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Oil's new infrastructure.

Getting North Slope oil out of the ground and to Valdez now costs less and is more environmentally friendly.

Amaze of pipe extends from the Nabors 28 oil site to the great expanse of the Arctic Ocean, which stretches across the far northern horizon. Most of the year, wind-roughed waves of crusted snow-covered tundra stretch as far as one can see to the south.

Only a thin line of pipe, which rests on steel supports about five feet above ground, snakes out from the drill rig and breaks up the seemingly untouched canvas in the eastern comer of Alaska's oil field developments.

That pipeline transports new oil from this remote field called Badami, estimated to contain about 120 million barrels of crude, to existing Prudhoe Bay infrastructure 28 miles away. There it joins the southward flow of oil to the port of Valdez.

At Badami, supervisors for principal owner BP Exploration Inc. must plan their work and supply deliveries carefully. In winter, crews construct temporary ice roads over the frozen ocean or on the coastal tundra. But those routes disappear in summer, replaced by ocean water or by the spongy, multi-colored tundra that becomes home for many migratory birds.

Crews and essential supplies are delivered by air during summer months, when those winter roads disappear.

The same sort of remote oil field, inaccessible by trucks except when temporary ice roads are constructed, is being built at Arco Alaska Inc.'s Alpine project, located on the western side of North Slope oil developments.

There, a 34-mile pipeline has been built to connect that 365-million-barrel oil field to existing transportation lines at Kuparuk, which eventually dumps into the 800-mile trans-Alaska pipeline.

Tapping remote oil fields without building permanent gravel roads is quite a change from conventional development in Alaska, but is quickly becoming the standard. Economics, as well as efforts to minimize environmental impacts, are driving the changes in North Slope developments.

"With these smaller fields that are being found ... the future is going to demand lower cost structure in production and development, or the fields aren't going to be economical to develop," said Martin Thurlow, Arco's project manager for Alpine. "And with periods of $10 per barrel oil prices, it makes it even tougher."

In addition to roadless access, Alpine and Badami have several other developmental traits in common. Both Arco and BP used new methods of crossing rivers on the North Slope: BP trenched pipeline through three small rivers, while Arco drilled under the Colville.

Both oil producers simplified plant operations that pull oil from the drill wells and separate the valuable crude from water, sand and gas that are also extracted from underground reservoirs.

And finally, both companies formed development teams with their hired contractors, creating a financial structure that rewards construction firms that drive down project costs.

All in all, Alpine and Badami represent the cost-cutting blueprint that Arco and B P will likely use to tap North Slope oil fields such as North Star and Liberty in the future.

"We've got to challenge ourselves to find out what's really necessary, and get out of our comfort zone," Thurlow said. "This is where the future lies. If we do not set off on these innovative paths to find a better future, then maybe we don't have a future."

Roadless Access and River Crossings

Drill rigs, processing plants, pipelines and roads are scattered across Alaska's North Slope, creating a man-made mosaic when viewed from the air. During a flight between Kuparuk and Deadhorse, no area of the ground seems untouched or untapped. In all directions, oilrigs extend their tapering fingers up from the tundra.

The vision is different, though, when flying over Badami. Tiny porthole windows in the boxy Casa aircraft show the Arctic Ocean stretching to the north, and repetitive wallpaper-patterned tundra to the south. Only close to Prudhoe Bay do the familiar man-made structures of pipelines, drill rigs and gathering stations appear.

"There's no road to Badami - that's the real unique thing about it," said Stephen Repp, BP Exploration's construction project manager. "All other fields are connected by an existing road network. At Badami, you either get there by boat or by plane, or in winter, run the ice road."

He estimates the company saved anywhere from $10 to $20 million by not building a permanent road. "It might even be higher than that - there's' three major rivers between Badami and Prudhoe Bay. Bridges axe very expensive, and we were able to avoid building those bridges."

BP Exploration decided to bury the Badami pipeline under those three rivers - the Sagavanirktok, the Kadleroshilik and the Shaviovik.

During January, February and March of 1998, construction crews dug trenches across the frozen riverbeds of those three waterways, then placed in the ditch a bed of gravel for the pipeline to lay on. The gravel will keep the steel pipe from sinking, even if underlying permafrost melts, Repp said.

"The oil from Badami is flowing through the line between 100 and 150 degrees Fahrenheit, and because it's buried in permafrost, it's like a hot house - it melts the permafrost," he explained.

In addition to using gravel as a protection buffer, design of the pipeline allows for some permafrost melting. Used in offshore pipelines in the Gulf of Mexico, the design allows the pipe to bend up to 18 inches without breaking, Repp said. "It's new to the Slope," he said. "Badami's pipeline is designed to go into the deformed region and not fail."

