An oil spill prevention and contingency planning group thinks a local energy company should scuttle its plans to reopen a large oil storage facility in favor of constructing a pipeline to transport oil across Cook Inlet.
In a July 11 position paper released Wednesday, the Cook Inlet Regional Citizens Advisory Council recommended Hilcorp Alaska replace the Drift River Oil Terminal and its tankers with a trans-Foreland pipeline as a means of transportation to reduce the risk of an oil spill at the terminal location. Hilcorp recently purchased the Drift River storage facility and is currently conducting a number of construction projects at the site located on the west side of Cook Inlet near the base of Mount Redoubt, an active volcano.
Crews are working to fix a broken part of the Christy Lee platform before winter ice conditions arrive, raise a berm designed to protect the facility from potential flooding caused by future eruptions of Mount Redoubt and amend the facility’s oil spill and contingency plan to include specifics of how to shutter the facility in the event of an eruption, among others.
Hilcorp hopes to bring two tanks back online at Drift River by October to accommodate its goal of doubling oil production. The company’s proposal is being considered by the state. The Drift River tank farm was drained of oil following the 2009 Redoubt eruption when volcanic mudflows caused flooding around the facility’s protective berm.
No oil was spilled at time, but the event resulted in seven feet of sediment deposits around the base of the berm. To compensate for the increased land elevation, Hilcorp plans to raise the 20-foot barrier another 15 feet.
Drift River, along with the Christy Lee loading platform, allows oil producers to store crude oil in tanks and pump it into tankers that haul it across the inlet to the Tesoro processing facility.
Shipping oil across Cook Inlet is risky business due to tides, currents and ice conditions. According to a recent CIRCAC study, it poses the greatest risk in Cook Inlet due to tankers’ great oil capacity and concentrated operations in the middle region of the inlet.
The current system of transporting oil — called “tightlining” — involves storing oil at a lower volume upriver of the facility and pumping it into waiting tankers.
CIRCAC’s Executive Director Mike Munger said in a press release the tightlining system is not a viable long-term solution.
“It is the council’s position that a properly engineered subsea pipeline presents a much lower risk than a marine facility and associated tanker traffic and represents the best long-term option for the inlet’s future oil transportation from west side production operations to the east side refinery,” Munger wrote in a release.
CIRCAC said it would prefer limited use of Drift River over the tightlining system under the conditions Hilcorp continue working to strengthen the facility’s berm and reduce its use of large oil tanks until the pipeline could be built.
The council also asked Hilcorp build the pipeline within five years of re-opening Drift River. Munger said five years is “prudent” given that Hilcorp is still in the early stages of its Cook Inlet operations.
“They are still in that kick-the-tire stage from buying a used car,” Munger said. “They are still trying to figure out what they got, what potential they’ve got and there is going to have to be some time built in before they even get that analysis done.”
Hilcorp’s external affairs manager Lori Nelson said Hilcorp has been in discussions with the council and its decision was no surprise. However, committing to a pipeline would be premature, she said.
“If production warrants and can support the economics of us putting a line in from west to east, it is something that we will certainly consider,” Nelson said. “That’s kind of why the RCAC put in that window — they do understand as far as our operations in Cook Inlet are concerned we are very young, we do have great aspirations, but until those have been proven, we really have no business trying to size a line, let alone finance one.”
CIRCAC’s announcement did not mention Cook Inlet Energy’s mid-June announcement it would build what the council is calling for — an 8-inch, trans-Foreland pipeline to carry 90,000 barrels of oil per day at a cost of $53 million. The company hopes to have the line built by May 2014.
Cook Inlet Energy officials did not return calls seeking comment.
Nelson said Hilcorp is aware of Cook Inlet Energy’s project, but the two were not partners.
Munger said the council didn’t feel it was their position to dictate who builds the line under what agreements or partnerships.
“We are very encouraged by Cook Inlet Energy’s efforts, but we didn’t feel it was our place to say, ‘Go partner with somebody else,’” Munger said.
Nelson said the company was continuing forward with permitting and construction work at Drift River and was comfortable with the added safety measures and new contingency plan being submitted.
“Does this stir up more tension? Of course it does,” Nelson said. “But from other conversations we have had offline with Cook Inlet RCAC and from the direction of (the Alaska Department of Environmental Conservation), we are certainly doing what we’ve discussed and doing the right thing to mitigate risk as much as possible.”