President's Message
David Wight, President and CEO

Alyeska’s role in delivering Alaska energy

Alyeska Pipeline Service Company is doing its part to make Alaska oil more competitive in world energy markets. That’s good for the companies that use the pipeline. It’s also good for the state of Alaska and its residents.

We have streamlined our business and cut operating expenses by some $100 million during the past two and a half years. These savings help reduce the cost of getting Alaska oil to market. Lower delivery costs build demand for Alaska oil and could lead to increased exploration and production. Lower oil delivery expenditures also help reduce
Alaska’s fiscal gap because the state pays 25 percent of the Trans-Alaska Pipeline System’s (TAPS) operating costs.

Alyeska and the rest of Alaska’s oil industry constantly look for ways to improve business efficiency by adjusting for the changing business environment, taking advantage of new technologies and strict budget discipline. Our strategic reconfiguration plan is part of this effort.

Strategic reconfiguration intends to improve TAPS efficiency by updating operations to account for changing pipeline demands, improved infrastructure and new technologies. Many of TAPS current operating procedures were established back when the pipeline carried more oil, before roads were upgraded, fiber optic links installed and remote sensing systems existed. Our strategic reconfiguration goal is to adapt to changes and take advantage of improvements to better maintain pipeline quality, safety and integrity at the same time we extend TAPS’ economic life.

Everything we do to improve North Slope crude oil’s competitiveness in the world energy market encourages new Alaska oil investments and boosts Alaska’s economy. Oil royalties and taxes account for about 80 percent of state revenue. Each $1 increase in the average price of Alaska oil over a year equates to between $60 million and $65 million in additional state revenue. And every dollar that Alyeska eliminates from the pipeline’s operating cost could save the state approximately 25 cents.

Our challenge is to keep improving pipeline operations, to ensure that it continues to deliver Alaska oil for the next 25 years.