Terminal Operations

As part of the right-of-way renewal of the grant and lease for the Trans-Alaska Pipeline System (TAPS), the Reliability Centered Maintenance (RCM) paradigm was used as the basis for assuring a thirty-year remaining lifetime for TAPS. Without a strong maintenance program for all of its assets, there can be no guarantee that the life of the assets will be 30 years or in accord with the assumptions underpinning the decision to renew the grant and lease for another thirty years. In 2004, The Joint Pipeline Office (JPO) found that Alyeska had deferred considerable amounts of maintenance that were required by regulations perhaps in anticipation of replacing assets in accordance with Alyeska’s Strategic Reconfiguration. Now that the Strategic Reconfiguration for the VMT is essentially dead, it is important that all maintenance deferred pending a successful Strategic Reconfiguration be completed according to the schedule required by regulation.

This project seeks to verify that the maintenance required of each facility and subsystem at the VMT of concern to PWSRCAC has been identified by means of an RCM process. Additionally, this project seeks to verify that maintenance of VMT facilities is being accomplished in accordance with the dictates of the RCM reports produced for each of the VMT’s facilities and subsystems.

Reports:

Because better seismic engineering is now available for asset protection and because the 1964 earthquake is now believed to have been more severe than originally thought, the council is concerned that the seismic protection of Valdez Marine Terminal (VMT) assets may not be adequate for an earthquake of the size that occurred in 1964.

Specific concerns are the stability of containment dikes around the various types of storage tanks, slope stability, stability of earth and rock support under storage tanks, and the structural integrity of all oil handling components of the VMT, especially those weakened by corrosion.

Project Objectives

• identify extent to which VMT may not satisfy current seismic engineering standards
• examine seismic re-engineering issues at the VMT
• recommend feasible seismic re-engineering activities for the VMT
• identify current risks of significant oil spills due to large earthquakes at or near the VMT
• coordinate with other seismic studies being conducted in Alaska
• identify if degradation of physical plant has lessened its capability to withstand earthquakes

The Joint Pipeline Office (JPO) has indicated to Alyeska that the seismic standards to which Alyeska structures and facilities must conform are those described in IBC 2003 (International Building Code -2003). It is expected that those facilities and structures not presently conforming may be fully or partially grandfathered to older standards.

Seismic Reengineering VMT (3.2 MB)

Earthquake, Landslide and Tsunami Hazards in the Port Valdez area, Alaska (2.8 MB)

Rock Slope Stability VMT (1.7 MB)

The Trans-Alaska Pipeline System (TAPS) was constructed through the central portion of Alaska on right-of-way lands granted by federal, state, and private landowners. There is a Dismantling, Removal, and Restoration (DR&R) obligation originating in the pipeline right-of-way grant and lease agreements with the state and federal governments. PWSRCAC had concerns about the TAPS DR&R fund.

DR&R stipulations specify that upon completion of the use of TAPS that the land is restored to a satisfactory condition and that equipment is removed. All facilities at the Valdez Marine Terminal are included in DR&R for the pipeline.

Although various documents specify the DR&R requirements and mandate that the funds will be available for this intended purpose, they are silent on the management of DR&R collections. Instead, government officials rely on the assumption that the legal obligations of the right-of-way grant and lease are sufficient to compel the TAPS owners to perform DR&R when required and that the guaranty requirements of the right-of-way grant and lease would assure availability of sufficient funds from the owners at that time.

Because it is possible for ownership interests to change, PWSRCAC and the public require assurance that funds and other resources set aside for DR&R purposes by one owner will be transferred to any new owner, that sufficient funds and resources are being set aside by the current owners, and that these resources will be available and sufficient for DR&R purposes at the end of the useful life of TAPS. DR&R obligations are often disputed by the various responsible parties because meeting such obligations will require the expenditure of significant financial resources by both the pipeline owners and operators.

The Regulatory Commission of Alaska requested public comment on the need for regulations governing the accounting treatment of DR&R under AS 42.06 for oil and natural gas pipelines subject to their jurisdiction.

PWSRCAC’s recommendations to the Regulatory Commission of Alaska include implementation of the following broad policy recommendations regarding management of the DR&R fund:

1. Petroleum pipeline owners should be required to establish external trust accounts for the receipt of all past and future petroleum pipeline DR&R collections necessary to accomplish their intended purposes.
2. Regulations should be developed to ensure that DR&R funds collected in the future are sufficient and will be employed in a timely manner for their intended purpose.
3. Because uncertainties inherent in the long-range forecasting make it difficult, if not impossible, to forecast the amounts necessary for DR&R in the distant future, all petroleum pipeline DR&R collection schedules should be reviewed and updated periodically to ensure that collection levels are appropriate to their particular task.
4. Regulations governing DR&R should be crafted with careful attention to the distinction between independent (stand-alone) and producer-owner pipelines in order to identify the differential results and reduce unanticipated benefits to the latter that may reward them for delay of DR&R outlays, to the detriment of both environmental and broader public policy interests.
5. In light of the complexity of the issues, the diversity of agencies involved and the broad and important environmental and public policy interests in the DR&R transaction, maximum transparency and the involvement of the responsible government agencies and public interest organizations are essential to constructive resolution of DR&R issues.

Trans-Alaska Pipeline System Dismantling, Removal and Restoration (DR&R): Background Report and Recommendations | June 24, 2004 | File size: 0.3 MB | Author: Richard A. Fineberg/Research Associates