Legislature(1993 - 1994)
02/14/1994 05:00 PM House O&G
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SPECIAL HOUSE COMMITTEE ON OIL AND GAS
JOINT PIPELINE BRIEFING
HCR-12
FEBRUARY 14, 1994
PROCEEDINGS
FEBRUARY 14, 1994
(Tape 94-6 - Side 1)
CHAIRMAN GREEN: I call the Special House
Committee on Oil and Gas Matters together at five minutes
after five. We are on teleconference with Anchorage and
Fairbanks.
Can you hear us in Anchorage?
ANCHORAGE LIO: Anchorage hears you just fine.
Fairbanks has not joined the conference as yet.
CHAIRMAN GREEN: Is there anybody in Anchorage
that will be wanting to testify?
ANCHORAGE LIO: Mr. Ottesen is here to answer
questions. He is from the Department of Transportation.
CHAIRMAN GREEN: Okay. He just wants to answer
questions, rather than testify?
ANCHORAGE LIO: If you have any of them.
CHAIRMAN GREEN: Okay. Thank you.
Well, we are going to take up House Concurrent
Resolution 12, natural gas as a fuel for motor vehicles
first, and then we will be fortunate to actually get an
overview from the Joint Pipeline Coordinator's Office to
discuss the overview, oversight of the Alyeska Pipeline.
So first we are going to have the -- is there
someone here -- okay. If you would like to come up and give
us a run through. Please identify yourself for the record,
David, and we will be off on House Concurrent Resolution 12.
REPRESENTATIVE FINKELSTEIN: Thank you, Mr.
Chairman, members of the committee. My name is David
Finkelstein.
Where we left off last year was, we discussed the
resolution. The department and others had a number of
suggestions. So the CS that is before you, has a couple
added from that hearing that members of the committee showed
an interest in.
One of them was, "Whereas natural gas could
benefit the commercial motor carriage through the
availability of reliable inexpensive fuel, meet the pending
low sulphur requirements of the Clean Air Act, and whereas
natural gas has improved and performed the arctic conditions
of Alaska, having been in use in the North Slope Borough for
more than ten years on a year round basis. And then there
is some other changes made that were comments from committee
members, and exactly who the copies of the resolution were
sent to, which is getting to be quite a list.
Other than that, the situation is basically the
same. I did attend some of the meetings that the state
sponsored during the interim on their cooperative approach
in trying to advance natural gases as a fuel in vehicles. I
think there is a lot of optimism. I just passed out an
article from February 7 in the Anchorage Daily News on the
same subject. And other than that, I would be glad to
answer any questions.
CHAIRMAN GREEN: Are there any questions from any
of the committee members, for Representative Finkelstein?
(No audible response.)
Do -- are there currently places that people can
get natural gas, if they had the conversion, in Alaska.
REPRESENTATIVE FINKELSTEIN: There are some. In
Anchorage there is basically a fast fueling spot and a slow
fuel spot out. The conclusion of the working group to date,
from the meetings I attended, and the minutes I've read, is
that is the bottle neck of the system at this point, that --
of private fleets, especially, are not about to convert
until they have some minimum level which, I think, the
Department, the state views as about four -- four to five in
Anchorage, so that it is reasonably convenient.
There are other communities, though, that can
operate off of just one fueling spot for the town. It's
just the nature of Anchorage, that is relatively inefficient
to travel beyond that to get to the fueling spot.
The view of those who might be in the business of
selling natural gas is -- it's hard for them to make the
commitment without any sense that the Department is going to
follow through, as well as the municipality, private fleets,
and the federal government are going to follow through, that
there really will be a market out there, if they make the
expenditure.
But in all levels that is happening, there is
still strong support within the municipality of Anchorage,
at least for that one city. And on the federal level,
Clinton has recently imposed to a higher level of
expectation for natural gas vehicles in the federal fleet.
And from my understanding, in talking to the Department of
Transportation people, the private fleet managers seem to be
as interested as ever.
So I've got faith that -- and I've been fairly
impressed with the efforts the department has made in trying
to work cooperatively with industry, and sort of move
together, so that by the time these refueling stations might
be put in, there really will be enough demand out there.
CHAIRMAN GREEN: Is there a preferred -- is it,
like, a cryogenic compartment that this gas would go into
and be stored as a compressed gas, or would it be liquified,
or...
REPRESENTATIVE FINKELSTEIN: I think all --
someone from the department could add to this, once I'm
finished. But I don't think they have operated any
liquified stations. There is a bit more technology involved
there. I think, generally, they unloaded, and they have the
transfer station, and from then on out, the distribution
system is just compressed gas. But, they can correct me if
I'm wrong.
CHAIRMAN GREEN: How does it compare economic
wise, if you had the conversion? Say, your vehicle was
ready to run on natural gas?
REPRESENTATIVE FINKELSTEIN: The range of figures
that I've seen, and, again, the department's experience is
much more relevant here -- but the range of figures that
I've seen is anywhere from 40 percent of the cost, up to 80
or 90 percent. That it's always lower per BTU, and lower --
I think BTU is the term used, rather than "thermal unit."
And, usually, 50 to 60 percent of the figures that I hear.
It is very efficient, and it can be argued -- if
you have refueling available, it can be argued it's worth
the investment for even each of us right now. It's just the
refueling station issue, that's, you know, created the
problem.
It has a variety of other benefits on the engine
as well. It's a more clean burning fuel. It doesn't have
the tendency to build up deposits.
CHAIRMAN GREEN: Do you suppose it would ever be
clean enough that you wouldn't have to have a certificate
inspection, if you had a gas car?
REPRESENTATIVE FINKELSTEIN: Well, those are a lot
after carbon monoxide. I don't know how we deal with the
particular exemption program, but I don't think you get the
variation you get in traditional gasoline powered engines,
where it's dependant on a complex technology to reduce the
emissions.
It's, you know, inherent in the engines, so even
the -- a more poorly tuned engine isn't going to be off to
the extreme. But all these things, you should ask, again,
the department, if they have any thoughts beyond mine,
because I would not pretend to be an automotive expert. I
can barely keep my car running.
CHAIRMAN GREEN: Anybody else have any questions
for Representative Finkelstein?
(No audible response.)
Any questions from Anchorage?
JEFF OTTESEN (VIA ANCHORAGE): Mr. Chairman?
CHAIRMAN GREEN: Yes, sir.
JEFF OTTESEN (VIA ANCHORAGE): This is Jeff Ottesen.
I'm with the Department of Transportation, and have been, I
guess, spearheading, more or less, the -- our conversion of
our fleet -- partial conversion to natural gas for the last
few years.
