ANCHORAGE, AK -- March 7, 1997 -- Alyeska Pipeline Service Company President Bob Malone announced today that the company reorganization has resulted in an Anchorage Corporate Office and two asset-based Business Units located in Fairbanks and Valdez, so that personnel and resources will be closer to the pipeline, Terminal and SERVS base. There will be an increase in work force at those locations. Approximately 970 Alyeska employee and contract positions will be located in the Fairbanks Business Unit and 650 positions in the Valdez Business Unit. Approximately 110 positions will remain in the Anchorage Corporate offices.

"The goal of this redesign is to position ourselves for the future," said Bob Malone, President, CEO, and Chief Operating Officer (COO) of Alyeska Pipeline Service Company. "We're making the organization more efficient, and that means moving our people and our resources closer to the assets that we operate and maintain. This will enhance the safety and environmental protection by increasing the number of people readily available every day. Our Corporate Headquarters remain in Anchorage and we will continue to be an active member of the Anchorage community.

"I see this move as a commitment to the long term success of Alyeska and the oil industry in Alaska. We want to look for ways of extending the life of the pipeline by being a more efficient transportation link for the producers as they explore and develop new oil reserves, and that means having an efficient operation. We are building on our strength as a people-oriented operating company," continued Malone. "Our roots are in Fairbanks and Valdez. That's where we were based when we constructed this pipeline system, and that is where we are returning so the operation has all the resources they need to run the system safely."

The changes represent a decrease in staffing from approximately 2,230 Alyeska employees and contractors to approximately 1,750. The staffing levels take into account pump station ramp-down plans scheduled for the summer of 1997. A Voluntary Separation Program has been offered to employees. An Involuntary Separation Program may be used if needed to meet planned staffing level changes.

The Fairbanks Business Unit will be responsible for the pipeline from Mile Post 0 at Prudhoe Bay to pipeline Mile Post 647, approximately seven miles north of the Gulkana River. The Valdez Business Unit will be responsible for the pipeline from Mile Post 647 to the Valdez Marine Terminal, the Terminal itself and the Ship Escort Response Vessel System functions through Prince William Sound to Hinchinbrook Entrance.

Mr. Malone will act as President, Chief Executive Officer and Chief Operations Officer. As previously announced, Lee Jones was named Sr. Vice President of the Fairbanks Business Unit and Bill Newbold was named Sr. Vice President of the Valdez Business Unit. Patty Ptacek will continue in her current role as the Vice President of Human Resources.

Rob Shoaf has been named Vice President of Corporate Services in Anchorage. In this role, he will be responsible for Law, Corporate Communications, Safety, Medical Services, Environment and Security. He has previously held positions at Alyeska as Assistant General Counsel, Manager of Government Relations and most recently as the Northern Business Unit Leader. Mr. Shoaf has been with Alyeska for 15 years.

The position of Vice President of Strategic Planning and Control has not yet been permanently filled.

The new design of the Business Units is based on previous employee recommendations and on over 70 individual and group interviews conducted by the Business Design Team over the last 5 weeks.

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