Northwest Arctic Logistical Concerns for Arctic Natural Gas Pipeline Planners

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Northwest Arctic Logistical Concerns for Arctic
Natural Gas Pipeline Planners

• November 18-19, 2002
• Jack Eidson

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Contents

• A glimpse back to TAPS
• A glimpse ahead to the ANGP
• What must be done this time - before and during
  and after the construction period
• The Bottom Line

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A Glimpse Back To TAPS

• At its peak TAPS was the largest commercial
  logistics project to date, consuming the
  following in logistics
• Over 300 truck movements a day out of Fairbanks
• Over 300 leased aircraft, including C130s with
  wet bladders for diesel fuel
• Over 22,000 people to feed and house each day up
  and down the 800 miles of pipeline in 18 camps
  plus Fairbanks, Anchorage, Seward, Whittier,
  Seattle, Stockton (CA), North Slope, and Valdez
• 1066 bed hotel in a barracks on Fort Wainwright
  to support the RR movements in and out of
  Fairbanks
• Over 7000 pickups and support vehicles, over
  15,000 pieces of heavy equipment
• Not enough supply anywhere i.e., two years of
  the worlds supply of grass seed for re-seeding
  the right-of-way
• 14 unions, various native corporation
  contractors, 5 section pipeline contractors, pump
  stations contractors, not to mention the Valdez
  facilities and North Slope facilities preparation
• Over a 1,000 purchase orders a week and many
  times that of invoices

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A Glimpse Back at TAPS

• In 1974-5 there were not enough facilities, spare
  parts, or trained and certified maintenance
  personnel for construction, or to handle support
  services or line equipment unions had to start
  their own training and certification programs in
  the lower 48 to create enough labor to do the job
• There was not enough rolling line equipment
  available in the world to outfit all the
  construction contractors old equipment had to be
  refurbished and new imported at top dollar from
  all over the world (effecting world prices, not
  just Alaska prices)
• There were not enough support and maintenance
  equipment, supplies, spares, and maintenance
  shops, warehouses, or storage yards
• TAPS traffic ruled the Trans Alaska Highway and
  had to develop maintenance and support facilities
  and services along the way. With all the big
  trucks roaring up and down the roads, local and
  tourist traffic not only endangered, but squeezed
  down to a trickle

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A Glimpse Back at TAPS

• There was inadequate planning for logistics
• Only cursory logistics planning prior to
  permitting approval - primary interest in
  achieving permit and securing financing and
  partnership arrangements
• Producers concentrated funds on permitting and
  finance issues, with only limited overall
  planning efforts, basically just enough to
  support the above overall above threshold
  objectives
• Contractors were not going to spend money
  planning unless they were paid by the producers
  for the effort
• Pipeline operators were not a factor since it was
  a private end-to-end Alyeska pipeline
• State and Federal government groups were not set
  up to assess or determine logistics or even
  in-depth procurement supply/union type policies
  or requirements
• Once the permit was approved by Congress, it was
  imperative to get to market with the
  revenue-producing oil as soon as possible, so no
  time to delay construction and plan first
• Interesting economics how much money do you
  have to save to justify delaying the production
  of 1.5 million bpd at up to 30 per barrel?

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A Glimpse Back at TAPS

• Mobilization was confused and hurried
• Fort Wainwright had unused post-war barracks and
  facilities that had not been maintained
• Some barracks had dirt floors on the bottom
  floors and heating systems that had not been
  turned on in 20 years
• There was no housing or office space to meet
  initial, much less peak, contractor, suppliers,
  government, and producer personnel in Fairbanks
  almost as bad in Anchorage
• The phone systems were so inadequate that you
  could not call across Fairbanks reliably, too few
  phones for business or otherwise radios and CBs
  had to be used
• There were no heavy or light equipment
  maintenance or storage facilities
• There was not enough facilities, equipment,
  consumables or trained personnel to maintain and
  support the fleet of private and leased aircraft
  pressed into service
• Camp and support facilities (living areas,
  recreational areas, offices, warehouses, lay-down
  yards, fuel storage, airfields, security and
  safety infrastructures, telecommunications, work
  pads, access roads, etc.) construction was
  hurried and sometimes out of synch with timing of
  needs

