Exhibit No. ATC- 2"
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`TAPS Strategic Reconfiguration Program Background
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`Overview
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`The TAPS Strategic Recanfiguration Program is a multi- g
`year phased initiative requested by Executive
`Management to favorably position Alyeska for future
`operation of the Trans-Alaska Plpeline System. The
`program |s responsible for determining and implementing
`the optimal line-wide configuration and asset utilization to
`achieve affective and efficient future operation and
`maintenance of the systam.
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`This preliminary information is Intended to provide a
`summary of the Program's work scope, reguired
`deliverables, execution methodology, and schedule.
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`Background
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`The Strategic Reconfiguration Program originally began as the Control and Information
`Systems Integration and Upgrade project intended to develop and implement a company-wide
`"Strateglc Framework” for our control and business systems and to look at a possible business
`case for upgrades to these systems. A team composed of Alyeska personnel and Kenonic (a
`controls engineering firm specializing in systems integration) began work on the frameworlk
`strategy. Their work was announced in a September 30, 1999 KYP as the work started.
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`This original work scope was the continuation of work done by the FBU Conceptual Engineering
`Group in mid-1999 when they reviewed an earller 1997 Pipeline control systems study called
`the "Contrel and Telecommunications Long Range Plan™ (C&T LRP). They re-evaluated this
`earller study and concluded that a partial Pipeline control systems upgrade effort afforded
`significant operational and maintenance benefits, was economically viable, and recommended
`proceeding with further development. They also saw some potential in evaluating other
`configuration options (use, type, and location of installed equipment) concurrent with this
`work to ensure we took full advantage of any benefits offered by technology advances.
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`In late 1999, Bob Malone recognized an opportunity to move the company's overall long range
`strategic planning process forward by leveraging this ongoing system-wide control/business
`system work. To do this, he requested that we significantly expand the scope of the original
`effort to include a determination of the optimal future configuration and asset utilization for
`the entire system from Pump Station 1 through the Valdez Marine Terminal. Bob saw this next
`step as essential to our corporate strategy for achieving "Operational Excellence” through the
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`Exhibit No. ATC-
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`most effectivefefficient system operation. He also saw it 8s necessary to our desire to be well
`positoned for other future opportunities.
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`Current Work Scope
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`In addition to completion of the original strategic framework, the first phase of the TAPS
`Strategic Reconfiguration Program will involve the development of implementation strategies
`and plans for future asset configuration/utilization, facility and right-of-way maintenance,
`improvements in contingency response capabilities, staffing, and control and business system
`upgrade and integration. It will also provide recommendations for other major configuration
`alternatives identified as possibilities, After completion and approval of the Phase I
`deliverables ( long range strategies and implementation plans), the program will progress to
`actual field Implementation of those conflguration/utilization alternatives determined to be
`most beneficial to our future operation.
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`Specific deliverables planned for the first phase of the program Include:
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`« Completion of the company-wide control and business systems upgrade and inbegration
`strategy known as the "Strategic Framework®, e.g. a control and business systems
`“specification® -
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`= Development of a system-wide TAPS reconfiguration and asset utllization strategy and
`Implementation plan to optimize future system operation and efficiency, e.g. determine
`the future system-wide needs for physical assets (number, capacity, efficlency, and
`location of pumps, drivers, tanks DRA sites, berths, utllity systems, and so forth)
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`« Development of line-wide maintenance and oil spill response strategies that support the
`identified TAPS reconfiguration program strategy
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`« Development of a long range staffing plan for future personnel skill requirements to
`support and most effectively implement the identified TAPS reconfiguration program
`strategy
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`« Development of detailed control system functional requirements and complimentary
`business system integration opportunities by location and system
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`« Development of a Phase II AFE for final design and implementation of the identified
`reconfiguration and supporting strategies for selected prototype locations/systems
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`Additional Information - Phase I Deliverables
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`The development of a control systems "Strategic Framework” is an ongoing Corporate
`Information Technology (IT) initiative to determine the needs of the organization in accessing
`process control and business data, identify opportunities for increasing the capabllity and
`efficlency of data collection and sharing, and establish guidelines/standards to be used for
`future control system installations in the areas of system architecture, communications
`protocol, procurement of system hardware/software, and system security. The deliverables
`from the Strategic Framework initiative are necessary to the overall TAPS strateqgic
`reconfiguration program and assistance with this effort has been incorporated into the
`Program scope.
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`Exhibit No. ATC-
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`TAP i i ilization Strategy
`The development of a TAPS reconfiguration and asset utilization strategy Is a line-wide
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`analysis of our existing physical assets (facilities and equipment) to determine if we have the
`most effective and efficient combination employed for moving, storing, and loading oll in the
`future. The evaluation will look specifically at the number, type, size, efficiency, and location
`of our physical assets (pumps, drivers, storage tanks, loading berths, power generators, DRA
`sites, and so forth), e.g. the current "configuration”. It will then compare the current
`configuration/utilization with other currently available equipment, technology, utility services,
`and other options to-be-determined. Should significant potential improvements be identified
`from modifying the current system configuration, a cost/benefit analysis will be completed for
`these possible options. This will result in gquantified recommendations for future operation as
`well as optimal timing for making the recommended changes. These final recommendations
`will become the basis for the TAPS reconfiguration/utilization strategy.
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`Pipeline Maintenance Strateqy
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`Concurrent with the preliminary engineering activities previously discussed a maintenance
`strategy for the future maintenance of the Pipeline facilities will be developed. This strategy
`will follow Alyeska's ongolng migration to an overall equipment maintenance strategy (EMS)
`specifically designed to maximize planned maintenance vs. reactive maintenance through
`frequent equipment/process monitoring, early detection of potential failures, and appropriate
`mitigating action. The strategy will take advantage of ongolng EMS efforts on the Plpeline and
`will rely heavily on maintenance planning and implementation performed by dedicated
`malntenance crews.
