40 Years Later, Alyeska Pipeline Faces 21st Century Challenges

October 2017, Vol. 244, No. 10

By Michael Reed, Managing Editor

Since its completion in May 1977, the Alyeska Pipeline, which crosses three mountain ranges along with 34 rivers and streams, has transported over 17 billion barrels of crude oil from Prudhoe Bay en route to the Valdez Marine terminal.

Now celebrating four decades of existence – a full decade longer than was originally planned for – the massive $8 billion undertaking has rightly been hailed as both a wonder of engineering and construction ingenuity, celebrated for strengthening America’s energy infrastructure while revolutionizing the economy of Alaska.

For those involved in construction of the nearly 800-mile pipeline during the four years that preceded the fanfare accompanying its first flow of oil, the story in many cases proved to be equally as transformational on a personal level. At the time, it was the biggest privately constructed project in history.

“I was a first-generation college kid off on a big adventure with buddies at the time,” said Larry Houle, who made his way north from the campus of Willamette University in Salem, OR after running out of money following his freshman year. “The reality is, I was attending an expensive private school and I was horrified at the prospect of dropping out.”

An economics major, Houle, assisted by a small loan from a professor, drove a  rig north for a Portland-based electrical contractor, while his brother, who had flown in to help him, drove Houle’s car. In Anchorage, Houle sold his possessions and hitchhiked to Fairbanks, camping near the Chena River. He described the scene that met him as “a really rough environment, a boomtown beyond belief. There was a little bit of danger involved.”

Working as a bead grinder out of Pipeliners Union 798, Houle was responsible for grinding out “rat tails” (imperfections) that were left behind by welders. Part of his job, which was among the more physical on the project, entailed carrying a noisy, 30-pound grinder with him along the 48-inch pipe; he attributes his hearing loss to that equipment.

Typical shifts for bead grinders were 9 a.m.-2 p.m., but Houle, who was determined to return to college, talked the superintendent into letting him work  20 straight weeks of 10- to 14-hour days.

While the work could prove grueling, living in a workforce housing camp – which, in addition to having a main mess hall, kitchen, bedroom and recreation area, included a library and movie theater – was not among the hardships, he recalled.

“Food consisted of anything you wanted to eat,” Houle laughingly told P&GJ. “If you wanted two steaks, you got two steaks. There was lots of fruit, and once there was a truck full of watermelons,” though price for the watermelon, $100 apiece, was steep. “It was the sweetest watermelon I ever had. Camp life, overall, was extremely comfortable, and I was in a lot of them.”

Houle and his greatly enhanced bank account returned to Willamette University, where he completed a double-major in economics and political science in 1979. Later, he would receive a master’s degree in construction management from Colorado State University. Today he is director of Business Development at Ukpeagvik Iñupiat Corporation-UIC Alaska, which provides social and economic resources to shareholders and their descendants.

“I can say, without a doubt, without the pipeline all of that [returning to college and his career] would never have happened,” he said. “I wouldn’t want my sons experiencing that life, but it worked out for me.”

Houle was far from alone in seeing opportunity and adventure in what was, at the time, the largest undertaking of its kind the world had ever seen.

Another such individual, who was fairly well know at the time, was former Major League baseball standout, Milwaukee Braves All-Star shortstop Johnny Logan. Playing primarily in the 1950s, his career preceded the era of lucrative contracts that would follow decades later. In need of a job to support his family, a friend advised Logan to head north. North to Alaska, that is.

“I didn’t know anything about oil or pipelining, but I had that desire,” Logan told P&GJ in July 2013. “It excited me, working on a pipeline. Everything every day is adventurous, new, like watching the bears coming by when they smelled the lunches in our cars. Just like playing baseball, but this was no game.”

He worked two years on the pipeline but wasn’t there at its completion. Logan, who died at age 86 shortly after that interview, remained proud of his work on that pipeline and others throughout his life. And, according to his son, Jeff Logan, his father’s income from Alaska was crucial to the family’s well-being.

Alyeska records show the project employed 70,000 workers between 1969 and 1977. That fact helps highlight the enormity of the $8 billion enterprise and suggests how overwhelming the project would have been without painstaking attention to detail.