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A Glimpse Back at TAPS

• Processes had to be developed for permitting with
  local, State, and Federal authorities (which also
  had to mobilize to meet the new demand)
• Native corporations had to be hired for security
  to maintain order in the camps and keep wild
  critters away
• There were not enough top notch arctic parkas and
  other arctic gear available for employees, much
  less their families and local constituents
• Computers were rare, and difficult to maintain
  (1 humidity inducing dangerous static
  electricity, dust, dirty power, extreme
  temperatures), communications almost non-existent
  unless built and supported by the producers and
  the contractors

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A Glimpse Back at TAPS

• The impacts of Fairbanks and surrounding area
  alone was profound
• New town homes apartments, and houses had to be
  rapidly build for senior managers and project
  worker families there was not enough available
  housing (new or used) so prices sky-rocketed
  pricing locals out of housing
• Hotels were turned into rental dorms at
  exorbitant rates
• Schools had to go to two shift per day, there
  were not enough teachers, materials, busses,
  support personnel (TAPS was paying top prices for
  all tradesmen, technicians, and equipment)
• TAPS was hiring everything that rolled or flew to
  support their logistics at top dollar, so the
  local community had trouble getting groceries and
  basic goods
• Retailers went wild, new stores opened buoyed
  only by the artificial, short-termed demand that
  drove them quickly out of business when the boom
  was over

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A Glimpse Back at TAPS

• There was pressure to buy Alaska wherever
  possible, but the local suppliers could not meet
  the demand and delayed invoice payments nearly
  bankrupt the small businesses
• The TAPS accounting systems could not keep up so
  fraud was rampant vendors sent invoices in for
  bogus shipments and were paid immediately since
  the pressure to pay small companies promptly was
  highly political
• Some of the unions used the opportunity to
  pressure the producers and contractors for
  lucrative work agreements, pressure local
  politics, build new union facilities
• Crime, drugs, fraud, and black market activity
  surpassed law enforcements ability to respond to
  the special needs and hoards of outside laborers
  and workers who were earning 3 to 4 times their
  normal incomes with plenty of money to spend and
  appetite for good times in the rough-and-ready
  arctic

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A Glimpse Back at TAPS

• But a Can Do attitude and lots of top dollar
  contracts, prompted the producers, vendors,
  contractors, government personnel, military, all
  responded to the needs and on-the-fly solved the
  logistics and arctic problems rapidly,
  decisively, and with a great amount of ingenuity
  like no other project in history
• It was almost a money is no object urgency
  though, due to the future production economics
• Engineering challenges were met, construction and
  arctic challenges were met, quality control was
  achieved, environmental requirements were met,
  delays due to logistics were minimalized, and
  safety was reasonable
• Labor established schools, labs and certification
  courses to recruit and train the needed army of
  workers

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A Glimpse Back at TAPS

• However, when the pipeline construction was over,
  much or most the learning experiences and skills
  and products developed were forgotten, lost, or
  left with the contractor and producer personnel,
  lost to the Alaska and diluted to intellectual
  property segments in many companies throughout
  the country
• The University of Alaska was not as active as it
  probably should have been during the TAPS
  construction
• They did not chronolog the history, events,
  politics, learning experiences, documentation,
  methods, arctic specialties, advances during the
  permitting, engineering, and construction to any
  great extent
• They rarely actively supported research or
  development of solutions, methods, products, or
  tools to support the effort and develop an
  educational product line specialty for the U of A

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A Glimpse Ahead To The ANGP

• The new Arctic Natural Gas Pipeline, compared to
  TAPS, will be
• Over twice as long, in two countries with
  different laws, regulations, labor agreements,
  native authorities and agreements, permitting,
  and laws
• Will much more environmentally sensitive,
  regulated, and concerned with the collateral
  impact on the local culture, economy, and
  environment
• Will require more equipment, consumables,
  materials, skilled labor and management, business
  systems, communications, and temporary/permanent
  facilities than are available in the surplus
  production capabilities in the entire world - it
  will not so much be a competitive winner as a
  supplier, but it will take all available
  suppliers
• Pressed as much or more to compress construction
  schedules once a permit is achieved and has had
  less logistical planning than TAPSso far
• We cannot individually or collectively throw
  money at the solution this time it is already
  estimated at above 20B and the operation
  economics are tight as it is!

