Project Management Institute

Atigun mainline reroute project

Project Management in Action

Showcase Project

Action

By the Project Team

INTRODUCTION

Even for a project team with years of pipeline engineering experience, replacing 8.5 miles of 48-inch-diameter buried pipe in a river floodplain 135 miles north of the Arctic Circle required a combination of strong leadership and innovative management to solve difficult problems and overcome unpredictable environmental hurdles.

In a 27-month period between August 1989 and December 1991, Alyeska Pipeline Service Company's Mainline Pipe Replacement team not only met these challenges, they completed the project at a cost which was 34 percent less than budget estimates based on historical costs for similar work in the area. This underrun was possible because they defined areas of financial risk clearly, and then reduced contractor contingency by assigning each area of risk to the party where it would be most financially advantageous to Alyeska.

The project was completed on schedule, in spite of environmental limitations, the Gulf War and the rigors of international procurement of materials. A common understanding of the project requirements was assured through face-to-face meetings between all parties involved in protecting the quality of internationally procured materials. Cultural differences of international vendors were recognized and managed.

The construction site was in a very remote location and the project was accomplished under some of the most harsh environmental conditions in the world; however, the safety record was outstanding, with an incident rate well below industry average for pipeline construction. The project schedule was designed to limit impact to the environment and disturbance to wildlife. Many members of regulatory agencies commented that the area did not look any different upon completion than when the project started.

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Pipeline replacement: Sidebooms lower new pipe into ditch. Winter temperatures reached -50° F during this phase.

Construction was completed with only five amendments to the contract scope of work. Changes to the fixed price construction contract were only 1.25 percent, considerably lower than industry standards.

A major change in the tie-in phase of commissioning the new pipe was accomplished without impact on schedule or cost overrun. Commissioning the new line required that two 48-inch-diameter sections of the existing pipeline be removed so that the new pipeline could be welded in place, while maintaining approximately 2 million barrels per day of crude oil flow through the pipeline at pressures exceeding 800 psi. This was accomplished by design, planning and execution of two bypasses utilizing eight 48-inch stopples. This stopple/bypass procedure was twice as large as had been attempted before on the Trans-Alaska Pipeline System. To the team's knowledge, setting eight 48-inch stopples in one day is a worldwide record. It was completed safely, and without an oil spill.

What It Means to Work in Weather That Cold

As an example of the kinds of cold-weather problems the Alyeska pipeline crew faced, consider the following story, as abridged by Reader's Digest from an article by Doug O‘Harra in the Anchorage Daily News.

In winter, Umiat, Alaska—100 miles south of the Artic Ocean—is just about the coldest place in the United States. Long since bypassed in the hunt for oil, this landing strip is now home to just three men who provide the region's only weather reports. They'll tell you what happens when it really gets cold:

Around -30°F, a good day means nothing breaks. At -40° F, getting water is usually ruled out. At around -45° F, they stop flying airplanes. At -50° F, hydraulic fluids thicken, lubricants congeal, and tires tend to fracture and split open, as if made of glass. Between -50° F and -60° F, transferring fuel stops too-it jells up, doesn't flow. At -60° F, everything stops.

Sometimes they take a cup of boiling water outside in the high -50°s and toss it into the frigid air. “It explodes,” says resident Ray Smith. “It sounds like a blowtorch. It all turns to steam. It's funny.”

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Dall sheep were frequent visitors to the construction site.

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A surveyor helps fill a ditch during extreme weather conditions,

Alyeska management, Alyeska Operations (the client) and its owners’ expectations for the project were either met or exceeded.

The project team began the project with a written Mission and Goals statement that identified “maintaining high quality” and “a personal sense of pride” of achievement as central to gauging its success. Through teambuilding and effective communication, they instilled this desire in everyone who worked on the project so that a common comment at its completion was “I have never worked on a project that attained this level of quality.”

What impressed me most was completing this project right there in the middle of all these animals, and seeing that we didn't affect them at all—that was gratifying,

Steve Newcomer Project Manager

BACKGROUND

On June 20,1977, the first barrel of crude oil produced at Prudhoe Bay, on the North Slope of Alaska, was injected into the TransAlaska Pipeline System (TAPS) and sent on its way to a marine terminal in Valdez, Alaska—800 miles to the south. Since then, more than 9 billion barrels of oil have been transported through the TAPS.

