In recent weeks, pronouncements about Alaska's oil and gas industry are made daily, often loudly, by people, some of whom appear guided by misplaced passions rather than logic or fact. The truth is, Alaska's oil industry is struggling just like Alaska's economy. Industry companies are collectively cutting back, laying off hundreds of hardworking Alaskans, and halting some operations due to frighteningly low oil prices and political hurdles. A truth remains: The long-term health of Alaska's oil and gas industry is as connected and vital as ever to the health of our state. Another truth is that the trans-Alaska oil pipeline system throughput matters a lot.
Oil throughput is a lifeblood of Alaska's economy, North Slope production is a beating heart and TAPS is an 800-mile-long artery. Alaska's oil is transported, as it has been for nearly 40 years, from Prudhoe Bay to Valdez via TAPS by Alyeska Pipeline Service Company employees and TAPS contractors.
The TAPS workforce of 2,500 men and women operates TAPS more safely, more reliably and more efficiently than ever. Nearly 95 percent of Alyeska employees live in Alaska and carry a deep satisfaction knowing that their work is essential to their state and communities. They have a passion for their fellow pipeline workers and TAPS. We call it "TAPS pride" and it is felt in good and tough times.
The industry employs thousands of Alaskans across the state -- engineers and surveyors, pipeline technicians, welders and laborers, accountants and safety and environmental professionals. They are mothers and fathers of families that bolster Alaska's retail industry, schools and nonprofit agencies. They are coaches and consumers, volunteers and neighbors.
TAPS throughput matters to Alaska's residents, economy and communities. It matters to those working in the industry. And it matters to the TAPS infrastructure and the science of operating a pipeline that travels through some of the world's most spectacular and challenging landscapes.
Last week, Alaska's oil and gas industry received positive news. The state of Alaska Department of Revenue data showed that yearlong North Slope oil production had increased for the first time since 2002 and for only the second time since 1991. From April 1, 2015, to March 31, 2016, the daily production average rose .87 percent over the previous 12 months (512,456 barrels per day compared to 508,047). And for fiscal year 2016, the state predicts that production will reach an average of 520,200 barrels daily, up from 500,700 barrels in fiscal year 2015.
Throughput is vital to TAPS sustainability. People often say that TAPS is only a quarter-full, down from its peak of 2.03 million barrels in 1988. This is not technically accurate since the pipeline is always "full" of oil. Lower throughput means that the oil moves in the pipe more slowly and in winter at lower temperatures.
Colder, slower moving oil amplifies the risk of increased wax buildup and ice inside the pipeline. That is a reality of current throughput and a battle that TAPS employees face every winter. If TAPS operations shut down in winter, cold oil will make it difficult to restart the system and Alaska's economy and the families that ultimately depend on that economy would take a substantial hit.
Current state oil production forecasts end in 2025, when predicted daily TAPS throughput will drop to around 300,000 barrels. TAPS faces a significant operational obstacle at that throughput level. Despite some of the best and most innovative people in the industry focused on this scenario, an operational solution has not yet been identified to sustain TAPS operations below 300,000 barrels per day.
Much like how the recent production numbers beat previous forecasts, political and public support can help Alaska's oil and gas industry continue an increased throughput trend. There are still billions of barrels of oil on the North Slope ready to be developed by large and small companies. Fiscal policy that better supports the industry and its exploration and production work will increase throughput in TAPS and yield economic benefits for Alaska and the people who live here.
Adm. Tom Barrett, U.S. Coast Guard (ret.) is the president of Alyeska Pipeline Service Company. He previously served as deputy secretary of the U.S. Department of Transportation and as the first administrator of the U.S. Pipeline and Hazardous Materials Safety Administration. Prior to that, he served 35 years in the United States Coast Guard, including as vice commandant.
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