President's Message
Kevin Hostler, President and CEO

Delivering oil safely and reliably

There were some questions asked recently about the safety and integrity of Alaska’s oil delivery system. One was about our storage capacity at our Valdez Marine Terminal. We are evaluating the optimum number of storage tanks as we face declining levels of production, while also adjusting our strategy to adapt to fluctuating throughput and changing crude oil characteristics.

TAPS is sized to move two million barrels of oil per day, though we are currently averaging a throughput of less than 900,000 barrels per day. At the height of crude oil production (2.1 million barrels per day) we had 18 storage tanks capable of storing nine million barrels of oil—roughly 4.5 days of storage without any tanker loading. Currently, we are considering operating with 14 storage tanks in the long term. Under current pipeline throughput, this storage capacity would provide almost eight days of storage, even without tanker loading.

Since we started operating with 14 tanks in September 2004 as part of an operational test, we had one production slow down due to weather, and we asked North Slope producers to slow production for approximately 12 hours, resulting in a deferral of about 90,000 barrels. Since then, we have had six inventory spikes above 75 percent and two above 90 percent, though neither resulted in a proration.

Weather is an important factor in transporting oil here in Alaska. It can cause a temporary suspension of loading, tanker transits, or both. During extremely cold weather, a prolonged shutdown of the pipeline system caused by a significant operational event could set the scene for a cold restart. We have planned for a cold restart since TAPS became operational in the mid-’70s. In nearly 30 years of operation, we have never come close to implementing our cold restart plan. This period includes November 2002, when TAPS was down for 66 hours, solely due to a 7.9 magnitude earthquake.

Every day, around the clock, our professional workforce safely and reliably operates the pipeline. We are proud of the way we’ve run our business and are proud to be a part of the delivery system that transports Alaska North Slope crude oil to the West Coast.