‘Critical’ Piece of Energy Infrastructure Threatened by Arctic Development Ban

April 12, 2017 in Blog, Featured

As a recent Bloomberg article reports, the declining oil supply from Alaskan onshore reserves is threatening what is arguably the state’s most important piece of energy infrastructure: the Trans Alaskan Pipeline System, or TAPS. Running 800 miles from the North Slope of Alaska to the southern port city of Valdez, TAPS requires a certain throughput level– the amount of oil transported by pipeline – to ensure the system flows properly. However, with the current offshore ban that has taken 115 million square miles of resource rich Arctic waters off the table, energy development options are limited and could be insufficient to keep this key piece of infrastructure alive.

Completed in 1977, TAPS has transported an estimated 17 billion barrels of oil, generating vital state revenue for Alaska while supporting our national energy security. At its peak, over 2 million barrels of oil a day flowed through the pipeline, a number which has now dropped to 565,000 barrels a day. While that seems to be a large amount, risks to the pipeline increase as the flow decreases. A 2011 study on the impact of low throughout found TAPS could experience issues at levels under 600,000 barrels a day. These challenges include:

“Wax build up in the pipeline is present at current throughput levels and will continue to increase a throughput declines…As throughput drops below 550,000 BPD, oil temperature will have the potential to drop below the freezing point of water and form ice in the pipeline during the winter months. Ice could damage pumps and equipment.”

With an estimated 27 billion barrels of oil and 132 trillion cubic feet of natural gas locked away in Arctic waters, there is no shortage of companies vying to produce in the region. Just last month, Italian producer Eni submitted plans to the Bureau of Ocean Energy Management to drill in the Beaufort Sea, partnering with Repsol and Royal Dutch Shell on the effort. Additionally, new “large-scale” discoveries of Arctic resources bring even more hope for renewed activity, such as Caelus’ Smith Bay find of an estimated 6 billion barrels.

While all of these onshore projects are promising, it will take more to restore TAPS throughput to healthy levels for the long term.  The current restrictions on Arctic oil and gas activities leave valuable resources untapped, placing tremendous pressure on Alaskan infrastructure. A recent report from Alliance for Innovation and Infrastructure found that offshore energy development would support an estimated $6.3 billion in critical infrastructure investment. Moreover, a report published last month from the Council on Foreign Relations found that without increased oil and gas development in the region, TAPS could cease to function – potentially for good:

“If the TAPS throughput were discontinued, it would likely be difficult to restart, and the United States could lose a critical piece of energy supply infrastructure. The Trump administration should reflect on this possibility and ensure the appropriate studies for options to maintain TAPS are being executed.”

As this information shows, opening Arctic waters to energy production is becoming increasingly necessary to ensure critical energy infrastructure, such as TAPS, isn’t shuttered, as that would gravely weaken Alaskan economic vitality and domestic energy security.