Alyeska Pipeline faces $244,000 penalty for violations related to small oil leak

A federal pipeline agency has proposed a $243,800 fine against the operator of the 800-mile trans-Alaska pipeline, related to a small crude oil leak in a pipeline heating system north of Fairbanks.

The Pipeline and Hazardous Materials Safety Administration says the Alyeska Pipeline Service Co. committed several “probable violations” related to the “overpressure event and leak” in the heating system on Nov. 13, 2024, the agency says in the Oct. 2 notice.

A second small leak was also discovered soon afterward as the heating system was under repair.

The agency’s proposed fine is its first for Alyeska Pipeline in at least a decade, agency records show.

The heating system, built in 2020, cost more than $10 million to build, records show.

Since the leak, Alyeska Pipeline has not operated the heating system, except for testing or maintenance, because other alternatives are available, said Michelle Egan, a spokesperson with Alyeska Pipeline.

Less than a cup of oil leaked, she said.

There was no environmental impact or risk to the main pipeline because the heating system was isolated from it, she said.

“We would need to work with PHMSA if we decide that there’s some reason we do need to use the system,” she said.

The 800-mile pipeline is critical infrastructure in Alaska, transporting the North Slope crude oil that underpins much of the state economy. The pipeline has transported 18 billion barrels of crude oil since starting in 1977.

The heating system, built at Mile 238 of the pipeline near Coldfoot, consists in part of lengthy, 8-inch pipe to divert some crude oil from the mainline. The oil is heated for reinjection back into the mainline.

The system was designed to help prevent winter icing.

The November leak occurred when a pressure relief valve froze and couldn’t operate, after it had been tested with water, the report says. The failure of the valve caused the system to exceed the maximum operating pressure.

The valve was insulated for outdoor service but lacked heat tape, the report says.

Before the leak, the valve provided “overpressure” protection in the heating system 13 times. But Alyeska Pipeline only identified these recurring “abnormal” events during the investigation into the November leak, “long after many of these events occurred,” the report says.

The recurring events and absence of records indicated that “response, investigation, and correction of the operation of the safety device had not occurred” as required by federal law, the report says.

No high-pressure alarm was configured for the heating system, though pressure information “was available via controller screens and locally,” the report says.

The crude-oil weep from the flange set was not found until Nov. 25, 2024. The pipeline company determined on Nov. 26 that the “overpressure event” occurred, the federal agency says.

The pipeline company has until Dec. 17 to respond to the proposed penalty, Egan said.

“We’re going through that as thoroughly as we can, and continuing to work with them to make sure that we’re in compliance,” she said.

The notice was signed by Dustin Hubbard, director of the western region for the Office of Pipeline Safety in Colorado.

The proposed fine comes on the heels of a separate proposed compliance order issued by the agency in April.

That order raises concerns about inspections for possible cracks in the main pipe.

Alyeska Pipeline is “still working with PHMSA on the issue of running a crack tool,” Egan said in an emailed statement on Wednesday.

“Our system integrity engineers assess the conditions of the pipe routinely and believe our current methods provide sufficient analysis to detect and manage issues,” she said.

Alyeska Pipeline Service Co. is owned by affiliates of Alaska’s major oil producers.

Harvest Alaska, an affiliate of Hilcorp, is the largest owner at 49%, while ConocoPhillips Transportation Alaska and ExxonMobil Pipeline Co. own the rest.