It is interesting that your meeting is today. I
spent the last three days riding one of our first new CNG
vehicles here in Anchorage around. I drove a CNG vehicle to
this meeting in the last 15 minutes. And I could tell you
that they operate every bit as well as a gasoline vehicle;
you can't tell the difference.
To answer a couple of questions that were raised.
The exemption for I & M. If your vehicle is a dedicated CNG
vehicle, that is, it only can burn CNG, yes, it can be
exempt. If it's a dual fuel vehicle, which is probably the
most practical choice, that is a vehicle that can burn
either gasoline or CNG -- it's a switch -- then it has to
maintain the I & M, because of the gasoline that is present
there.
As far as the LNG versus CNG, that's really the
same chemical fuel source, it's only a matter of how it is
stored. Either being delivered to the refueler, or,
ultimately, to the vehicle.
LNG is simply natural gas that has been liquified.
It can (indiscernible) many temperatures.
CNG is simply natural gas that has been compressed
to very high pressures, but it's not being stored at
cryogenic temperatures.
There are advantage to the LNG that we have
available there at Kenai, that's a very economical method of
transporting natural gas. It can be put in a truck like
gasoline. It can be carried to the refueling location,
beyond the range of the current pipelines. To places like
Fairbanks. Stored there at refueler, and then loaded into
automobiles or heavy trucks, for ultimate use by the
vehicle.
So I think Representative Finkelstein is right.
The problem now is the refueling infrastructure. There is a
lot of interest in fleet owners here in Anchorage, from what
I hear, in getting into the business of having CNG. They
have no place to buy the gas right now.
CHAIRMAN GREEN: Would it be a fair assumption,
then, that the -- if you were going to a cryogenic system,
that you would have a greater range than you would under
compression?
JEFF OTTESEN (VIA ANCHORAGE): That is correct.
If you go to cryogenic as your source on board, that is
beginning to show up more and more in the commercial side of
the industry. That is the -- I know the bus system in
Seattle has just opted to go to LNG, because they get
greater range than tanks. Likewise, the long over-the-road
carriers now, around the country, are converting to natural
gas.
But once the gas is being used by the engine
itself, it's the same gas as if it were stored in the
compressed form. The LNG is just a more dense form of
storage.
CHAIRMAN GREEN: And I guess my last questions --
I don't want to monopolize the questions. But how would,
say, either a compressed gas, or a liquified gas, be safety
wise, as compared to conventional gasoline?
JEFF OTTESEN (VIA ANCHORAGE): Well, I'm not an
expert, but I've listened to a lot of experts talk. And my
own skepticism, I think, has come full circle -- or, I
should say, half circle. I have come from being a skeptic
of safety, and now believing that natural gas is probably
safer. And I will give you a few reasons why.
One, the tanks, themselves, are much more durable,
much stronger than a conventional gasoline tank. They are
capable of withstanding a high velocity of rifle rounds.
They are capable of being dropped off a six-story building,
and surviving in tact. So just their durability, as
compared to sheet metal, which is how gasoline is stored, is
much better.
Secondly, the fuel has a lower range of ignition.
The range that it will ignite, the amount of gasoline versus
the atmospheric conditions, has a much narrower band of
accountability than gasoline.
And then, finally, the gas, if it does have a
spill, you do have a break in storage, it's lighter than
air. It quickly dissipates and blows away. Where,
gasoline, being heavier than air, pools and settles down.
But for all those reasons, it's really a safer
fuel.
CHAIRMAN GREEN: Thank you, Jeff.
Any questions from anyone in the audience?
(No audible response.)
What we need to do, I think, is first adopt the
substitute as the bill. I would entertain a motion to that
effect.
REPRESENTATIVE KOTT: Well, Mr. Chairman, I wonder
if I might be able to ask Jeff a question.
CHAIRMAN GREEN: Sure.
REPRESENTATIVE KOTT: It seems to be in order at
this particular point in time.
Jeff, Representative Kott here. I just have a
question for you regarding the number of natural gas
vehicles that are currently in operation in the state of
Alaska. Do you have any estimate as to how many those are?
JEFF OTTESEN (VIA ANCHORAGE): I don't have a hard
estimate. I think, from what I've heard at the various
conferences we've held, I think it's well over 100 now, and
growing. The state fleet here is just in the process of
adding six to its inventory. That will be our first six.
We have a variety of vehicle types, as well as some that are
dedicated natural gas. That is, that is the only fuel. We
also have a Ford Taurus that is a bi-fuel. Some are off the
factory assembly line conversions, and some are being
converted -- after-market conversions. That is, the state
has done it itself.
So we even have these vehicles available for
people that are visiting Anchorage, and need to use a state
car for a day or three. They could be made available. Give
me a call there in Juneau, and I could put you in touch with
people that could schedule that car.
REPRESENTATIVE KOTT: I would be more than happy
to oblige you in using one of those vehicles, as long as I
don't have to report it on my ethics report.
Those numbers that you cited, over 100, are those
state owned vehicles, or is that a combination of public and
private?
JEFF OTTESEN (VIA ANCHORAGE): I believe that's
public and private. There are people that own these
vehicles as individual citizens. There are various
businesses that are using them now. There is a new
coalition of public and private fleet managers here in
Anchorage that are just this week, I believe, going to sign
their resolution as -- basically, their bylaws, and that
includes one of the Anchorage taxi cab fleets, the
municipality and state fleet, and other fleet owners,
basically getting together and trying to work -- get a
teamwork environment to make this happen.
In the three or four days here in town that I've
had a vehicle, driving around, and I have been stopped three
times with people wanting to know what this car is all
about, and how does it drive. Does it work? There's a lot
of difference.
REPRESENTATIVE KOTT: Thank you for your comments.
CHAIRMAN GREEN: Jeff, I have another comment.
This is Representative Green.
How does the maintenance compare on a natural gas
engine to a gasoline engine?
JEFF OTTESEN (VIA ANCHORAGE): We held a
conference a year ago December, where we brought fleet
managers from around the country here to talk about that,
and they all reported the same thing. The engines simply
burn cleaner on natural gas. It doesn't put the
contaminates into the oil. It doesn't foul the spark plugs.
You don't get the (indiscernible) on valves, and that sort
of thing, in the engine, or the rings. they'll last a long
time.
CHAIRMAN GREEN: Thank you.
Any other questions?
(No audible response.)
Okay. I would entertain a motion to adopt the
committee substitute.
REPRESENTATIVE KOTT: So moved.