“From a procurement standpoint, it was the largest project I’d ever worked on,” Sanford Ward, project procurement manager for Bechtel International told P&GJ on the occasion of the Alyeska Pipeline’s 20th anniversary.

“I can remember calling a vendor or possible supplier and giving him an order, and he’d show up the next day saying it was the biggest order he’d ever delivered in his life. The funny thing about that was his order would only be for one camp,” he recalled.

The need for thorough planning and craftsmanship was exemplified by the welders, as time parameters and the extreme conditions the pipe would face left no margin for error.

“Alyeska spared no expense and cut no corners with this pipeline,” said R.J. George, general superintendent of H.C. Price – one of the lead construction contractors – said in that same 1997 article.

“The bending and accuracy of the aboveground pipe had to be perfect. With the changes in temperature, the pipe had a tendency to move sideways. And, because of the extreme weather conditions, the expansion and construction of the pipe made things difficult when it came to laying it on the VSMs [vertical support members],” he said.

The VSMs were carried by cranes in 40- or 80-foot segments, then lowered into the holes and welded together. Quality-control engineers inspected the welds with X-rays. Many of the 40-foot segments had to be placed atop the supports, welded together and coated in concrete.

The extreme conditions extended to all of the equipment. With temperatures reaching the -80 degrees F range, pumps burned out regularly because the equipment ran around the clock during the severe winter months. Drilling holes to install VSMs, in large part, was further complicated because the terrains were unfamiliar to most of the workers.

“When the temperatures were down around 5 degrees or below, that was the best time to work because everything was frozen solid,” added Bob Walker, then-assistant project manager for H.C. Price. “Spring was by far the most difficult time of the year because everything started to thaw.”

Some History

In March 1968, the largest oil strike in U.S. history occurred when an Atlantic Richfield drilling crew hit pay dirt beneath Prudhoe Bay. Due to delays, including environmental concerns, it wasn’t until March 1975 that construction of the originally named Trans-Alaska Pipeline System (TAPS) got underway. Construction was completed in May 1977, with the first oil sent to its destination.

It was fortuitous timing. Oil production was peaking in the lower 48 states by 1970, and three years later the Arab oil embargo created a national energy crisis when OPEC quadrupled the price of oil. For years after its completion, the Alaska pipeline transported about 2 million bpd to the lower 48, helped restore market balance, and provided a lifeline to the national economy.

In planning for construction, engineers faced a myriad of difficulties that went well beyond the enormity of the project. Chief among the concerns: the fact that it was estimated as much as 500 MMbbls of oil would have to be recovered to make a North Slope oil field commercially viable.

Obviously, the extreme cold and isolated landscape had to be considered, too, as did the fact that this would be the first mega-project to deal with permafrost, requiring that special construction techniques be designed and used for the first time. Eventually, it was determined that only 380 miles of the pipeline would need to be buried underground; the remaining 420 would be aboveground.

“They had to come up with a different solution; it took a patent and a brilliant engineering design,” Admiral Tom Barrett USCG (ret.) president of Alyeska Pipeline Service Company, told P&GJ. “Fundamentally, without the innovations to manage the permafrost and the seismic issues, you could not have built this line safely in the earthquake or permafrost areas. They had to come up with a different solution, and they did.”

Barrett turned out to be the perfect choice in 2011 to lead Alyeska, having serving much of his 35-year Coast Guard career in Alaska. He was also very knowledgeable about pipeline integrity, having been deputy secretary of the U.S. Department of Transportation and the first administrator for the federal Pipeline and Hazardous Materials Safety Administration (PHMSA).

Over the course of its 40-year run, the historic pipeline has experienced a number of ups and downs. Chief among these in recent years has been its flow rate, topping out at  2.1 MMbpd in 1988, when 11 pump stations were used, but falling to 518,000 bpd and four pump stations by 2016. (The 2016 number actually represented the first increase since 2002.)

As a result of the decline, it is sometimes said the pipeline has been three-quarters empty in recent years. In truth, that is inaccurate – the pipe itself is always full. However, due to reduced production in the region, it now takes longer for the oil to arrive at its destination.