After the pipeline was buried, engineers ran a "geo pig" that contained a gyroscope to measure the precise location of the buffed pipeline, Repp said. "Every so often, we'll run this pig through there again so we'll know whether the line settled or not. We won't have to dig it up to monitor it and know where it is."

Burying the pipeline in the riverbeds saved money on bridge construction, but it also created less impact on the environment, Repp said.

"We considered burying the entire pipeline but decided not to do it because of economic reasons," he added.

In development of Alpine, Arco Alaska approached a major river crossing with the same idea, but used a different construction technique.

Rather than building a bridge across the Colville River, which can be up to a mile wide during the spring breakup and runoff, Arco decided to go under the waterway. But instead of digging a trench like BP did, Arco tried drilling under the river, a technique new to the Arctic.

"It's never been done in permafrost before," Thurlow said. "Translating that technology so it would work up here was the trick ... the whole project hinged on it being successful."

The first season of horizontal drilling in early 1998 didn't go so smoothly, as crews only punched through one hole, not the four needed.

Work this past winter fared much better, Thurlow said. "If we could have stayed out there in the summer, we could have fixed it then," he said. "The good news is, we got there."

From an enclosed shelter on the east side of the Colville River, crews directed the drill bit down about 100 feet with an angle of about 15 degrees, Thurlow explained. Then the drill carved out a horizontal tunnel more than 4,000 feet long, before turning upward again to punch out on the west side of the riven

Four pipelines were pulled through the underground river crossings. One was for oil, one was for water, a third was a utility casing carrying diesel and fiber optics, and the fourth was an electrically charged anode, used to prevent corrosion of the three other steel lines.

Drilling the tunnels for the pipelines under the river saved an estimated $150 million to $250 million for bridge construction, Thurlow said. "No one was quite sure how to build a bridge that was affordable. It's a substantial river, especially during breakup."

Arco also saved between $25 and $30 million by not building a permanent road to Alpine, he added. "We've come a long way in 25 years. This is the next logical step in being more sensitive to environmental needs and have development go on sensibly."

Simplify Plants

At both Alpine and Badami, plant designs have been stripped of extra circuits and redundant equipment.

"We accepted the fact that we could tolerate 10 percent down time on the plant," said Repp, at Badami. "So we eliminated a lot of the redundancy to make things more simple. Now, Badami runs with very high reliability, more than we expected."

For example, complicated drain and vent systems were left out. Instead, workers can use portable hoses to drain any vessels or vent some of the equipment. "It's not that we've compromised safety, it's just to work on them you have to shut the plant down, and that saved a lot," he said.

Repp said that a more simple design inside of the processing plant makes it safer. "If you have a lot of complicated vent and drain systems, it creates a possibility of things going wrong where they're not supposed to," he said. "A simple plant is a safer plant - there's less likelihood of confusion."

Thurlow also described a stripped down processing plant at Alpine, where more operating equipment is left outside. "That reduces our energy demand," he said. "If you're going to walk to the plant from the camp, you'd better be dressed well, because walkways aren't enclosed and heated. It may be a bit of discomfort on our operators, but if we don't do this kind of thing, we won't be doing anything."

Engineers also came up with a pipeline design that would cut the flow of oil in an emergency situation, rather than using shut-off valves that tend to leak, Thurlow said. Crews built a vertical loop of pipe that sticks up in the air about 35 feet, which allows gravity and siphon to create a quicker and simpler stop to crude oil flow.

"It won't work with a lot of hills, but because the Slope is flat, it works well," Thurlow said. "It needed a little bit of thought and courage to push it through."

Team Development

Finally, both Arco and BP formed teams with their hired contractors to build their respective remote fields in a more efficient and less expensive manner.

"We chose five contractors to enter into this partnership who had a lot to say about what we did, versus BP being a dictator and the contractors being our slaves," said Repp. "The contractors put their profits at risk on the outcome on Badami and they spent less time fighting with each other. It was a less adversarial relationship."

Financial incentives were set in advance of construction, rewards that would be given to the contractors if the final project came in under budget. Conversely, if Badami experienced overruns on construction costs, those extra expenses would be taken from the already-established profit margins for contractors. "Everyone had a stake in bringing the project in as low cost as possible," Repp said.

Costs for that project, which was completed last August, came in right on target, he said.

Original estimates for the cost of opening Badami were close to $800 million. But by using the alliance of contractors and cost-saving construction techniques, the project came in at $360 million.

Construction at Alpine, which will cost between $700 and $800 million, will conclude next winter when the final production modules are put in place.

The team approach not only saved Arco money, it has cut time from the development schedule, Thurlow said. "My belief is that by having the integrated team structure, we saved at least one year, and maybe two, in getting the project finished."
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Title Annotation:Alaska's North Slope
Author:Jones, Patricia
Publication:Alaska Business Monthly
Date:Jul 1, 1999
Previous Article:Creative funding for business.
Next Article:The environmental man.

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