CHAIRMAN GREEN: It's been so moved by
Representative Kott. Any objections?
(No audible response.)
So ordered.
I would now entertain a motion...
UNIDENTIFIED MALE: Mr. Chairman, do we have
anybody from the oil and gas industry in the audience that
can give us an estimation as to how many natural gas
vehicles are currently in operation on the North Slope
Borough, since they've been up there for about 10 years or
so? Any idea?
CHAIRMAN GREEN: I don't know whether industry --
I see, we have a member, Department of Environmental
Conservation.
Do you happen to know, or have a feel for -- I
guess what you're really after, is just kind of an
approximation.
UNIDENTIFIED SPEAKER: Yes.
MEAD TREADWELL: Mr. Chairman, Mead Treadwell,
Deputy Commission, ADEC.
As I understand it, the firm NORGAS, which is one
of the people you are directing this to, has been operating
its truck fleet on the North Slope. I don't know how many
it is, but it's not a large fleet. My guess is five to 10
vehicles at this point. There has been -- there is also a
source of natural gas, as you know, that's not connected to
Prudhoe Bay, that operates in Barrow. And we had at the
conference last year, a representative of the North Slope
Borough, and I believe they had, with that gas utility,
maybe three to five vehicles, as well.
They actually -- it was kind of an interesting
situation there, because the price of gasoline was far more
expensive than the price of natural gas, and you would think
that many more vehicles would have converted. But the
explanation given at the conference was that the owners --
the people who sold gasoline had a major choice in the
decision of what kind of cars were purchased, and that's why
they stuck with gasoline.
But the utility that controlled its own vehicles,
has been running on natural gas for some time, and that's
the gas utility fleet there. So the two North Slope gas
utilities have it.
Mr. Chairman, I had raised my hand when you were
asking for questions, and if Jeff is still on the line, I --
perhaps a colloquy between the two departments.
Jeff had asked me the other day what additional
incentives DEC might be able to come up with to help on
this. And as you may be aware, our state implementation
plan for clean air is in the Department of Law right now for
review. It's a 3,000 page document. It's probably the
weightiest set of regulations ever contemplated, much less,
had anything to do with developing. But that's what we were
required to do, and that's about one-eighth the size of
Oregon's 20,000 page submission on the Clean Air Act.
But anyway, that is in the Department of Law right
now for review, and as soon as that is adopted, we have the
authority to trigger a mechanism that would allow the
Department of Transportation to use some of its so-called
CMAC funds to help buy a gas refueling station. And if we
do that, I know that -- Jeff, you might want to explain the
public-private partnership that you have in mind that could
help get some greater refueling facilities in the
marketplace.
JEFF OTTESEN (VIA ANCHORAGE): Would that be
appropriate?
CHAIRMAN GREEN: Yes, please go ahead.
CHAIRMAN GREEN: The notion is, we could give some
of our -- some of our highway funds are dedicated to a
purpose called CMAC, or Conjunction Mitigation/Air Quality.
How we use that money is controlled by the state
implementation plan that Mead just talked about. He needs
to adjust this plan to make our spending, in this fashion,
legitimate. What then happens -- what we are hoping to
envision would be, some form of a joint public-private
partnership allowing one or more stations to go in the
Anchorage area, that would be available to both public
fleets and to private fleets.
I think, just in kind of a broad brush thinking
proposal, or strong (indiscernible) proposal, we're
imagining an RFP, which would basically say, we have this
much money available to install the system. We are looking
for a private partner to come in, make that installation,
operate it and maintain it, and to sell the natural gas
automotive fuel back to the state's fleet, on a long term
basis, at a discounted cost. So that we would recoup that
investment.
At the same time, those (indiscernible) system
would be available to any other user that would care to come
in and get refueled.
CHAIRMAN GREEN: Thank you. Thank you, Mead, and
thank you, Jeff.
Representative Kott?
REPRESENTATIVE KOTT: Thank you, Mr. Chairman. I
would just call your attention to page 2, line 8, where it
talks about the number of natural gas vehicles currently in
operation within Alaska. And per the testimony of Jeff, I
think we can probably make this -- tighten it up a little
more, and make it a little more palatable to those who would
not seemingly think it's a good idea, by, perhaps, offering
a friendly amendment, making that number 50 to 100. Since
we do have over 600,000 registered vehicles in the state, I
think it would add a little more thrust to the proposal.
I'm certainly not wanting to hold this up in this
committee, because it does have two additional committees,
plus finance, which it probably ought to be away from, but
-- I think it would give it a little more teeth in the
matter, if we substantiated the number to a higher number.
CHAIRMAN GREEN: Do you feel comfortable with
that, David, that -- is that still a number that you can
live with?
REPRESENTATIVE FINKELSTEIN: Actually, Jeff's view
is more important. If Jeff thinks it is correct, then
that's more correct. I just...
REPRESENTATIVE KOTT: I'd offer that as a friendly
amendment, then.
THE COURT: And the sponsor has no problem with
that?
(No audible response.)
Anybody else have any comment on that?
(No audible response.)
You're offering that as an amendment?
(No audible response.)
Okay. That will then read, over 100 natural gas
vehicles.
REPRESENTATIVE OLBERG: Should we ask for
unanimous consent?
CHAIRMAN GREEN: Beg your pardon?
REPRESENTATIVE KOTT: And I would ask unanimous
consent of this amendment, with no objection. Don't think
about it too long.
CHAIRMAN GREEN: Any objection to that change?
REPRESENTATIVE GARY DAVIS: Good observations.
CHAIRMAN GREEN: If not, so ordered.
REPRESENTATIVE KOTT: And, Mr. Chairman, I make a
motion, I would move this out of committee, with unanimous
consent, as amended, to the next committee referral, which
is Resources. I think this is a good idea. We've ridden
this horse around the corral for a long time, and it's time
to open the corral door and let it loose.
CHAIRMAN GREEN: Any objection?
(No audible response.)
So ordered.
REPRESENTATIVE FINKELSTEIN: Thank you, sir.
CHAIRMAN GREEN: Yes, sir.
While the document is being circulated, I would
like to now introduce Jerry Brossia, of the Pipeline
Coordinator's Office, who will give us an overview, and
hopefully we will introduce his federal counterpart, John
Santora.
MR. BROSSIA: Thank you, Mr. Chairman, and members
of the committee. I am Jerry Brossia, the State Pipeline
Coordinator. And with me here today is my counterpart on
the federal side, Mr. John Santora. He is the authorized
officer for the Bureau of Land Management, and Rob
McWhorter, of our office, is also here.