Alyeska Pipeline Service (Alyeska) is the operator for TAPS and is responsible for the maintenance and operation of the pipeline and the loading of oil tankers at the marine terminal for shipment of oil to refineries in the lower 48 states. The TAPS transports approximately 25 percent of the United States’ domestic crude production.

Alyeska conducts routine and periodic inspections of the pipeline to ensure that the pipeline remains in a good and safe operating condition. One of the inspection methods used on the pipeline is the annual running of instrumented pigs to detect both internal and external corrosion of the pipeline. Data from pig runs conducted in the fall of 1988 indicated that excessive external corrosion had occurred in an 8.5-mile section of the pipeline located in the Atigun River flood plain which is 135 miles north of the Arctic Circle in the heart of the Brooks Mountain Range.

During the spring of 1989, a project team was formed to replace the corroded pipeline. The project team was responsible for all phases of the project from start to finish and was supplemented by its owner companies, contractors and consultants.

The entire project, from conceptual engineering through construction and commissioning of the new pipeline segment, was managed by this core team of Alyeska employees. They completed conceptual engineering, selected and managed primary engineering and construction contractors, managed the international effort to procure materials and transport them to the site, and completed construction of the 8.5-mile replacement pipeline.

They were responsible for satisfying the needs and requirements of Alyeska and its seven owner companies, as well as federal and state regulatory agencies who oversee the operation and safety of the pipeline.

Design engineering and materials procurement started in September of 1989 and the project closed out in December 1991.

The timing of this project coincided with intense company activity responding to the Exxon Valdez oil spill, an intensive corrosion investigation program on the entire pipeline system, and public commentary concerning development of the Arctic National Wildlife Refuge. This not only meant the project team had to complete the project utilizing minimum company resources, but also that the project was highly scrutinized by Alyeska management, regulators and the public. Any deviations from a safe and environmentally sound completion were unacceptable.

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Location of Atigun Reroute Project, 135 miles north of Artic Circle.

The project met or exceeded all of our expectations. The project was cornpleted well under initial cost estimates and the qualify of the finished product is such that we are confident that this portion of the pipeline will require only routine maintenance for the remaining life of the pipeline.

William C. Rusnack, Chairman,
TAPS Owner Committee

PROJECT DESCRIPTION

The Atigun Mainline Reroute Project involved the replacement of approximately 8.5 miles of 48-inch-diameter mainline pipe. Along with the new pipe, the installation of three 48-inch valves was required as well as the installation of a state-of-the-art corrosion protection system. The tie-in and commissioning of the new pipeline involved special equipment and materials. This tie-in was accomplished with minimal impact to pipeline operations. It included the largest stopple/bypass operation accomplished in pipeline history to divert oil flow and isolate tie-in points on the existing pipeline.

Engineered material was purchased and furnished to the contractor at the job site. Significant items of furnished material were the mainline pipe and check valves, articulated concrete mats, special equipment for hot-tapping and stoppling and high pressure pumps required for draindown and tie-in operations.

Fabrication of the pipe was bid to 14 pipe mills worldwide. Field trips were conducted to inspect the plants of the two apparent low bidders. An Italian mill was selected to manufacture 16 miles of 48-inch-diameter pipe. The project required 8.5 miles of pipe and the remainder was placed in Alyeska contingency stock.

The pipe was coated with fusion bonded epoxy (FBE) and concrete at the A1-Qahtani plant in Saudi Arabia. This plant was selected after a worldwide review of plants that could coat this size of pipe and meet the extremely stringent specifications. A1-Qahtani was responsible for the import and export of the pipe in Saudi Arabia.

Ocean shipment of the bare pipe from Italy to Saudi Arabia and for the coated pipe to the tidewater port of Valdez in Alaska was arranged by Alyeska. The shipment of the pipe proceeded without incident in spite of the pipe leaving Saudi Arabia immediately prior to the outset of the Gulf War.

Three 48-inch mainline check valves were purchased from Cooper Industries/WKM, located in Houston, Texas, with design similar to the existing Atigun valves.

The fabrication of 1,340 articulated concrete mats took place in Fairbanks, Alaska, during September and October 1990.

Major equipment procured for the draindown/tie-in included the five additional 48-inch by 48-inch split tees and stopples to supplement the three sets already owned by Alyeska and a high pressure reinfection pump required to drain down oil in the pipeline.

This was the largest single project undertaken on the pipeline since it was put into operation in June 1977.

