Company seeks to dismantle oil terminal on Cook Inlet shore

KENAI — A subsidiary of Hilcorp Alaska is seeking to begin dismantling an oil terminal on the Cook Inlet next year after oil is expected to start flowing through a reconfigured pipeline system in September.

Cook Inlet Pipeline Co. filed for permission this month with the Regulatory Commission of Alaska to begin shutting down the Drift River Oil Terminal in early 2019, the Peninsula Clarion reported.

Hilcorp is expecting to complete the $73 million project this year to reconfigure an existing underwater pipeline between Beluga and Ninilchik to carry oil instead of natural gas. The pipeline system connects fields on the west side of Cook Inlet to the Andeavor Refinery on the east.

Oil is currently transported across Cook Inlet to the terminal by tanker.

Hilcorp is also planning to disconnect the Christy Lee Loading Platform, which is currently connected to a large crude oil tank farm. The farm contains seven tanks that can each hold about 270,000 barrels of oil.

The loading platform will be placed in an inactive "lighthouse" mode until the company removes it.

Hilcorp estimates that mothballing the loading platform and decommissioning the tank farm and its pipelines will cost about $21 million.

The terminal is located near the active volcano Mount Redoubt.

Decommissioning Drift River "will reduce the environmental hazards inherent in the marine transport of crude oil by tankers and the storage of large volumes of crude oil below an active volcano," the company said in filings. "The proposed system modifications will also substantially reduce the amount of oil that is stored in any one location, thereby mitigating the risk of a large spill of stored oil."

Cook Inlet Pipeline Co. is a subsidiary of Harvest Alaska, which is the pipeline-owning subsidiary of Hilcorp.