Contractors for Alyeska are mobilizing about 250 construction workers to finish the construction, and Alyeska expects the physical installation of facilities by June or July, and for the new pump station systems to be operating by the end of September.

Meanwhile, the costs of the project have escalated to $434 million, up from an initial estimate of $250 million. The project is also running about three-quarters of a year behind the original completion target of December 2005.

Monthei told the Alliance, an oil and gas contractor group, that Alyeska had moved too quickly in sanctioning the project before preliminary feasibility work was completed. The company discovered when engineering studies were done that the project was much more complex than initially thought.

"The economic savings were very robust, and we fast-tracked the project to take advantage of it," Monthei said. In retrospect, more time should have been allowed to complete the pre-feasibility work, he said.

There were are also problems with vibrations in large electric pumps ordered for the pump stations, which required changes in design and expansions of facilities at the pump stations, he said.

Workers access a turbine generator arctic enclosure assembly using a lift at Pump Station 4. Alyeska Pipeline Service Co. plans to complete its pipeline reconfiguration project this summer after delays and cost overruns. PHOTOS Courtesy of Alyeska Pipeline Service Co.

The changes are expected to save Alyeska about $50 million a year, Monthei said. Part of the savings would pass through to the state of Alaska because the lower pipeline costs will mean greater state royalty and tax revenues because of higher values for oil on the North Slope.

The project involves replacing pumps and control systems at Alyeska's Pump Stations 1, 3, 4 and 9, and an upgrading of control systems at Pump Station 5, which is now a standby relief station on the pipeline. The pump stations will be unmanned and operated from a control system in Anchorage, Monthei said. Currently, the pipeline is controlled from Valdez, but that function will be moved to Anchorage. Pipeline maintenance crews will be stationed at three new regional maintenance centers along the pipeline route, he said.

"There were a lot of redundancies in the older systems, so there will be huge efficiency gains with the new systems," he said.

The upgrade of the pump stations involves replacing 1960s and 1970s technology with modern state-of-the-art systems. One example of a new approach to maintenance is a program of so-called condition-based monitoring of the new electric turbines. There will be constant monitoring of a variety of operating components of the turbines such as oil pressure, temperature and vibration, and the data will not only be compared with similar turbines at other Alyeska pump stations but also other turbines worldwide, Monthei said.

The data set and access to data from other turbines worldwide will allow Alyeska to predict maintenance needs on the turbines.

A revamp of the Valdez Marine Terminal at the pipeline terminus is also planned, but Alyeska is taking more time on engineering feasibility studies, Monthei told the Alliance.