8″ Pipeline for Nikiski Finds Agreement

Posted: February 13, 2014 at 6:59 am

Cook Inlet Energy has formed an agreement with  Tesoro Alaska and the newly-formed Trans-Foreland Pipeline Company to build an 8″ crude oil pipeline across the Inlet.

 

The 23-mile pipeline would provide greater stability, according to CIE CEO David Hall…

 

Hall: “We think it’s going to provide lower risk transportation for crude oil, by not having to move crude oil by ship from the west side to the east side, and also not having to run crude oil through storage tanks near the base of an active volcano.”

 

Right now, crude oil from the west side of the Inlet flows through a pipeline, tank farm at Drift River, and loading facility operated by Cook Inlet Pipeline Company, a owned by Hilcorp. From there, it’s shipped across the Inlet to a terminal in Nikiski and then flows to the Tesoro Nikiski refinery.

 

So would CIE stop using Drift River if all goes to plan?

 

Hall: “Perhaps. As far as our production, if a new line is built, we would certainly want to run all of our new production through the new line.”

 

CIE’s only been here since 2009, but the recent resurgence in the Inlet has seen several of these “aggressive” new companies investing heavily in the area…

 

Hall: “We’ve had a very aggressive year. We’ve spent roughly approximately about $100 million in capex [capital expenditure] plans in the Cook Inlet in 2013, and we see 2014 to be quite a bit more aggressive than that.”

 

CIE says that the new agreement gives Tesoro the sole right to pursue the project until December 31, 2015, after which CIE acquires the option to re-acquire all interests in the project for $817,490 plus the cost of tangible equipment and property purchased. Installation was originally scheduled for this summer or fall.

 

For more on CIE’s involvement in the Inlet, read: Cook Inlet Energy Pursues Direct Marketing.

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