GAO DISPUTES DOE FINDINGS ON POSSIBLE TIMING OF TAPS SHUTDOWN

The U.S. General Accounting Office has disagreed with a 1991 Department of Energy analysis that argued Congress should allow drilling on the Arctic National Wildlife Refuge on Alaska's North Slope by 1997 to keep the Trans-Alaska Pipeline System (TAPS) in operation. The DOE study said the production decline from Alaska's Prudhoe Bay field will force TAPS to shut down by 2000. DOE's 1997 leasing deadline assumed industry would require 10-12 years to develop oil fields on ANWR.

May 31, 1993

3 min read

The DOE study said the production decline from Alaska's Prudhoe Bay field will force TAPS to shut down by 2000. DOE's 1997 leasing deadline assumed industry would require 10-12 years to develop oil fields on ANWR.

GAO said, "While we agree with DOE's conclusion regarding the length of time to develop ANWR, we believe the shutdown of TAPS could occur sooner or later than DOE's projection depending on a number of factors, including the price of oil, TAPS' minimum operating level, whether West Sak field is developed and/or areas with undiscovered fields are found to contain substantial amounts of oil that are ultimately produced.

"No one really knows how much oil will be produced on the North Slope in the future or the exact operating level at which TAPS will be forced to shut down.

"Therefore, DOE's conclusion that TAPS will shut down between 2006 and 2011, with 2009 as the most likely year, implies a level of precision that does not exist."

GAO CRITIQUE

GAO said DOE should have used a computer model that developed ranges of dates.

"The companies that own TAPS may consider many factors when - they decide whether to continue or discontinue part of their operations, including the operation of TAPS.

"Since the major owners of the Pipeline are large, vertically integrated oil companies, there are many factors-that must be considered when deciding whether or not to shut down TAPS.

"For example, the companies may be willing to incur the expensive changes required to continue operating TAPS at reduced levels if warranted by the overall profitability of the companies' Alaska operations."

GAO said the pipeline started up in 1977 at a maximum throughput capacity of 600,000 b/d, which was increased to 2.2 million b/d by adding pump stations and equipment.

"Alyeska officials told us they probably could operate again at a level as low as 600,000 b/d by closing some pump stations. We found that TAPS operated at an even lower level, with average flow rates ranging from 341,000 to 487,000 b/d for 2 months in 1977.

"According to Alyeska, these low rates required certain pieces of equipment to operate out of their normal design operating ranges. While Alyeska believes this is an acceptable condition for a short time, they believe that over a long period it would result in unacceptably high maintenance costs and high fuel and power rates."

But GAO noted the pipeline's tariffs could be renegotiated to cover such higher operating costs if necessary.