TECHNOLOGICAL CHALLENGES

Remote Location

The remote location of the project, 135 miles north of the Arctic Circle, meant that it was necessary to provide standalone facilities to accomplish the construction and commissioning of the replacement pipeline. These facilities included housing and food, transportation, warehousing, maintenance, equipment, and offices for a population of approximately 500 personnel.

The closest urban center was 350 miles south of the project site and accessible only by a gravel road or airplane. All equipment and materials were either trucked in or flown in on charter aircraft.

In addition to the remote location, the construction site is subject to flooding, rockslides, avalanches, and temperatures that go as low as -60°F in the winter.

Because of the dangers of avalanches, rockslides, mudslides and slush flows to aboveground structures, the original pipeline in the Atigun River flood plain was buried. Burial depth averaged 15 feet to prevent damage from scouring caused by river flooding. Scouring has occurred up to depths of 10 feet in the area. After in-depth engineering studies, it was recommended that the most cost effective design was to bury the replacement pipeline with a minimum coverage of 5 feet and then provide mechanical protection by applying 1 1/4 inch thick concrete coating to the pipe and installing river diversion devices (articulated concrete mats and gabions) in the areas of high stream velocities.

Corrosion Protection

One of the major challenges in obtaining a quality job was to ensure that the new pipe would last the economic life of the pipeline. The external corrosion occurred on the original pipe because of a coating system failure. This meant that all aspects of the corrosion prevention program had to be done correctly to ensure that the new line would not have similar problems.

A task force was established with coating experts from Alyeska and several of its owner companies to determine the best possible coating system for this application. Battelle Laboratories of Columbus, Ohio, was hired to do extensive laboratory testing for coating systems. Fusion bonded epoxy covered with 1 l/4 inches of concrete was selected as the best coating system.

A worldwide search for coating applicators determined that the facility most qualified to apply this coating was located in Saudi Arabia. Our dedication to quality was severely tested when pipe manufactured in Italy was ready to be shipped to the coating plant in Saudi Arabia. Tensions in the Middle East were mounting at an alarming rate. If the Gulf War started before the pipe was coated and shipped out of Saudi Arabia, the project could be delayed indefinitely. A decision was made not to deviate from high quality standards. The pipe was coated, loaded out and shipped barely one month before war started.

Mission Statement

The mission of the Mainline Pipe Replacement Project is to produce a constructible, cost effective project that will have the quality to provide safe operation throughout the economic life of the pipeline. The project shall be managed to ensure that the project goals are achieved, and that construction will be completed in a manner that makes all involved proud of their participation.

Project Goals

The following goals are established for the successful completion of the project.

  1. There shall be no reportable oil spill of any magnitude throughout the duration of the project.
  2. There shall be no unscheduled interruptions to throughput caused by any project activity.
  3. The engineering work will result in a design that will last through the economic life of the pipeline and the construction work shall be completed with the quality of workmanship and materials that are specified in the design documents.
  4. The work shall be completed and the pipeline restored to normal operational efficiency within the specified project duration.
  5. The final cost of the project shall not exceed the project budget.
  6. There shall be no violations of any provisions specified in the permits or any federal and state statutes that are applicable to the project.
  7. There shall be no personal injuries that qualify as a lost time accident.
  8. There shall be no single incident of damage to Alyeska-owned property that is greater than $1,000.

The mandate to have a good quality coating system also was a fundamental consideration of many other design and construction decisions. Focusing on this objective proved to be a guiding star for the project team.

Design Change

Just prior to field mobilization for pipe trenching activities in December 1990, a major change in procedures for tie-in of the new pipeline to the existing pipeline was made by Alyeska's management. Rather than stopping oil flow to weld in the new section of pipe, they directed that the oil flow was not to be interrupted. This meant isolating the old section of pipe for tie-in, and the design of two temporary bypasses. The project team changed the existing plan, redesigned the tie-in and commissioning procedures, procured specially fabricated 48-inch, long-lead, stopple equipment to isolate the tie-in sections, and designed and procured a skid-mounted high-pressure reinfection pump.

MANAGEMENT CHALLENGES/OPPORTUNITIES

Alyeska's executive management issued the following objectives and guidelines for the execution of this project:

  1. The project team would manage the job from its conception to completion with total responsibility and authority for the project.
  2. The project team would be a small, highly skilled, totally dedicated group of individuals who relied minimally on company resources. The project was to be accomplished using contractors as much as possible.
  3. The solution to the Atigun corrosion problem was to be permanent and meet or exceed the remaining life of the TAPS pipeline. Quality of the finished product was a prime objective.
  4. There would be absolutely no oil spills. The impact of any spill would be devastating to the oil industry since this was the first major project since the Exxon Valdez oil spill.
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Placing articulated concrete mats over new pipeline for scour projection in canyon area of construction zone.