Therein lies one of the greatest challenges facing contemporary engineers: Oil that used to traverse the pipeline in four days now takes more than two weeks to arrive, lessening the heat it generates en route. The oil, which already has been heated at Pump Station 1, becomes more difficult to handle at lower temperatures, allowing waxes to build up and water that is trapped in the unrefined crude to begin freezing.

“There are a lot of ideas out there, and we are looking out beyond five years,” Barrett said. “If the throughput continues to decline, then we consider what we can do to continue to operate technically, not only from an engineering and safety perspective, but also economically.”

Cleaning pigs are sent through the line more often – about every four days – and the company has intensified its research into containing and preventing wax-related problems.

From an engineering standpoint, Barrett said his team is “pretty confident” the pipeline can remain operational at the 300,000-bpd level, possibly even at the 200,000-bpd and 100,000-bpd levels, though the line is certainly not designed for that. It’s the economics, though, that creates the greatest cause for concern.

“The price issue will be tougher. It won’t matter if we can engineer our way down to 100,000 bpd if the cost per barrel is off the scale in terms of investment up here,” Barrett said. “The easiest, most direct solution to keep this line going is adding more production, more oil. There is an enormous amount of resources on the slope, but markets are certainly more competitive, so it’s tougher.”

Those resources include existing wells worked by BP (48.4% owner of Alyeska), ConocoPhillips (29% owner) and ExxonMobil (21% owner) with adapted injection techniques similar to those used by shale frackers. There have also been some exciting discoveries in recent months:

  • Repsol SA discovered a North Slope play the company estimated at 1.2 Bbbls, with a potential to produce 120,000 bpd.
  • At its new field in the National Petroleum Reserve-Alaska, ConocoPhillips discovered at least 300 MMbbls of recoverable oil with the potential to produce 100,000 bpd, according to company executives.
  • Caelus Energy predicted its Smith Bay leases might contain 2.4 Bbbls of recoverable oil, though that number has not been independently verified.

Separately, the Interior Department recently granted conditional approval for Italian oil company Eni SpA to develop its offshore unit in the Beaufort Sea. Still, there is the cost factor and the competition from the Lower 48.

“You didn’t have the Permian Basin competing against us 20 years ago,” Barrett said. “If the production is not there, it is going to be very challenging to keep this great asset. We have a fabulous asset in place – an asset you don’t have to build.”

As far as the physical structure of the pipeline – designed to last 20 years to a maximum of 30 –  there are also challenges. As with any aging system, there is a huge amount of industrial steel to maintain.

“Fundamentally, we figure if we amp up the quality of our inspections, we will ultimately have a safer, more reliable line,” Barrett said. “I’m pushing hard with the Federal Aviation Administration to let us use more unmanned aerial vehicles (UAVs) [beyond the line of sight]. We’re using them now, and have just used UAVs to inspect Pump Station 1.”

While overseeing the Alyeska Pipeline’s physical well-being is a massive task that Barrett readily described as a “constant maintenance and renewal issue,” he still expressed full confidence in his staff, particularly its “brilliant, talented engineers.” In the final analysis, he believes his team can keep the infrastructure operating for another 40 years.

“One of the challenges is that it’s a very big system, and if you are not moving a million-and-a-half barrels a day, then the cost per barrel of moving the throughput causes operational complications,” he said.

Describing himself as an optimist, Barrett added, “When people are challenged and you step up and overcome these challenges, you build a camaraderie and team spirit that makes it feel special. That’s because it was hard and you did something hard that’s lasting. There’s a lot of job satisfaction.”

And, in the case of the Alyeska Pipeline and its four-decade odyssey, that feeling of kinship has extended well beyond those 800 employees now working for the company or living in Alaska.

Barrett recalled an event in Fairbanks where a woman reached up to touch the pipeline, then pulled back and asked him if it was all right to do so. After being assured that it was, she said her father had worked on the pipeline and his job had been so much “the fabric of our kitchen conversation” that she wanted her grandsons to see it and touch it.

“We call it TAPS pride,” Barrett said. “Us being successful matters to everybody in the state. We transformed the economy of this state and 95% of our employees are Alaska residents. The feeling is, ‘What I do matters to my neighbors and the community’.”

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