Again, I think you recognize Mead Treadwell, of
the Department of Environmental Conservation, is here today.
And we have a couple of folks with Alyeska, Paul Richards,
and Mr. Rob Shoaf, that might be able to answer questions.
First of all, I do have some prepared notes here
that I will hand out to anyone who wants a copy of those.
I think sometimes, as we go through life, it's
hard to make my priorities your priorities. And one thing I
am pleased about is, you have the interest in hearing a
little bit about the Alyeska Pipeline. Because, to me, the
Alyeska Pipeline is one of the most important assets that
Alaska has. It represents symbolically, the steel backbone
of our economy. It affects each and every one of us, if,
for some reason that pipeline were to be shut off.
And each year Alyeska employs 1800 people, or so,
and they have an operating budget of some half billion
dollars.
Tonight I would like to briefly talk about the
Joint Pipeline's Audit of Alyeska Pipeline Service Company.
And before I start, talk a little bit about the Joint
Pipeline Office.
It's kind of an old idea in industry to form
partnerships, and joint ventures, and things, but it is a
new idea to government. And over the last four years we
have formed a series of objectives to essentially strengthen
our relationship with state agencies and federal agencies,
to share resources, knowledge -- kind of pull together, if
you will, to work our way through difficult problems.
Quite often the situation in government is a big
tug of war where we all fall in, and one sort of shark, or
another, in the water, to capitalize on that.
In this case, I believe the Joint Pipeline Office
is working as a team. We have a number of state and federal
agencies in the office. The Department of Natural
Resources, the Department of Labor, the Department of
Environmental Conservation, the Department of Fish and Game,
the Governor's Division of Governmental Coordination is also
in the office.
On the federal side, the key lead agency is the
Bureau of Land Management, and then the main federal
regulatory agencies in that office are the Department of
Transportation's Office of Pipeline Safety, and the
Environmental Protection Agency. We also have a member of
the U. S. Fish and Wildlife Service in the office.
The idea of audits of the Alyeska Pipeline is not
new. We have, for some time, taken an in depth look at a
variety of problems. We've looked at various weld records,
we've looked at corrosion, air issues, oil spill plans, and
so on.
There are other audits that have gone on as well
at Alyeska Pipeline Service Company. You may have recently
heard that the owners conducted an audit of Alyeska. And
it's our intent, as well as the other government agencies
intent, and Alyeska, to put all of the audit findings on the
table, categorize them, sort them, and try to work through
them in one single process.
One might ask, "Well, why do you guys do all these
audits?"
Because we had a lot of allegations. We had
allegations from people inside the company, whistleblowers,
if you will. We had allegations from United States
Congress, and they held hearings, as you well know, and it
essentially caused us to take a very close look at the
operations of the pipeline.
One of the main issues that you will repeatedly
hear are Alyeska has management problems, they have quality
assurance problems, and they have some hardware problems.
Now, what does that mean?
The quality assurance is essentially a way of
establishing what your criteria are for anything, whether
it's building a pipeline or any kind of a product. And then
setting up a series of systems, and programs, and check
lists, to give you some assurance that the original set of
specs and engineering criteria are being met.
Now, as one increases the risk of some kind of a
catastrophe, be it pipeline rupture, or loss of life, or
something like that -- the risk. If it were to increase
your assurances, should essentially parallel that, and there
should be more assurances in a worst case situation.
These audit findings have essentially been based
on what is called a "vertical slice" of the pipeline. We
looked at Pump Station 1, 6, 10 and the Valdez Marine
Terminal. We talked to almost 250 employees at Alyeska.
We've gone through a lot of records to come up with these
findings.
Originally, again, at Congress' urging, we had a
relatively quick schedule to meet. The schedule started the
first of September, and we entered into what we call the
findings process. That was two months long. It ended in
early November, followed by oversight committee hearings.
Those oversight committee hearings ended, and we issued a
Phase 2 contract to come up with some corrective actions,
particularly focusing on management problems at Alyeska and
their quality program. Currently, we are looking at
solutions for the hardware problems.
After the corrective actions are identified, then
we will be going into the implementation stage. And that
implementation stage is going to run until about December of
1994.
So essentially, what did we find in this process.
We had a number of positive effects that resulted and
affects safety -- worker safety, particularly. The effects
on pipeline integrity, from vertical supports, and so on.
Seismic design of different issues. And we had some
environmental issues.
Now one of the main issues, I think, that everyone
wants to hear about is: "What are you going to do," and
"How are you going to fix it," and "What is it going to
cost?"
And I can't really give you definitive answers,
but I can tell you the process that we are going through
today. And essentially what we are doing is establishing a
base line on what the laws, and regulations, and codes, and
specs are. And that will become the floor of the minimum
amount that Alyeska will have to do to comply with the law.
On the other hand, there may be some areas of
higher levels of standards that have to be set to enhance
the program at Alyeska. And we have recently been going
through the drill to decide what those corrective actions
are, based on risk and cost benefits. And this phase will
probably take us over the next couple months, followed by
essentially, again -- we'll come up with the corrective
action, and then we will be implementing fixes, and hope to
have this implementation stage carried out by December of
1994.
The findings have been placed into three different
categories, again, based on risk. Class 1 being the most
severe. They are the kind of problems that break out into
management, broadly, and secondly, to hardware problems.
Alyeska has suffered, perhaps, from somewhat of a
construction mentality, when they should be in more of a
processing mentality, an operation mentality. I think we
all recognized that Alyeska is very good at building
pipelines, and very good at moving oil, and they need to get
out of a construction mentality and into one of more
operations oriented, safety oriented.
They have recognized that, and they have had their
own series of contractors and auditors that have developed a
new philosophy, if you will. Some of you may have read the
paper recently, and have seen the article by David
Pritchard, where he talks about changing attitude, and I
believe that's true. They are changing their attitude
there.
They are interested in having processes in place
that protect workers, and give you some assurance that the
blueprints are in place, the engineering process are in
place, check lists for inspectors in place, and so on.
CHAIRMAN GREEN: Can I interrupt you just for a
moment.
MR. BROSSIA: Certainly.
UNIDENTIFIED MALE: As you discussed Alyeska
moving into the operations mentality, or safety oriented
mentality. It is my understanding that Alyeska has one of
the best safety records of any industry, especially the oil
industry. Is that basically...
MR. BROSSIA: Oh, I think that's true. I think
there are things they can do to improve, but I would agree
with you, they have an excellent safety record. And they
certainly have a good record, as far as keeping the oil
inside the pipe.