ORGANIZATION

A totally new concept for Alyeska project management was instituted for this project:

  1. The project manager was given responsibility for the project from concept through commissioning.
  2. The seven Alyeska employees who made up the initial project team were assigned specific roles and responsibilities in their particular field, and were tasked to oversee the work of contractors.
  3. Team members participated in the conceptual engineering and remained with the project through commissioning.

The project team included two positions new to Alyeska. A permit coordinator ensured necessary permits were identified and obtained. The other position was a project quality control engineer responsible for the implementation of the project quality program.

The engineering coordinator worked in the offices of the engineering contractor to administer the engineering contract, oversaw design work and acted as liaison with Alyeska's engineering department.

The project team effort provided an excellent example of how a project should be undertaken from conception, to design, construction and finalization.

Kenneth M. Peacock
Pipeline Manager
Alyeska Pipeline Service Company

The construction manager administered construction contracts and coordinated the services provided by Alyeska.

At the time the decision was made to change the tie-in process from shutdown/ draindown to stopple-and-bypass, an Alyeska project group with experience in the use of stopples was integrated with the core team to accomplish this portion of the work.

To ensure that the Mission and Goals were being achieved, management techniques used included partnering, teambuilding, empowerment, establishment of goals and face-to-face meetings to bond the team members with their counterparts in government agencies and contractors’ staffs.

The project team was responsible for satisfying the needs and requirements of its clients (Alyeska and its seven owner companies), as well as federal and state regulatory agencies who oversee the operation and safety of the pipeline.

CONTRACTORS

Williams Brothers Engineering Company (WBEC) in Tulsa, Oklahoma, was selected as the design engineering contractor after extensive research and interviews by the project team. WBEC was also responsible for providing new specifications for engineering design and inspection of purchased materials. Upon completion of design engineering, field engineering and assurance inspection services were provided during construction.

The construction contractor, Price/Northland, J. V., Anchorage, Alaska, was selected in the same detailed manner as the engineering contractor. The construction contract was a fixed price contract except for items where quantities could not be determined in advance. These items were contracted on a unit price basis.

The strategy that guided the construction contract was to assign all work to the contractor for which he was experienced, leaving Alyeska to provide those services which could not economically be provided by the contractor. Alyeska provided the following services:

  • Communications, including telephone, computer data links, radio and cable television. Alyeska has ongoing contracts for operation of the pipeline communications systems and extending the service to the contractor camp at Atigun was provided by Alyeska.
  • Air transportation from Anchorage and Fairbanks and the project site. Alyeska contracts weekly flights for pump station personnel in the project vicinity. Additional flights dedicated to transporting project personnel were arranged.
  • Camp security.

The contractor provided all of the remaining services necessary to complete the project, including operation and maintenance of the camp to house the construction work force and operation and maintenance of all construction equipment.

The contract allowed for the following three methods of payment to the contractor for the work performed, depending on how well the scope and quantities of an activity could be defined:

  1. Fixed-price where scope and quantities could be defined. Unit prices were also included in the contract to facilitate negotiation of changes. This applied to approximately 90 percent of the contracted work.
  2. Unit-price where only scope, not quantities, could be defined. This applied to ditch dewatering and rock excavation.
  3. Force account rates for labor and equipment. This applied to the draindown and tie-in of the new pipeline where Alyeska retained control of the operation while utilizing some contractor resources already mobilized at Atigun.

Since 90 percent of the construction work could be contracted at fixed prices, it was decided to competitively bid the work to qualified contractors who were experienced in the construction of large-diameter Arctic pipelines. The process of selection was to invite 12 contractors with this experience to submit technical proposals describing their qualifications. After review of the proposals and interviews with these contractors, a short list of four contractors was selected to competitively bid for the work.

Upon receipt of the bids, a two-step bid evaluation followed. Alyeska Contracts Department analyzed the commercial terms, including the bid tabulation, and the project team performed the technical review including evaluation of each contractor's proposed construction plan, schedule, equipment spread and experience of key management personnel.

Both reviewers rated the bids separately and then compared the ratings. The two lowest bidders were identified and interviewed from which final contract negotiations with lowest bidder resulted in a contract award.

