Alaska OKs Pipeline Competition and Creates New Pipeline Oversight Office

By Anonymous

In mid-May, the Alaska legislature approved Governor Sarah Palin’s plan to solicit competing bids for construction and operation of a North Slope natural gas pipeline. Applications to build the pipeline are expected to be issued on July 1 and are due on October 1 . Governor Palin will pick a proposal by January and then offer it for legislative approval. The route and scope of the line will be up to the bidders.

The three most likely scenarios are a line that would run all the way to Chicago, a line to Alberta or one that stays in-state and would bring gas to the southern Alaska port at Valdez, where liquefied natural gas tankers would be loaded.

But the big three gas producers in Alaska won’t be making bids. BP, ConocoPhillips and ExxonMobil have complained the bill’s requirements are too specific and onerous.

Ms. Palin rejected the companies’ idea of negotiating directly with the producers for pipeline terms.

Meanwhile, Governor Palin signed an administrative order in late April creating a new state office to oversee the safety of pipelines in the state’s oil and gas fields, In response to pipeline corrosion that caused a partial shutdown of the giant Prudhoe Bay field last summer.

The new Petroleum Systems Integrity Office, which will cost $1.5 million (U.S.) in its first year, will co-ordinate enforcement of pipeline maintenance rules, including new state inspections. Its main purpose is to identify areas where state oversight is lacking, along with areas where oversight may be duplicated.

Although the corrosion and oil spills at Prudhoe Bay occurred within crude oil transit lines, the new regulations for pipelines within the fields were based on the assumption that the smaller flow and gathering lines were at more risk for corrosion, state officials have said.

Ms. Palin’s initiative does not cover the 1,300-kilometre Trans Alaska Pipeline System. Oversight of that huge oil artery is already co-ordinated by the federal-state Joint Pipeline Office.

Although the corrosion and oil spills at Prudhoe Bay occurred within crude oil transit lines, the new regulations for pipelines within the fields were based on the assumption that the smaller flow and gathering lines were at more risk for corrosion.

Copyright Northern Star Communications Ltd. May/Jun 2007

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