The main hardware issues and big cost items are
going to be evolving around electrical problems. And I
can't tell you again what the cost would be, but I can tell
you, it's a substantial effort. Several hundred workers
will be involved with that electrical repairs at the Valdez
Marine Terminal, and then they will follow it up through the
pump station, so it is going to be a substantial amount of
work.
There are some other issues, in the way of
hardware issues, vertical support members, where the pipe is
slid over next to it. It could cause some structural
problems, and again we want to do a careful engineering
analysis of that before we just go out and put new VSM's in,
and do sidebars, and so on.
The second type of finding was called a Class 2
finding. Examples would be, drawings not in place. Quite
often electrical workers will go into boxes and not know
what wires are hot and what wires -- whether they're color
coded properly, and so on. Fire safety programs could be
improved at the Valdez Marine Terminal. Some of the
emissions at the pump stations aren't being monitored in the
relief systems.
Class 3 findings. The kind of finding that causes
loss of time. Inefficient. They could beef up their
training program, to make sure they got the right training
for the right job. Alyeska does have a good training
program, but in some cases, the right training is not
completed for the right individual work.
Leak detection. Alyeska, again, probably has a
good leak detection system, but it probably can be improved,
and they have been working on that for the last year, and
they will be working on it to try to improve the accuracy of
it, so they could get it down in probably the 1500 barrel
size leak right now. It's probably in the 3000 to 5000
barrel size.
What have we been doing about all of this? We
have essentially tried to verify a lot of work that Alyeska
has done. We have brought on a few more people. We hired
several consultants to give us technical expertise, so that
we know that we are fixing -- or that Alyeska is doing the
right fix, if you will, and we will be looking at those
fixes, or cost benefits, risk and so on.
We stepped up our monitoring program. We
participated in five or six drills in the last six months,
and tried to have a more active field presence, in general.
In the short term -- it's a bit hard to see, but I
think if you follow along in your handout, you could --
we've got sort of a five or six point action plan. We have
an audit team that is essentially tracking the design review
of each one of these findings. We will then work with
Alyeska on approval of the various fixes. We will have an
inspection team in the field that will sign off on them, and
then they will pass it back, in some cases, to various
regulatory agencies for their reviews and approvals.
By this time next year, we hope to be able to tell
congress, essentially, the status of all these findings,
whether they are complete, in progress, or some of them may
have regulatory actions that are going on.
At this point I would like to turn it over to John
Santora, and John is going to talk to you a little bit about
the future of the office, and then I will come back and be
happy to answer any questions.
John?
MR. SANTORA: Thank you, Jerry.
Mr. Chairman, and members of the committee. My
name is John Santora. I am a Bureau of Land Management
employee, and presently I am the authorized officer for the
bureau, with reference to the TransAlaska Pipeline.
As Jerry has said to you, the TransAlaska Pipeline
System is a vital resource to the state of Alaska, for the
continued development of proven energy resources within the
state. It is also a vital resource for the consideration of
future energy resources within the state of Alaska. And it
is our intention, within the Joint Pipeline Office, by
lessons earned from these audits, to ensure that the
pipeline system is not a contentious issue with regard to
public safety, worker safety, environmental compliance, and
system integrity, and any consideration of future resource
development.
To achieve that goal, we have taken steps to focus
and look at our existing monitoring program and oversight of
the TransAlaska Pipeline System activities, and to
strengthen that program, and to improve it, so that we can
ensure that the lessons learned, as a consequence of these
audits, are not repeated in the future.
Some of the things that we have done to initiate
that action is, we've initiated and developed a memorandum
of agreement, which has been signed by six state agencies
and five federal agencies. That memorandum of agreement,
now, is a formalized method for those people who are in
policy level management positions to come together quarterly
to discuss areas of concern and consideration, with
reference to their oversight and monitoring responsibilities
for that TransAlaska Pipeline System. That is the
significant step to strengthen the union that has been
formed between state and federal agencies, insofar as our
joint oversight and monitoring of the TransAlaska Pipeline
System.
We are also presently reviewing our entire office
structure, our organizational structure, our staff
composition. We are considering how we can better utilize
existing staff, the skill mix that we need permanently
within that office, and also, how we can best utilize, in
certain situations, consultants to assist and help with very
specialized issues, such as seismic concerns, which are now
under consideration, as a result of the audit.
We have a very positive outlook. We've come a
long way in learning how to work together positively and
pro-actively. And it is our intention to continue to
improve, with the focus on ensuring that that pipeline
system can never be an issue of contention regarding any
future development of Alaskan resources.
That's all I have to say. Any questions?
CHAIRMAN GREEN: Any questions of either of you?
(No audible response.)
When this pipeline was constructed, it was kind of
put up there as one of the major wonders of the world. It
was state of the art. Largest private capital -- and all
these superlatives. And for years it seemed to work well.
You've got an excellent safety record. You've got all these
things. What happened two or three years ago to start this
unwinding? This situation with the whistleblowers, and
subsequently, all of the problems that you have encountered
since then?
MR. SANTORA: Mr. Chairman, let me try and answer
that question using an analogy, if I may. What you say was
true. At the time, the pipeline was a state of the art
facility, but it was a first of a kind. That type of
pipeline, in the Arctic environment, and in the sub-Arctic
environment, had never been constructed anywhere else in the
world.
The best engineering judgments were applied to
those unique new areas of consideration, such as the
permafrost conditions, the discontinuous permafrost
conditions, the construction of an above-ground pipeline,
with some very unique designs for those vertical support
members, given what type of supporting soils that they were
placed in. And all of the other considerations that had to
be taken.
The tremendous Delta-T that the pipeline operates
at, from oil starting out at around 105 degrees, now
probably around 100 degrees on an average, down the
pipeline, and the extreme winter and summer temperatures.
As you are well aware, we can have 90 degrees in Fairbanks
in the summer, and we can see 40 below in the winter, and
yet that pipe must stay within an operational range, if you
will, on a vertical support member. All of those things.
But the analogy I want to draw to you is, the
freeways in Los Angeles were designed to the best standards,
using what they considered, at the time, the best seismic
and earthquake designs that they knew of. But times have
changed. Technology has improved. Design methods have
improved. The methods of analysis of those particular
structures and the stresses they will be subjected to, have
improved. And as we saw, there was a retrofit program taken
as lessons learned from previous earthquakes, to strengthen
those facilities.
The ones that were strengthened survived the last
earthquake. The ones that had been designated to be
strengthened, but they were unable to get to because of
budget and other considerations, those failed.