Breakthroughs in Alyeska's contract administration procedures were implemented that allowed contract change orders to be negotiated by the project manager and construction manager in the field. These change approvals were subject to the financial limitation vested in these positions by company policy.

During the construction of the pipeline under the fixed-price contract, a total of five amendments were made to the contract. These amendments, which reflected a mere 1.25 percent change to the original fixed-price contract, attest to the completeness of the scope of work and the outstanding management of the contract.

Another improvement to contract administration procedures entailed the verification of installed quantities in the field, with agreement from the contractor prior to preparation of his invoice. This ensured that invoices were paid within 30 days of submittal.

Alyeska's project team managed and coordinated the efforts of Price/Northland, J.V. and Williams Brothers Engineering to ensure executive management's objectives were met, as well as the requirements of federal and state regulatory agencies which are responsible for overseeing the overall operation and safety of the pipeline. Alyeska was required to obtain 35 separate permits and design approvals from nine different regulatory agencies before construction of the pipeline could begin.

I think this is me of the finest hours in Alyeska. The phanning, the engineering, the execution of this project were absolutely fantastic. I think this is really going to set a standard in Alyeska for the future.

James B. Hermiller
President
Alyeska Pipeline Service Company

QUALITY MANAGEMENT

The Mission and Goals statement established by the project team set a standard for extraordinarily high levels of quality. This instilled the desire to obtain quality in all aspects of the project. Team members did not rely solely on the project quality control engineer to achieve quality, but agreed that all project personnel had a vested interest in the quality of the project.

Project quality requirements mandated by the client and approved by regulatory agencies required the formation of a complex quality management system. This systematic approach to quality provided a detailed verification trail of construction events. This system was composed of three separate levels.

The first level of quality control (QC) was placed with the construction contractor where it would have the greatest influence upon the work. The construction contractor provided QC inspection of onsite work activities and offsite work produced by its subcontractors.

The second level of quality management was performed by the engineering contractor's quality assurance inspection organization. This group witnessed, monitored and ensured that construction contractor QC personnel followed the approved QC Plans.

A third level, comprised of Alyeska QC personnel, administered the overall project quality management program through a series of quality verifications, site surveillance activities, internal audits, orientation sessions and quality meetings.

Alyeska Quality Assurance, acting for the client, was an active participant in all stages of the project and supplemented these three QC levels by conducting two formal audits and numerous field surveillance trips.

All three levels of quality were represented at daily coordination meetings between the project team, engineering representatives, construction contractor and other applicable personnel. Quality status, existing problems and foreseen future quality difficulties were reported. Statistical information was transmitted daily to appropriate personnel remote from the work site.

Unresolved quality issues and anticipated problem areas were further discussed at daily meetings of quality supervisors, documentation personnel, regulatory agency field officers, engineering and project team representatives, survey supervisors and, when necessary, construction foremen.

Uniform inspection standards were established at a pre-work orientation conducted to familiarize the inspectors with the quality requirements of the project and to introduce each of them to their counterparts in the other levels.

Other pre-activity sessions utilized design engineers, project engineers, project team management, contractor management and appropriate manufacturer's representatives to clarify and explain specific work requirements to inspectors and craft supervisors.

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Bypass piping.

TIMING AND SCHEDULING

Environmental constraints had a major impact on the development of the construction schedule. Mobilization, camp construction and right-of-way work was scheduled for the fall of 1990 to minimize wildlife disturbance and to take advantage of thawed soils and mild temperatures. Pipeline trenching, pipe laying and backfill operations were scheduled to be completed during the first two quarters of 1991, prior to winter “breakup.” This allowed ditching during the lowest water level conditions, provided a better quality installation, and minimized environmental disturbance to fish and wildlife. During this period, ambient temperatures were typically well below zero with as little as three hours of available daylight. This created difficult working conditions for men and machinery. However, temperatures and available daylight increased from January to June, which improved working conditions and morale. Work in the canyon area of the project was completed first to minimize the exposure of personnel to springtime avalanches. The new pipe had to be backfilled prior to spring thaw and potential flooding in May.

Clarification of Allegations

Alyeska's Quality Control (QC) and Quality Assurance (QA) programs have been questioned by several former quality control inspectors. Five former inspectors have filed complaints with the U.S. Department of Labor. Alyeska strongly disputes the allegations.