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`Qil Spill Contingency Response
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`An enhanced oll spill contingency response strategy will be developed consistent with future
`system configuration and leveraging planned upgrades to the Pipeline’s control and business
`systems. The revised strategy will focus on anticipated improvements to Alyeska's abilities in
`spill prevention, early detection, mitigation, and response capabilities. Specific areas to be
`reviewed include enhancements to the operation and maintenance of process/equipment
`through upgraded systems, possible improvements in leak detection systems for the Pipeline
`and facilities, potential installation of physical barriers to the migration of oil in the vicinity of
`waterways or other sensitive areas as appropriate, and Improvements in rapid response
`capablliities. The effort will require continuous Interface with regulatory agencies to ensure
`concurrence with proposed changes.
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`Staffing
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`The implementation of the strategic reconfiguration strategy is expected to result in changes
`to required skill levels and numbers of operations, maintenance, and other support group
`personnel. It will aimost certainly impact our future training needs. As part of the TAPS
`Strategic Reconfiguration Program, an assessment of current and future skill levels and
`training of required personnel will be completed. This effort will provide for the development of
`a long range staffing plan to ensure the right personnel resources are available to support
`future anticipated needs.
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`Control B Business Systems Functional Requirements.
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`Exhibit No, ATC-
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`Detailed system integration and control system engineering will be completed to define the
`functional requirements for any future upgrades to control and business systems. This
`engineering effort will establish the specific equipment and process monitoring and control
`points required for safe operation and maintenance, identify the most appropriate means of
`collecting and distributing data to users requiring the information, and develop a specific scope
`of work for any subsequent final design and implementation. This portion of the work will also
`evaluate the control system needs of the OCC. The review work will utilize a combination of
`Alyeska Engineering personnel and specialized system integration and/or control systems
`engineering contractors, with direct and continuous Involvement from Alyeska operations and
`malntenance personnel.
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`Physical Asset Evaluation Methodology
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`Numerous stand alone conceptual engineering studies have been completed over the past
`years to determine the feasibility of individual asset configuration and/or utllizatlon options.
`These past evaluations have Included such options as: additional system tankage; upgrades of
`pumps and/or drivers; disposition of idled pump station topping units; utilization of excess
`power generation capacity; lease or sale of Berth 1; demobilization of West Tank Farm;
`electrification of pump station drivers; partial or complete reconfiguration of idled pump
`stations; and upgrade of control systems. The studies resulted in the identification of various
`minor opportunities for improvements to TAPS operations and efficlency. However, none
`presented a compelling economic case for proceeding as a stand alone initiative.
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`The current program will use these previous studies and others in a "system-wide” value
`englneering approach designed to formulate the optimal combination of asset utilization and
`equipment/systern upgrade options to achleve maximum economic and other benefits to
`future TAPS gperation and maintenance. This optimal configuration will form the basis for our
`future long range configuration/utilization strategy. Implementation plans will then be
`advanced to a point where a "go / no go” declsion can be made by Alyeska Executive
`Management and the TAPS Owners.
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`Preliminary Schedule
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`Control Systems Strateglc Framework 08/07/00
`TAPS reconfiguration/asset utilization strategy and plan 10/31/00
`Maintenance, oil spill response, and staffing strategies 12/15/00
`System Integration and functional requirements 12/15/00
`Preliminary Phase II economics for a "go/no go® decision 01/15/01
`Completion of prototype field reconfiguration work scope 10/31/02
`Completion of anticlpated reconflguration program work scope 12/31/04
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`Program Team
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`A relatively small program management staff will perform the preliminary Phase I work scope.
`The staff will consist of four positions, namely: a Program Manager, a Sr. Project Engineer, an
`Operations Coordinator, and a Project Lead. Part-time assistance will be required from various
`of Alyeska's Engineering, Operations, Maintenance, IT and other support groups to develop the
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`Exhibit No, ATC-
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`reconfiguration/utilization strategy, establish the control/business systems functional
`requirements, and provide Input for development of the maintenance, contingency response,
`and staffing strategies. These positions will be filled by subject-matter-experts recruited from
`the respective groups.
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`Currently identified personnel are:
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`FBU Asset Manager Steward Wayne Wilson
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`VBU Asset Manager Stewards Mike Joynor and Kathlesn O'Connell
`Program Manager Jim Luchini
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`Operations Coordinator to be announced
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`5Sr. Project Engineer Steve Schudel
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`Project Lead to be announced
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`Request for Help
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`Successful completion of this planned work will require the participation and input of many
`people and work groups throughout the company. The input sessions began with the strategic
`framework interviews conducted by Kenonic Controls late last year. Most recently, Operations
`Managers from FBU and VBLU met to discuss future operational requirements and use this as
`the starting point for overall strategy development. These Operations representatives have
`agreed to act as program stewards for the overall effort.
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`The next step Is to Involve knowledgeable malntenance and other support group personnel in
`the strategy development process. Your cooperation and help in these upcoming sessions as
`requested will be greatly appreciated.
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`More Information Available
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`This A-Net site will be updated periodically as work progresses. Please check it occasionally to
`s&2 how the Program work is progressing. We will also be extending an offer to Alyeska
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`managers and supervisors to provide Individual communications sesslons for their teams as
`requested.
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`Lagh wped sbad :February 14, 2001 B2000, Abyeika Pipaling Serdes Compay Corteet: Shanp Clay
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