By Tim Bradner

Alyeska Pipeline Service Co. is delaying a major pump station reconfiguration project and eliminating 60 company and contractor positions, a company spokeswoman said Nov. 4.

The company is trimming $101 million from spending in its 2010 budget, with $55 million cut from the operating budget and $46 million from its capital spending, according to Alyeska spokeswoman Michelle Egan.

About 30 of the positions being eliminated are Alyeska jobs, but 15 of these are currently unfilled, which means the pipeline company will lay off about 15, Egan said.

The other 30 positions being cut are with contractors, most of them involved in a multi-year pump station upgrade program that is now nearly completion, she said.

After the reductions, Alyeska will have about 750 employees and about the same number of contractor employees.

Alyeska operates the 800-mile Trans-Alaska Pipeline System that now carries about 700,000 barrels of crude oil daily from Alaska's North Slope to the Valdez Marine Terminal on Prince William Sound.

Egan said the staff reductions and project deferrals are a result of Alyeska's effort to reduce spending in response to lower volumes of oil moving through the pipeline.

After TAPS was completed in 1977, it carried about 2 million barrels per day to Valdez, but volumes now vary between 750,000 barrels per day in winter to 600,000 barrels per day or less in summer.

The amount of oil Alyeska carried started dropping in 1989, when North Slope producing fields came off their peak plateau of production and began declining.

One pump station project being deferred in 2010 is the reconfiguration of pump station 1 in Prudhoe Bay, Egan said. The project would have been the last of a series of major upgrades of pump stations Alyeska has done in recent years.

A reconfiguration of pump station 4, near Galbraith Lake in the Brooks Range, was recently completed, Egan said. The projects involved replacing 1970s-vintage turbines with modern electric pumps and automating the pump stations.

There will still be staff and contractors based at pump station 4 to do pipeline maintenance in the region, but the pump station itself will function automatically, Egan said,

Pump station 3, south of Prudhoe Bay, is now fully automated and operating with the electric pumps, she said, as is pump station 9, located south of Delta Junction in Interior Alaska.

New systems being installed at the pump stations will allow them to operate more efficiently as the volume of oil moving through TAPS continues to decline. The older equipment that was replaced was designed to handle higher volumes.

When it is completed, Alyeska's pump station project will have cost about $500 million, the company has said previously.

Alyeska is engaged in studies on how it can best operate as its daily throughput of oil continues to decline. Company officials have said that mechanical problems begin to appear at volumes of 500,000 barrels per day but with modifications the pipeline may be able to economically operate at lower volumes.