The Department of Labor has found that the inspectors’ allegations cannot be substantiated. Those cases are now on appeal to a higher level within the DOL.

The Atigun pipe replacement project has not been the focus of these allegations.

Project management strategy was that “quality” was one of the primary considerations in developing the project schedule. Milestones would be set based on seasonal and environmental requirements that would yield the highest quality job.

Seasonal considerations such as ambient temperatures, frozen soils, available daylight (3-4 hours during winter), avalanche dangers, and slush flows affected project timing. Fish habitat, raptor nesting areas, Dan sheep lambing season, caribou migration, bear habitat and protection of the tundra were given primary consideration in setting milestones. These constraints, and the desire to replace the pipe in a timely manner, kept constant pressure on the team to complete the job as quickly as possible.

The project schedule spanned 27 months from conceptual engineering through commissioning. The project team assigned durations and logic to funding, engineering, construction, long-lead material procurement, contracting and permitting activities in order to develop a master schedule. The master schedule was then used to develop detailed engineering and construction schedules.

The activities for the engineering and construction phases were organized into a work breakdown structure (WBS) and organizational breakdown structure (OBS) developed by the project team. These breakouts were established early and all cost and progress were reported within these structures for visibility of problems and attainment of cost and schedule forecasts.

The engineering design schedule was set up and maintained by the engineering contractor. The construction schedule was set up and maintained by the construction contractor. Updates from these detailed schedules were incorporated into the project master schedule maintained by Alyeska for forecasting and project coordination.

During the conceptual and design engineering phases, updated engineering schedule data was compared to actual cost data and used to forecast the completion estimate for project engineering costs and labor hours. These forecasts were shown by WBS and OBS to isolate problem areas within the schedule.

The project end date was important because the complexity of the tie-in demanded the coordination of many different contractors and operational groups. The delay of these activities would not only affect project costs, but would push the tie-in into more severe winter conditions. Changes in scope were incorporated immediately into the schedule, allowing Alyeska to evaluate the impact of all pending changes on the project.

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Cutting old pipe in preparation for tie-in.

Despite the change to the tie-in and commissioning design, a high-quality project was completed within the originally allotted 27 months from conceptual study to commissioning.

COST

In September 1989 an interim budget was established for the engineering design and purchase of long-lead materials. In July of 1990, an overall project budget of $140 million was approved. The final project cost was $92.3 million, which was 34 percent less than the original estimate. This was the result of many management decisions innovative to Alyeska. The most distinguishable cost saving decision was to competitively bid the construction as a fixed-price contract. This had not seemed feasible before because of the perceived financial risk to the contractor for working in such a harsh environment and with the large number of uncertainties. Risk to the contractor was reduced in areas of undefinable quantities, such as dewatering and rock excavation, by removing these areas from the fixed-price work and establishing unit prices for changes in scope. This reduced financial risk to the contractor resulted in savings to Alyeska. Additional cost savings were attributed to a systematic practice of promptly negotiating all change orders in the field before the project could be impacted by delays.

The original construction estimate was based on Alyeska's historical pipeline construction costs and Alyeska pipeline maintenance costs. A risk analysis, employing probability curves and confidence levels established a 20 percent contingency as part of the total project estimate of $140 million. This contingency took into consideration unpredictable risks due to the harsh environment and the remote location of the project. The original estimate was the baseline to measure project success.

Refinement of project costs was an ongoing effort from the start of final design engineering through project closeout. As the project progressed, the cost forecast was reduced appropriately based on current projections. Reductions were made to the contingency where a reduction in risk was identified. At project completion, only 22 percent of the original contingency had been expended.

Costs were tracked to an appropriate cost breakdown structure (CBS) level to facilitate direct forecasting. Total project costs and reports of the field period costs and labor-hours were compared to the budget and reviewed with the project manager and construction manager weekly.

The detailed project estimate was organized in a data base file to permit detailed cost tracking and forecasting. The database was updated once a month with current expenditures. This allowed the project costs to be reported at the lowest level of detail and measured against the baseline estimate. Monthly, these reports were used to forecast the project estimate at completion.

The construction contractor reported physical work progress weekly. Cost controls utilizing variance analysis as well as integrated cost/schedule reporting were employed for the purpose of establishing current cost and schedule position of construction. The most notable cost tracking procedure was that the contractor incorporated a pre-negotiated schedule of values into the work schedule so that contract payments could be calculated based on physical progress. Physical progress agreed to in the construction schedule was calculated at the lowest level of detail into earned value for monthly progress payments. A major benefit to handling progress payments in this manner was the elimination of conflicts when measuring physical value earned against schedule of value. This also ensured change order impacts were incorporated in the schedule as they developed. The contractor submitted detailed cost reports directly from the Open Plan scheduling system as part of monthly pay requests to Alyeska.