Let me suggest to you that that type of a failure
contributes significantly to the cost. It is no longer a
retrofit now, it is a total removal, which is extremely
expensive, and a total reconstruction, which is far more
expensive than a retrofit.
Let's look at the pipeline. There are areas right
now. The pipeline, as it exists, is safe. There is no
threat from the pipeline in the given conditions we have
today. But if we were to subject the pipeline to its
maximum design considerations for seismic, given some of the
lessons we've learned now, there is a question with regard
to certain supports and certain other physical features on
the line, as to whether it would be prudent to strengthen
those, because they do not, at this time, appear to be
seismically capable of withstanding the accelerations that
they would be subjected to.
If we make reasoned retrofits now, and we should,
God forbid, have another seismic event of that magnitude in
the state of Alaska, I would suggest to you that the
remedial actions that might have to be taken would be far
less than if we left the conditions as they are. Because
the state of Alaska, for instance, could not do well if we
had to shut the pipeline down as a result of some seismic
event, for six months, before we could repair it, as opposed
to maybe a month. That would be the difference.
Think, again, of the work that is going to have to
be done in the Los Angeles area because of that seismic
event, as opposed to the work that would have been done if
they had the means, and were able, within a reasonable time
frame, to retrofit those facilities that were so severely
damaged.
So the design, Mr. Chairman, was good. The
design, presently, is good for existing conditions, but we
have identified certain areas that need a...
(Tape 94-6 - Side 2)
MR. SANTORA:... isn't good economics.
CHAIRMAN GREEN: You mentioned the word "costs,"
and that brings a real sensitive nerve to the surface with
the state. It's indicted that for every dollar spent, the
state, in fact, spends 25 percent on that. What do you
foresee as the cost? Can you project what the cost might
be, both -- and is that 25 cents on a dollar a reasonable
figure?
MR. SANTORA: The 25 cents, I would have to defer
to Jerry. To answer your question about costs, we just
started now to get the data in regarding those concerns.
The QTC audit that was done by the Bureau of Land
Management, was a very narrow vertical slice, just to look
at areas, and see if there was any places where there were
concerns. And there were areas of concern identified.
The owner companies have now launched their
independent audit. That is an all-encompassing audit. It
will cover all the pump stations and all facilities at the
Valdez Terminal, in addition to pipeline related facilities,
such as the valving that is up and down the line, to
determine what areas are of concern and need to be
considered.
Phase 2 is underway. It's not complete. To try
to answer your question would just be a guess. And,
respectfully, I won't guess.
CHAIRMAN GREEN: Is it big, or is it reasonable?
MR. SANTORA: Within the order of magnitude of
what that facility encompassed when it was originally
constructed, and where it is, we intend it to be reasonable.
We intend it to be reasonable. They're in business. That
is a business. Any decisions you make must be made with a
sense of business. You just don't spend money without
considering the consequences of that investment that you are
making, and how it will effect your business. If you don't
do that, you are going to be out of business, and we do not
want to see the pipeline company out of business. It is,
again, a very vital resource to this state, and its future.
CHAIRMAN GREEN: Well, where I was kind of going
with this, and -- if the federal mandates, which -- yeah, it
supplies oil to the United States -- perhaps the federal
view of what might be necessary could vary with what perhaps
the Pipeline Coordinator's Office might find, especially
considering the fact of how vitally the throughput of the
Alyeska line is to the state of Alaska. Proportionately
significantly more important to Alaska than it is to the
federal government.
MR. BROSSIA: I would like to try to answer
something. My answer is a bit different than John's, on how
did the situation get to where it is, in light of the
original construction project.
And my analogy is an airplane. And you can fly
that airplane as long as you want to maintain it, and that's
the way the TransAlaska Pipeline System is going to be made.
And several years ago the administration made the decision
that we wanted the pipeline maintained at its maximum design
capacity. So that means the airplane can be 30 years old,
or it can be 50 years old, but it is maintained properly.
Now, why did we get to where we are with the rush
of construction, and the intensity of construction. A lot
of things to run an operating pipeline were never done. The
as-built drawings weren't completed. A good operating
pipeline has, essentially, what is a called an equipment
list, or a Q list, if you read this report. And a Q list is
nothing more than a list of all the components that make up
that system, from pumps and wires, and stacks, et cetera.
And each one of those pieces, then, are entered into a
predictive maintenance list. And those predictive models,
then, can tell you, compliance checks, maintenance
schedules, life cycle of components and parts, and so on.
And those processes were never put in place. And as one
maintains this old airplane, it becomes very important to
know which pumps and which parts, et cetera, need to be
maintained if you are going to keep the thing running for a
long time.
So I think Alyeska -- you should ask this question
of Mr. Shoaf -- I think Alyeska has bought into the idea of
these management processes, equipment lists, and predictive
maintenance models, and field checks, and as-builts, and so
on, because they want to maintain it, too. They have a
hope. And after the throughput declined in 1988, from 2.1,
it's been going down, and they don't want it to go down, and
their attitude should not have that kind of decline to it,
also. So they want to maintain it. They want to do a good
job. And the same hope that the state has, and that's to
bring future oil to market. So we can't get there from here
if we don't maintain it, is the short list.
As far as the 25 cents, I'm not sure it is
precisely 25 percent, it might be 23 percent. It's really a
question for the Department of Law, and they regulate the
tariff under, I believe, Alaska Statute 41. But the concept
is, the well head value of the oil is an average of west
coast, east coast, and I'm not sure what else is in that
basket that makes up the total spot price. But the well
head is a total spot, minus cleaning and hydras costs at the
field, minus transportation costs. And that deducts down to
the well head value of oil.
So, yes, Alaska loses money as the tariff goes up,
the well head value comes down. As well as in the taxation
side of things. And I, quite frankly, don't know the
details of how, as the expenses goes up, that affects the
tax. But in theory, those two combined, come up to about a
loss to the state in revenues of 23 to 25 percent.
The ultimate decision maker in those areas, would
be the Federal Energy Regulatory Commission. Alaska
disputed the additional costs several years ago for
corrosion repairs. It is my understanding that we would
dispute any unreasonable costs in this operation. So,
again, I can sit here and say, "We don't want to pay, but we
want it fixed." And the ultimate judge on that will be the
Federal Energy Regulatory Commission.
CHAIRMAN GREEN: I think you answered a question I
was going to ask, that the state has about 12.5 percent of
royalty, and yet pays about 25 percent -- or, would lose 25
percent. It's through the tax portion that makes that
balance?
MR. BROSSIA: That is my understanding, and that
is a Department of Revenue question.
