The Observer, May 2005

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Alyeska Viewpoint

FONSI is first step in long process of terminal reconfiguration

By Greg Jones

For nearly two years Alyeska has been engaged in engineering studies to evaluate the possibility of simplifying facilities, operations and support functions at the Valdez Marine Terminal. We have referred to this project effort as “strategic reconfiguration.” This project has examined possible modifications to the terminal to accommodate changes in production and throughput that have provided the basis for pipeline reconfiguration. Alyeska has previously informed the council that terminal modifications could include such changes as reducing crude storage tankage to meet current and future storage needs or replacement of the current saltwater pumped fire system with a freshwater gravity system.

In February, the Bureau of Land Management, or BLM, issued its final decision record on its environmental assessment of the proposed terminal strategic reconfiguration project – a “finding of no significant impact,” or FONSI. It is important for readers to understand that the BLM decision was not an approval of the project to allow construction to go forward. Prior to building and operating new facilities associated with any of the project components, Alyeska would require permit approvals from a number of agencies. There would be a number of opportunities for additional public review associated with applications for these permits.

The FONSI represents a significant milestone for the project. With BLM’s finding of no significant impact, no additional environmental impact statement will be required for the proposed project as set forth under National Environmental Protection Act, or NEPA. NEPA is a federal procedural statute designed to require an analysis of probable environmental impacts from proposed projects before federal agencies make binding decisions. NEPA does not dictate the federal decision. Instead, NEPA links the federal decision-making process to a written analysis of the probable environmental consequences of the proposed action and of a reasonable range of alternatives.

Whether a proposed project presents a “significant” effect on the environment requires consideration of two broad factors – context and intensity. Context refers to the setting and scope of the proposed action. The more the scale and nature of the proposed action is inconsistent with existing uses and activities and state of the environment, the greater the likelihood of significance. Intensity refers to the severity of the impact on the environment. Potential adverse impacts on sensitive species or resources (e.g., impacts on endangered species, subsistence resources, or wetlands) would be examples of intensity. Intensity also includes potential effects of great magnitude such as aircraft noise from siting a new major airport. These would be types of impacts requiring a more detailed environmental impact statement.

The BLM based its finding of no significant impact on several factors. In broad terms, all components of the proposed project fall within an existing industrial site expressly set aside and operated as a crude oil storage and transportation terminal for the past 30 years, and with renewed authority to operate for another 30 years. Thus, proposed changes to terminal facilities and operations are consistent with existing terminal activities in both character and scale. In fact, one of the primary purposes and effects of the projects under review is to reduce the infrastructure and complexity of terminal operations.

In the decision record, BLM found that long-term environmental impacts from Alyeska’s proposed project “will not be significant, nor will they affect the safety, integrity, and security of TAPS.” In its finding, BLM also set forth several mitigation measures over and above current regulatory requirements to reduce potential consequences associated with the project. These mitigation measures include (but are not limited to) protection of cultural, wetlands and fish resources; coordination of construction activities with work planned to improve Dayville Road; and revision of the terminal oil spill contingency plan to reflect any changes in the number and capacity of crude storage tanks and in the number of on-site employees. We anticipate that the mitigation measures identified in BLM’s decision record would be incorporated into permits issued for construction and operation of any new terminal facilities.

To go forward, strategic reconfiguration at the Valdez Marine Terminal will require additional engineering analysis and approval for funding by the oil companies that own Alyeska and the pipeline and terminal assets Alyeska operates. This means a viable business case must be established for the substantial investment required. Preliminary engineering is targeted for completion in 2005 or early 2006. For the projects approved for funding, the remaining detailed engineering effort would be spread out over a longer period of time to allow resources to be devoted to the Pipeline Strategic Reconfiguration Project and to construction and installation work underway at the pump stations. Strategic reconfiguration at the terminal remains an opportunity, but not a certainty. We will do our best to keep the council informed as this project evolves.

• Greg Jones is Senior Vice President, Operations and Maintenance, Alyeska Pipeline Service Co.