Alyeska Cuts Annual Budget by $100 Million through Reduction of Transportation Costs

As double-hull tankers come on-line, Alyeska is expected to take a third more out of the transportation costs over the next five to eight years, says Mr. Donald Wright, President and CEO of Alyeska.

$10 to $15 million per year reduction in gross wellhead value has already been achieved due to the 30 cents per barrel saving in transportation costs. According to Wright, ?The costs that come out of transportation will make Alaska more competitive, because the challenges are very significant for producers on the North Slope.?

Alyeska saved $100 million a year in operating costs by reviewing how it did business. The business is complex, and the company had some 400 manuals telling them how to run the business, and, for some procedures. They had to look at 20 different manuals to ensure that it was doing the correct process. The most important improvement achieved consolidating and eliminating the manuals is that regulators now have a very clear, simple way to check on things.

Additional saving was gained by Alyeska's consolidation of its Anchorage staff into leased offices at BP, which resulted in sharing the building security costs.

The next $100 million in savings will come from the pipeline and the Valdez Marine Terminal. Alyeska intends to automate the pump stations which are remote and manned. More than two-thirds of the buildings are there to house people and support operations, because the pump stations are basically small cities.

The next system under review is its the Valdez Marine Terminal, which is a major component of the Alyeska operation. The marine terminal covers 1,000 acres, stores 9 million barrels of crude, treats ballast water, handles vapors coming off tanks and ships, generates power, and supports the Ship Escort and Response Vessel System.