CHAIRMAN GREEN: Sure. Okay. You used an
airplane as an example. Now, we've got this 747 in Alaska.
How does the oversight of that 747 compare with, maybe, a
727 or a Piper Cub, and the other little planes that are out
there? I mean, there is pipelines all over the Lower 48.
Do they have anything near this kind of scrutiny?
MR. SANTORA: No. It's my understanding that the
Office of Pipeline Safety, which is the main regulator of
pipelines in the United States, has about 175,000 miles of
liquid pipe in the Lower 48, and about 3 million miles of
gas pipes. And there is no pipeline in the United States
that receives the intense scrutiny of this pipeline. And
there is no other pipeline that has developed some of the
technologies that are used on this pipeline, in the way of
smart pigging, and devices to look for corrosion, and so on.
So the short answer is, no. There is no other
pipeline that I know, that has the scrutiny.
CHAIRMAN GREEN: Is that just because of the
volume that's handled?
MR. SANTORA: That is the answer that has been
given. Twenty-five percent of the nation's domestic crude,
as you know, flows through that pipeline, and because of it,
it has a national security interest, and the government has
decided that it needs more scrutiny.
CHAIRMAN GREEN: If you didn't have this Joint
Pipeline oversight group, what do you think the government
might do?
MR. BROSSIA: Well, first of all, there would be
as many as eight, or 10, or 12 different agencies looking at
the pipeline. And one of the topics that have been
addressed under the proposed Presidential Task Force, is new
legislation. So I guess, if we did not have the Joint
Pipeline Office, the biggest potential would be for new
federal legislation to create an oversight group.
CHAIRMAN GREEN: So it is definitely to our
advantage -- "our," being the state's advantage, to have
what we've got in place?
MR. BROSSIA: I believe so, yes.
John, do you want to elaborate on that?
MR. SANTORA: No. I would have to agree with
Jerry's assessment.
One of the criticisms that, in the past, before we
had the Joint Pipeline Office, that was levelled, was that
we were a splintered group of various regulatory and
oversight agencies, and that we did not coordinate our
activities at all, therefore, we were not as effective, or,
in some people's eyes, ineffective in achieving the expected
oversight of the TransAlaska Pipeline System.
Being aware of that concern, we -- Jerry and I
proposed, and were successful in starting to develop the
concept of a Joint Pipeline Office. I have to suggest to
you, I don't think there is another one anywhere in the
United States, where the state and the federal government
have been able to cooperate on a pro-active basis, with
regard to a facility of the complexity and magnitude of the
TransAlaska Pipeline.
And I would agree with you, Mr. Chairman, I think
it is in everyone's interest, that we make that type of an
arrangement successful and work.
CHAIRMAN GREEN: Let the record reflect that
Representative Sanders got here about 10 minutes to 6:00, or
5:00, or something like that.
REPRESENTATIVE SANDERS: Ten minutes to 5:00 is
better.
CHAIRMAN GREEN: Sorry. Yes.
REPRESENTATIVE SANDERS: No, it was about ten
minutes to 6:00.
UNIDENTIFIED MALE: Is it 10 minutes to 6:00 or
5:00?
CHAIRMAN GREEN: Ten or five minutes to 6:00 is
what I meant.
If there is a difference of opinion on
expenditures, as you had indicated, Jerry, there could be,
is there an authoritative structure within the oversight
committee?
MR. BROSSIA: What we hope to do -- right now John
and I are the same size dog. He takes as big a bite out of
me as I do out of him. So, to resolve that issue, we
created this memorandum of understanding with the state and
federal government, and it would be elevated up to cabinet
level on the state side, and a number of the federal heads
on the federal side, and they would argue it out.
I don't foresee that happening, quite frankly,
because, we have a lot of arguments. I wouldn't say we
didn't, but usually we have been able to work everything out
in the last four years. And sometimes it takes a while.
But we have reached an agreement in the past with this
process on one oil spill program, one corrosion program.
Those are two very big programs.
So I would anticipate amicable agreement on
corrective actions. But in the event that we can't, we have
set an elevation process up.
MR. SANTORA: I would like to add to Jerry's view,
that with the memorandum agreement, and the fact that we
have these policy level people who have signed on that
agreement, which is an intent to work together cooperatively
and pro-actively. You would not see a unilateral decision
made. There would be a vehicle, and there is a vehicle for
discussion. And I, personally, would urge your strong
support of the continuation of that agreement, and a
participation of those policy level people in that
agreement. I think it's to everyone's interest, because it
is the first time for that office, we had that kind of
vehicle where we could bring those folks together and we can
discuss areas of concern, and there will be no unilateral
decisions made. They must be discussed. I think it is to
everyone's advantage to do that.
CHAIRMAN GREEN: Now, at the Dingell hearings back
in Washington, the owners -- at least three of the owners --
the bulk of the owners, in other words -- the majority
ownership -- that's better -- was very cooperative and
indicated that they were going to do everything reasonably
in their power to cooperate. Have you found that with your
oversight, that you sense that same feeling of cooperation
of the owners?
MR. BROSSIA: Yes.
MR. SANTORA: I would support that.
CHAIRMAN GREEN: Now there were some allegations
that there was corrosion in the pipeline, and there was, you
know, the news media about the stress situations in Atigun
Pass. Is it your feeling that those issues are being --
because you indicated there wasn't any. The pipeline is
safe. There isn't any immediate danger. Those issues, to
your satisfaction, are being handled?
MR. SANTORA: As you, I think, are aware, eight
and a half miles of the pipe was replaced at Atigun Pass.
Alyeska has an annual program to inspect the pipe in several
different ways, for corrosion. We are a part of that
program, and we believe that we have a very good
understanding of where corrosion is on the pipe, how severe
it is, and we're moving towards remedial repairs, in a very
cooperative way, with Alyeska right now. That is the entire
office, both the regulators within the office, as well as
the right-of-way agency. So I believe we are working
cooperatively to resolve corrosion.
Now, that's not to say that there is not corrosion
of the pipe. But, at this point in time, we don't know of
any corrosion that presents a safety related problem.
CHAIRMAN GREEN: And the last question I would
have is, sometime toward the end of last year -- maybe a
little earlier than that, even, but certainly toward the end
of last year, there were some problems developed with the
remote sensing valves, the safety valves. And it appeared,
in some cases, that that was not just a natural phenomena.
I haven't heard anything more. Was that just a
happenstance? Do you feel there was, maybe, disgruntled
employee, or whatever? That's not a concern safety wise?
