News: Anchorage Daily News, June 13,2002 (p. A-1)

Watchdog seeks more pipeline oversight, upkeep
RENEWAL: Problems are cited as new right of way is considered but are characterized as old news.


By Wesley Loy
Anchorage Daily News

After 25 years of operation, the 800-mile trans-Alaska oil pipeline is in serious need of upgrades and better management, concludes a new report from an oil industry watchdog organization.

The line is "riddled with problems," including extensive corrosion, budget cuts and operational lapses leading to spills, damage to the pipe and its ground supports, a near-disastrous spark at the tanker port in Valdez two years ago, and trouble coping with last year's bullet hole incident, says the report from the Valdez-based Alaska Forum for Environmental Responsibility.

The 168-page report, written by economist and longtime pipeline watcher Richard Fineberg of Ester, also says the pipeline owners are slow to fix problems, and federal and state regulators are too accommodating.

Fineberg makes six recommendations, including creation of a new citizen oversight panel to monitor pipeline operations.

Pipeline operators and regulators dismissed the report as an overhyped rehash of old news.

Since 1977, the pipeline has carried crude oil from Prudhoe Bay and other North Slope oil fields to Valdez, where tankers haul it to West Coast refineries. The line is the jugular of the Alaska economy, carrying a critical commodity that funds much of state government. A major disruption along the line could be both an environmental and economic calamity for Alaska.

The watchdog report comes as the consortium of six big oil companies that own the line, operating under the banner of the Alyeska Pipeline Service Co. of Anchorage, seeks a new 30-year right of way across the vast federal and state lands traversed by the 48-inch-diameter pipe. The current right of way expires in early 2004.

The report also comes on the heels of a study from the Joint Pipeline Office, a coalition of federal and state regulators, indicating that the pipeline overall is well-run with few unresolved problems.

Alyeska officials and regulators said the pipeline is not worn and that right-of-way renewal is justified. They also said the Fineberg report was nothing to get excited about.

"No surprises, no gotchas," said Alyeska spokesman Curtis Thomas. "In reality, it's just a rehash of old events and items that we told him about, alerted him to, discussed and fixed."

"Are there big problems on the pipeline? No," said Rhea DoBosh, spokeswoman for the Joint Pipeline Office. "We look at everything six ways to Sunday. There are programs in place for preventative maintenance and corrective actions."

Early next month, the pipeline office plans to release a draft environmental review on the issue of renewing the right of way. A series of public meetings is scheduled for later this year, and anyone with ideas on improving pipeline operations can weigh in, including Fineberg, regulators said.

"We welcome that. We're looking for all the comments that people want to give us," said Rob McWhorter, an official in the Anchorage-based pipeline office.

Ultimately, the U.S. interior secretary and the state natural resources commissioner will make the final decision on renewing the right of way.
Fineberg, for one, argues against granting it without major reforms.

Aside from citizen oversight, his report says the oil companies should be forced to give up big investment profits on money they're required to set aside for future pipeline dismantling and instead plow that money into the line's upkeep.

This week, pipeline critics disclosed an internal letter from BP Pipelines (Alaska) Inc. president Al Bolea to Alyeska president David Wight that they say proves BP and other trans-Alaska pipeline owners are scrimping on maintenance and operations. Bolea, chairman of the pipeline owners committee, asks Wight in the letter to attempt to trim 10 percent off $34.5 million in corrosion and other maintenance projects.

"There is no smoking gun here," Wight said Wednesday. He said the letter was part of an overall effort by pipeline owners and Alyeska to be as efficient as possible, and that the projects ultimately will be funded.

"It really is all about budgeting and good business practices," Wight said.

Fineberg argues that as the line gets older, maintenance should rise, not fall, to keep up with needed repairs and upgrades.

In fact, Wight argued that the pipeline owners believe costs should fall because the line now carries only about 1 million barrels of oil a day compared with its peak of some 2 million barrels in the late 1980s.

With less oil to carry, four pump stations that used to employ dozens of workers have been closed and Alyeska wants to remove them altogether, Wight said. Moving less oil also means having to spend less to power pumps, he said.

Wight added that he sees no reason the pipeline won't win renewal of its right of way.

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Reporter Wesley Loy can be reached at wloy@adn.com or 907 257-4590.