22,600 through October 2019); and the number of tanker escorts provided by Alyeska’s Ship Escort/Response Vessel System (nearly 14,000).

“TAPS workers achieve these milestones with a laser focus on safety and the environment. Our team just marked 26 million hours of work without a serious injury,” said Barrett.

In addition to reaching milestones, TAPS is also reportedly producing more oil than previously projected.

The State of Alaska reports oil production in FY2019 averaged 82,700 barrels per day above what was forecast for this year under the last oil and gas tax structure.

“The Fall Revenue Sources Book shows that while Alaska will continue to struggle with budget challenges, our current tax structure continues to deliver. In contrast to the severe production declines being forecast just six years ago, it’s encouraging to see production is well above where we were expected to be under the old tax structure,” said Moriarty.

As Department of Revenue Acting Commissioner Michael Barnhill said in his report, “The forecast assumes that production will decline modestly to 492,100 barrels per day in FY 2020 and 490,500 barrels per day in FY 2021. New fields offer tremendous potential to increase production later in the 2020’s but these developments are still contingent on final investment decisions and commitment of billions of dollars of new investments on the part of oil and gas producers.

Including both new exploration developments and investments in the core fields, North Slope investors are planning over $24 billion in capital investments through 2029.

“Experts said our current tax law would lead to more investment and more production, and they were right,” said Moriarty. “It delivered as predicted, stabilizing oil production even during a period of extremely low oil prices. Last year, the State’s Department of Natural Resources reported the busiest drilling season in 20 years. Alaskans have much to be optimistic about when it comes to potential for more oil flowing through the pipeline.”

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