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What Must Happen This Time

• The Nature of the Problem
• Multiple projects must be planned simultaneously
• Systems Integration and synergies across projects
• Coordination with collateral projects and local
  programs
• Competition for available resources with other
  arctic projects and the local ambient demand

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What Must Happen This Time

• Strategic Planning must address
• Permitting, ROW, Access
• Construction Direct and Mobilization
• Construction Logistics and Support Services and
  Mobilization
• Permanent Operations/Maintenance and Mobilization
• Collateral Impacts
• Demobilization, Salvage, and Return To
  Sustainable Normal

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What Must Happen This Time

• Strategic Planning must also take a pro-active
  and in-depth commitment to the Alaska Natural Gas
  Pipeline project this time
• Collect an independent and unbiased knowledge
  bank
• Represent the full constituency of Alaska and the
  University of Alaska
• Pro-active role to document, research, and assess
  current stakeholder proposals and counter
  positions on each mode to determine
• Identify and define stakeholders and primary
  affected/impacted sets, key players and decision
  makers
• Positions of each stakeholder objectives,
  drivers, incentives, resources, limits, their
  view of competition or adversaries (and their
  similar positions identified as a stakeholder),
  schedule parameters, economics
• Accomplish research and assessment, planning that
  would not be accomplished by the stakeholders
• Chronology/historical documentation of events,
  publications, reference documentation and links
  to other information sets

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What Must Happen This Time

• Strategic Planning must also
• Reach out and establish and define methods,
  organizational modes, and liaisons with Canadian
  government, commercial, First Nation groups,
  populace constituencies, and stakeholders
• Rebuild, re-construct, and solicit the access to
  and documentation of the learning experiences and
  useful products that were developed on and for
  TAPS
• Use the opportunity to develop and enhance the
  curricula, resources, and value of the
  documentation, knowledgebase, informational
  reference, and relevance of the University of
  Alaska in such areas as
• Arctic linear and general engineering,
  construction, and logistics management,
  mobilization and demobilization, sustainable
  collateral optimization
• Mega-project systems integration, planning,
  management and control
• Linear engineering and construction methods,
  systems, simulation and planning, compliance
  management, training, feasibility/business plan
  development and assessment

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What Must Happen This Time

• The real challenge and risk, after the permit is
  achieved, will be Logistics Management and it
  must include
• Construction Materials and Equipment Maintenance,
  Spares, Consumables, Asset Management, Licensing,
  Operations and Maintenance Facilities
• Construction Support Maintenance, Spares,
  Consumables, Asset Management, Licensing, and
  Maintenance Facilities
• North Slope and Terminal Facilities Construction
  Equipment Maintenance, Spares, Consumables, Asset
  Management, Licensing, Operations and Maintenance
  Facilities
• Permanent Operations Facilities Materials and
  Equipment Maintenance, Spares, Consumables, Asset
  Management
• Collateral Industries Facilities Materials and
  Equipment Maintenance, Spares, Consumables, Asset
  Management
• Logistics Management must span more than just ANGP

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The Bottom Line

• We can not run this project the way we ran TAPS
• Cant just throw money at it
• Cant damage the local economies, determine and
  manage the maximum sustainable local contribution
  and growth, all else temporary and salvageable
• Must maximize the collateral impacts to all
  stakeholders in a way that benefits both the
  project and the other stakeholders
• Must use the opportunity this time to document
  and develop the learning experiences, research
  and science/technical/industrial products
  develop permanent curricula for later arctic
  projects

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The Bottom Line

• PLAN, PLAN, PLAN
• Understand the importance of Systems Integration
• Understand the challenge and need for
  sophisticated and integrated Logistics Management
  and Control
• Understand that planning must involve all the
  potential stakeholders, including planned
  suppliers and vendors, in strategic planning
• START NOW!