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Pre-heating ends of pipe beside ditch before fit-up and welding.

RISK MANAGEMENT

The project team was fully aware that a project of this size and nature would involve some major risks to meet the goals and objectives set forth by management and the team. At the onset of this project, all elements of risk were identified and, if considered to be excessive, were managed by redesign or procedural change to reduce that risk with minimal or no change in cost.

Major risks anticipated in the construction and tie-in of the new pipeline segment were:

  • Ditching next to a high-pressure operating crude oil pipeline.
  • Avalanche safety for both the new pipeline and construction personnel.
  • Tie-in of new pipeline segment to the existing mainline shutdown/drainback vs. stopple-and-bypass tie-in without pipeline damage or oil spills.
  • Oil spills resulting from inadequate design, construction mishap or equipment failure.

Clearly, major risks were at hand, any one of which could create a major oil spill in the Atigun and Saganavirktok Rivers, both highly sensitive fish streams.

Belowground pipe construction was a design requirement due to both river scour problems and avalanche dangers. Of the two possible ditch construction methods, blasting was selected over conventional ditching as it was considered to be less risky to personnel and equipment because the blasting could be controlled using well-developed procedures.

Blasting was required in close proximity to the existing operating pipeline for excavation of bedrock and frozen soils. In many cases this blasting took place less than 30 feet from the existing operating pipe. In an effort to minimize the risk, detailed technical procedures were developed based on experimental work conducted by the American Gas Association. As part of these procedures, verification test blasts were conducted at the project site. It was specified that the construction contractor submit a detailed blasting plan. Ground particle velocities were carefully monitored for each blast and adjustments were made to the blasting plan based on this monitoring. Non-electric detonators were specified to reduce risk of accidental detonation. Blasting was successfully used without damaging the existing pipe. This resulted in a significant cost savings when compared with other excavation methods.

The southern portion of the project was located within an area of potential avalanche activity. The only road access to the project from the south was subject to periodic closure due to avalanche activity. Avalanche experts were consulted to better understand the risk and to develop forecasting and control methods. The area was extensively mapped and potential avalanche paths were identified prior to construction. During construction within the avalanche areas, a full-time avalanche control and forecasting person was present. Explosives were utilized to shoot down potential avalanches and unstable snow deposits prior to construction personnel working within the area of risk. Using these methods and advanced planning, the safety and financial risk from avalanches was significantly reduced. The recognition and management of the avalanche danger to personnel and equipment throughout the winter construction period resulted in no loss of equipment or personnel injury.

The project has been completed with a minimum of surface disturbance. The end result is probably the cleanest major pipeline construction spread that I have ever seen.

Michael L. Menge, Chief,
Branch of Pipeline Monitoring
Bureau of Land Management

Initially, tie-in of the new 8 l/2-mile pipe segment was to be accomplished by a complete draindown of the segment into pump station storage tanks lying north of the construction site, although highly undesirable due to the revenue loss of four million barrels of oil resulting from a two-day pipeline shutdown to accomplish the task.

In lieu of this method, a pipeline stoppling system was considered and ultimately used. Alyeska had, for a number of years, been developing such a system. Basically, this stoppling system entails hot-tapping of the 48-inch pipeline under maximum flow/pressure conditions and inserting a plug which internally seals and can withstand the full 1200-psi pipeline working pressure. Such stoppling systems had been successfully used in smaller pipeline systems. However, Alyeska's experience with 48-inch stopples had been minimal. This past experience dealt with pipeline bypass operations using two stopples (single bypass with stopple on either end) whereas the Atigun Project specified eight stopples, twice as many stopples as industry standards.

Recognizing this as a formidable task, Alyeska initiated four efforts to directly address the use of stopples on the Atigun Project as follows:

  1. Conduct a risk assessment of the potential problems associated with use of double stopples as compared to a single stopple.
  2. Conduct a design review of the split tee and stopple designs to eliminate weaknesses.
  3. Develop procedures for the attachment and stopple insertion at pipeline slopes up to 10 percent.
  4. Full-size testing of actual hardware.

