Pipeline chief says ‘buying American’ impossible
President Donald Trump’s recent executive order calling on oil pipeline projects to “buy American” faces a major obstacle: foreign countries make many of the parts needed to keep the oil flowing.
“The truth is, the kind of parts we need are no longer manufactured in the United States,” said Thomas Barrett, president of the Alyeska Pipeline Service Company on Tuesday.
In a conversation with a class of UAF students, Barrett said that German, Japanese and Russian parts are essential to the continued operation of Alaska’s world-famous pipeline. Despite Barrett’s stated preference to support the U.S. and Alaskan economies, much of Alyeska’s equipment comes from overseas by necessity.
Citing the long U.S. maritime trading history, Barrett, a former Coast Guard vice commandant, hinted at disapproval of the new administration’s protectionist policies.
“America has, from my perspective, always been a trading nation,” he said.
An innovative tethered robotic crawler designed by Alyeska’s own engineers is now being made in Russia and then imported. The robots had previously been used only in gas pipelines, but engineering has adapted it for use in pipelines transporting crude oil. Being able to better detect corrosion and deformations has made the pipeline much more efficient and safer to operate, saving Alyeska hundreds of millions of dollars in the process, Barrett said.
Decades of Coast Guard service made Barrett an expert on risk management, but he initially considered himself ill-prepared for the oil and gas industry and almost refused Alyeska’s offer, saying he was not qualified.
He now says his background in risk management makes him well suited for the the job. Since becoming Alyeska’s president in 2011, Barrett has put emphasis on the motto “nobody gets hurt.” His attention to safety continues to pay off, in 2017 Alyeska won a World’s Most Ethical Companies Award from the Ethisphere Institute for the sixth year in a row.
“That’s a big deal with me,” Barrett said.
Yet on top of safety concerns, political uncertainty, aging equipment and declining flow of oil, a much larger threat has appeared on Barrett’s portfolio of risks in recent years—thousands of monthly cyber attacks. Unlike somebody shooting a hole in the pipeline with a rifle, which has happened in the past, a hacker could cause broad damage across the entire system, from gaining control over valves and flow rates to shutting down the entire pipeline.
Hackers from all around the world, including China, Russia and Iran try to poke holes in Alyeska’s security systems thousands of times a month, so far without success, Barrett said. The executive added that Alyeska’s cyber infrastructure is isolated and any new equipment attached to the system undergoes thorough scrutiny for malware and other safety concerns.
“It’s a ubiquitous problem these days, and it’s something we’re highly attentive to,” Barrett said.
At oil’s current price around $50 per barrel, an unscheduled shutdown would cost Alyeska more than a million dollars an hour, even with the pipeline currently running at only a quarter of maximum capacity at 500,000 barrels per day, according to Barrett’s numbers. The bigger risk however is that technical complications following an unexpected shutdown could prevent some oils wells from resuming operation. If the shutdown lasted more than eight days Alaska would burn through its reserves and have to import fuel at a high cost.