Alyeska's pipeline overhaul: a troublesome project to upgrade pump stations lumbers toward finish line.

• Author: Loy, Wesley
• Position: SPECIAL SECTION: Oil & Gas

For several years now, the owners of the trans-Alaska oil pipeline have been working to transform the state's most valuable asset.

Known as "strategic reconfiguration," the project involves rebuilding the pipeline's main pump stations to make them more efficient and less labor-intensive.

It's been an incredible challenge for Alyeska Pipeline Service Co., the Anchorage-based oil company consortium that runs the 800-mile line.

That's because the work had to proceed while keeping millions of barrels of North Slope crude oil flowing.

"It's like trying to repair the engine while you're flying the plane," says Mike Joynor, Alyeska's senior vice president of operations and maintenance.

While major elements of the project are now done, strategic reconfiguration has been a troublesome undertaking.

The project has cost far more, and taken far longer, than the pipeline owners ever intended.

The state, as part of a regulatory fight with the owners, argues Alyeska simply went about strategic reconfiguration the wrong way, and that the project "remains a work in progress and is not scheduled to be completed until December 2014, at the earliest."

Alyeska points out that strategic reconfiguration is the largest project along the pipeline since its original construction in the 1970s.

"That is not to say that everything went as planned," the company says. "Among other things, labor and materials shortages led to delays and escalating costs; a significantly greater amount of work needed to be done in a 'brownfield' operating environment than had been anticipated; and the lead contractor failed to deliver the leadership personnel and engineering staffing it had promised. The result, simply stated, was that the project cost more than originally projected and took longer to complete."

Pipeline is Lifeline

It's hard to overstate the importance of the pipeline to Alaska's economy.

Since startup on June 20, 1977, more than 16 billion barrels of oil have flowed down the line, enriching the state far beyond what gold or fish or furs ever did. And the pipeline figures to carry prosperity for some time yet.

The owners include the major oil producers on the North Slope: ConocoPhillips, BP and ExxonMobil. Chevron also owns a small share.

Original pipeline construction began in April 1974 and was completed in June 1977 at a cost of about $8 billion. At the time, it was the largest privately funded construction project in history.

Even today, the pipeline stands as a...