MR. BROSSIA: It is a safety issue, and there are
about 160 valves on the pipeline. About a third of those
are what you refer to as "remote gate valves," and they are
essentially operable out of the Valdez Marine Terminal.
The reason that the valves exist, of course, is
they have a systematic and orderly shutdown of the pipe. If
one were just to cut the flow off, you could create a
hammer, like, you get in your water faucet, and you could
literally blow the pipe out of the water and rupture it. So
it's important to essentially control the orderly shutdown
of the pipeline.
Several things have happened: Alyeska did a trend
analysis. They had several of those motors and valving
regulating devices that did age, needed maintenance, needed
repairs. And I think they found some 30 or 40 valves that
needed upgrades, and they worked on that.
Secondly, they also put a new gearing device into
those motors to close them slowly, so that they can't shut
down in four minutes. They are now going to close in eight.
So that they are taking that precaution.
And, thirdly, they are going to renovate the whole
communication control system. I can't really talk to the
details of that, but I know that an RFP will be going out in
the near future to upgrade the telecommunications system.
CHAIRMAN GREEN: One other question I might have
for Mr. Santora. Recently the BLM director has left his
office. What is the plan there, as far as his replacement,
and his working with this whole process?
MR. SANTORA: A gentleman by the name of Mr. Mike
Donbeck (ph) has been designated by the secretary, to be the
acting director. It is my guess that we will not see a
permanent replacement until sometime, probably, the end of
August or first of September. It's an appointed position,
appointed by the president, with concurrence of the senate.
And it looks like now, it probably won't happen until late
in the summer, but you can always be fooled.
CHAIRMAN GREEN: Are there any other questions
about the -- yes?
REPRESENTATIVE GARY DAVIS: Mr. Chairman, thank
you.
Every project that is built, and probably every
piece of machinery that is built, has a somewhat life
expectancy and a maintenance plan to it. Is all that still
in place, or is the life expectancy of the pipeline,
quantities of flow, major maintenance problems that were
assumed to happen. Is there any major hits anyplace? Of
course, if there is, hopefully, more opportunity or more oil
finds on the Slope, to maybe double the expected life of the
pipeline or the facility, if that should happen. Is that
part of any plan now to, how to accept that and prepare for
it? See how optimistic I am.
CHAIRMAN GREEN: Good man.
MR. SANTORA: I think you are actually -- I heard
at least three or four questions there. Starting with the
last one first. I think that Alyeska is, and the owner
companies are thinking about a future plan for TAPS. I
can't tell you what that future plan is. I can be hopeful,
as you are, of what it might be, but it's something you
maybe more appropriately, should ask Mr. Shoaf.
But as far as, are there any hits, I think, from
the State's perspective, the only real hit we thought would
be under better control, would be the corrosion.
When the pipeline was originally built, we thought
that it had an adequate coating, and then they put a tape on
it, and then they put a cathodic protection. We thought
that would be good enough.
So if there was any hit or surprise, it came in
the area of corrosion, which there has been a fairly
significant amount of money, probably 400 or 500 million had
been spent on that in the last few years, and that's a
number out of the newspaper, so I'm not sure how accurate it
is.
It has been a substantial number, and there is
still a fair amount of work to be done over the next five
years or so. But I think most of the corrosion is now under
control, but that's the main hit.
As far as the future plan, you might want to ask
Mr. Shoaf.
CHAIRMAN GREEN: Please join us.
MR. SHOAF: My name is Rob Shoaf. I work for
Alyeska in Anchorage. I've been working recently on some of
the audit processes that Jerry and John have described to
you. Just to answer that one question.
As Jerry said earlier, we are trying to maintain
the system, so it could transport all the available oil.
And as John said, we would like to maintain the system, so
that it is not an issue in decisions about what oil is
available to transport.
What that means in practical terms is, we do have
programs for maintenance of the pipeline itself, and of the
systems that move the oil through the pipeline. They are
designed to provide a high degree of reliability. But for
the current levels of throughput, which are around 1.7
million barrels a day, but also with the maximum established
capacity of the system, which was 2.1 million barrels per
day.
Obviously, in the future we have to continue to
look at that, and we talked to the state about it, but at
the moment, that's what we are doing.
CHAIRMAN GREEN: I know with a car, if you got
this new car and it's pretty resistant to any kind of
corrosion, then you begin to get little pits. It seems like
the corrosion, then, accentuates the -- accelerates,
perhaps, is a better word.
You feel that you've got the corrosion in the
pipeline under control. Is this through a treatment. Is it
cathodic protection, or corrosion inhibitors that go in the
oil, or...
MR. SHOAF: Well, I'll start and then Jerry can
supplement it, from his perspective. But we really approach
the problem from two perspectives. The corrosion on the
mainline pipe itself is external. We have coatings on the
pipe where it is below ground, to try to minimize the
potential fork erosion, and that is supplemented by a
cathodic protection system, which is intended to avoid the
processes of corrosion itself.
We have found that some areas, like Atigun Pass,
that the cathodic protection system has not been sufficient,
given the circumstances, to prevent corrosion to the degree
where we needed to react to it. And there, as Jerry said,
we replaced eight and a half miles of pipe.
In other areas we are in discussion with the joint
pipeline office, and particularly the United States
Department of Transportation Office of Pipeline Safety,
about the cathodic protection, and engineering challenges
that we face in trying to utilize the cathodic protection
system, to eliminate or mitigate corrosion of the pipeline.
And we are involved in a very detailed technical review of
those types of issues.
On the other side, we -- as Jerry explained, we
run what we call a "smart pig" through the pipeline. And
what that does is use -- we have two different pigs that use
different technologies, to basically look at the wall
thickness and measure where there is a reduction of wall
thickness, and determine whether that is indicative of
corrosion or not.
The corrosion that is revealed through those
inspections, is evaluated, based on the strength of the
steel and the necessity for, still thickness, at various
points of the pipeline, to allow the operating pressures
that we have to have in the pipeline, to operate it at its
capacity.
And it's really that evaluation -- the corrosion
against the operative pressures that we want that helps us
determine where we have to go in and make some sort of
repair.
CHAIRMAN GREEN: And so far the corrosion has been
from the outside in, rather than from the inside out?
MR. SHOAF: That's correct.
CHAIRMAN GREEN: Any other questions?
(No audible response.)
CHAIRMAN GREEN: Well, thank you very much. We
really appreciate this update, and it's good to know that
you are in good hands.
MR. BROSSIA: Thank you.
CHAIRMAN GREEN: Thank you, very much.
MR. SANTORA: Thank you, Mr. Chairman.
CHAIRMAN GREEN: Thank you.
***END***
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