The Observer, September 2005

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Alyeska Viewpoint: Terminal overhaul will focus on incremental change

by Rod Hanson

For several citizens’ council meetings in a row, beginning in Seldovia in September 2003, Alyeska representatives have provided updates on the engineering studies to simplify facilities, operations and support functions at the Valdez Marine Terminal. As Observer readers may recall, we have referred to that project effort as VMT strategic reconfiguration.

The strategic reconfiguration project examined possible modifications to the terminal to accommodate changes in production and throughput as well as the opportunities to utilize newer technologies to greatly simplify our facilities and systems. These are the same business drivers that have formed the basis for the pipeline strategic reconfiguration project. Our company discussions largely focused on the potential to install internal floating roofs in the crude oil storage tanks, changes in our methods for generating power and managing tanker vapors, and replacement of the current pumped saltwater firefighting system with a gravity-fed freshwater system. Throughout the period of our discussion of strategic reconfiguration with the council, we have sought to emphasize that strategic reconfiguration remained an opportunity for Alyeska, but not a certainty. To go forward, strategic reconfiguration was going to require additional detailed engineering and economic analysis, and approval for funding from the owner companies of the Trans-Alaska Pipeline System.

Earlier this summer our plans changed, and we shared this news with various stakeholders, including representatives of the council. The owner companies agreed with our recommendation not to proceed at this time with the major capital investments associated with some of the principal terminal reconfiguration concepts, such as internal floating roofs in the crude tanks, new power generation, marine vapor combustors, and isolation and shutdown of the existing power vapor facility.   

Engineering study will continue on other elements of strategic reconfiguration. Our owner companies did agree with a plan to proceed with engineering and likely conversion to a freshwater system for firefighting (which currently relies on pumping salt water from Port Valdez).  The plan is to complete some more exploratory geotechnical work this year, continue with final design in 2006, permit applications in late 2006 and following regulatory approvals, construction in 2007. Members of Alyeska’s project team will meet with council staff in early September to provide an update on the fresh water fire system design, and we will continue to keep the council informed on this project as events unfold.

We’re going to evaluate the optimum number of crude oil storage tanks to keep in service. We will also be carrying out some smaller projects at the terminal over the next year or so that will help make our operations there more efficient. Several of these projects will involve consolidation of office facilities now scattered around the terminal to areas on the east side of the terminal and farther away from areas where crude oil is stored or moved above ground. We hope to have more details on terminal facilities consolidation toward year end. In general, reconfiguration in Valdez will mean more incremental changes over time as opposed to a major project effort, as has been the case on the pipeline.

An important new development is the start of an engineering effort to evaluate the future operation of the Ballast Water Treatment facility. We are undertaking this effort to respond to the rapid decline in ballast throughput due to earlier than anticipated retirements of the tankers that require treatment of oily ballast. The present facility was designed with a ballast throughput capacity of 30 million gallons per day. Ballast throughput is ranging around 7 million gallons per day this year, and will further decline to about 1.3 million gallons per day in 2010. We are studying alternatives for design and operation of this facility that will assure that it continues to meet strict EPA discharge standards, operates efficiently and more simply if possible. We are also looking at ways to substantially reduce emissions of benzene and other harmful compounds that have long been an issue of council concern. We plan on making some modifications at the ballast water facility next year that will implement some of the recommendations of the emissions study carried out in 2004, a study that was closely monitored by council staff. As the engineering effort for redesign of the Ballast Water Treatment Facility moves forward, we will keep the council apprised.

We will continue to pursue ways to make operations at the terminal more efficient and more cost effective, while striving for excellence in safety and environmental performance. The purpose of an engineering effort such as the one we’ve engaged in is to evaluate alternatives, test them rigorously, identify the ones that appear to work best, and then make them happen as safely and as cost-effectively as possible. In that process, some project alternatives survive, and some do not. In the case of strategic reconfiguration at the terminal, the scope and some of the project elements have changed from what we first described. Such change is a common outcome for engineering review that has involved the level of effort our staff has devoted to strategic reconfiguration. The need to configure the terminal for safe, reliable movement of Alaskan oil in a context of ongoing economic transformation, strict environmental standards and high public expectations remains unchanging – and will remain a constant challenge.

• Rod Hanson, manager of the Valdez Marine Terminal, has recently been named Alyeska’s Commercial Manager. Tom Stokes has been named to replace Rod as Terminal Manager, and will be introduced in the next issue of the Observer.