A consultant was hired to conduct a risk assessment of using stopples. Based on their findings, many detailed procedures were developed to reduce the most prevalent risk, that of damaging the pipe or hardware with the lifting and placement of massive equipment close to the operating pipeline. The final decision was to use double stopples to provide extra protection to the environment.

The effort to develop new procedures for installation of the stopples was performed through full-size testing of actual hardware (pipeline, split tees and stopple). This effort was considered to be most beneficial as it was conducted by the same personnel who would be utilized under actual project field conditions.

Utilization of the double-stopple/double-bypass tie-in concept rather than the shutdown/draindown concept actually reduced risk due to the preliminary offsite development work using full-size equipment and the same personnel. Additionally, it reduced the overall cost of such a tie-in to less than 20 percent of the two-day revenue loss to the owners of TAPS.

COMMUNICATIONS

Communications were emphasized from the project start with teambuilding sessions, weekly project status reports with contributions from all team members, and periodic project meetings. Geographical problems were solved by establishing appropriate project team representation at key offsite locations during the project. A small Alyeska engineering team was established within the design contractor's office. Alyeska representatives were also onsite in Italy and Saudi Arabia during the pipe manufacturing and coating process. This permitted key decisions to be made quickly. Interpreters were hired to permit better communications within non-English-speaking countries. At periodic intervals presentations were made to the client, Alyeska, owners and government regulatory agencies to build consensus and confidence in the project design and progress.

It is said that meetings are a “necessary evil,” but this project proved that well-conducted meetings are a critical ingredient for a successful job. One example is a meeting held in Houston, Texas, to coordinate shipment of the 16 miles of 48-inch-diameter pipe. Improper shipment of the pipe could severely damage the coating. Representatives from the steel mill, coating applicators, engineering inspection firm, Alyeska inspection, marine inspectors, Alyeska transportation, ship owners and the freight forwarders met to go through the details of our handling specifications. One of the shippers who attended the meeting said that he had spent his life in shipping and that this was the first time he had seen all the players in the same room at the same time. The expectation was clearly established that the pipe needed to arrive on the job site, halfway around the world, in good condition even though each piece of pipe was handled about ten times. The pipe was received in excellent condition because extra time and money was spent to establish expectations, obtain clear understanding of our needs, and to establish commitment and buy-in.

Several different communication mediums were used by the project for day-to-day activities. These included meetings, electronic mail, telephone, formal written correspondence, and personal contact. During the construction work, daily meetings were held each morning with key personnel including Engineering, Project Management, Quality Control, Survey, and the construction contractor. Problems were identified and frequently solved at these meetings because all of the involved parties were present. Electronic mail and FAX machines were used to communicate between the remote construction site, Anchorage, and Tulsa.

Government agencies and regulators were contacted at the very start of the project and were involved in all stages of the project. This involvement promoted a good working relationship with all concerned parties.

AUTHORS

This paper was put together in appreciation for all the people and contractors who worked on the Atigun Mainline Reroute Project. The major contributors to the paper were:

Larry R. Blachut, Quality Control Engineer

*Timothy G. Bridgman, Construction Manager

*Gerard L. Farkas, Cost and Scheduling Engineer

Marva E. James, Administrative Secretary

* Patrick G. McDevitt, Engineering Coordinator

Werner R. Munk, Engineering Advisor

* E. Steve Newcomer, Project Manager

*James H. Nichols, Cost and Scheduling Engineer

Linda M. Powell, Video and Communication Specialist

Clayton M. Rue, Field Engineer

* Marvin N. Swink, Permits Coordinator

* PMI Members

Frequent evaluations determined the project progress and provided recommendations for improvement. A three-day critique session was held in the middle of the job by the construction and engineering contractor and Alyeska. A four-day critique was held at the end of the job. This included some government regulators being onsite full-time, and others who went to Italy to observe the pipe being manufactured and to Saudi Arabia to observe the application of pipe coating. Their opinions were always listened to and they were allowed to participate in discussions. Every effort was made to make this a win-win relationship for all involved. The Alyeska project manager was the advocate for these basic human resource management techniques and worked closely with the management of the engineering contractor and the construction contractor to achieve the desired results.

Good communications and coordination were established early on. Creation of a Mission and Goals statement by the team provided clear direction and “buy-in” throughout the project. The Mission statement established the desire for this to be a well-run project. The specific goals were tough enough to really challenge the accepted norm.

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This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

JANUARY 1993

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