hen oil emerges from the depths of the earth on Alaska’s North Slope, the journey has just begun. Transporting crude oil from 250 miles north of the Arctic Circle to its first destination in Valdez is only a portion of the process required to deliver this valuable natural resource to its final customers. The transport starts at Pump Station 1 in Prudhoe Bay, where crude oil enters the Trans Alaska Pipeline System (TAPS)—but it does not end 800 miles away in Valdez, which is not even halfway to the finish line.

At the Valdez Marine Terminal, crude oil is loaded onto tankers for a voyage lasting between five and twenty days, depending on the refinery marked to receive the shipment.

Situated on 1,000 acres at the southern shore of Port Valdez, the Valdez Marine Terminal marks the southern terminus of TAPS. Tankers have been loaded with Alaska’s black gold at this location since the first oil flowed through the pipeline from Prudhoe Bay in 1977.

Constructed at a cost of approximately $1.4 billion, the Valdez Marine Terminal’s elevation stretches from sea level to 660 feet up the Valdez mountainside. Fourteen tanks provide temporary storage for oil awaiting pickup. This eliminates the impact of any marine transport delays on North Slope production. The Valdez Marine Terminal also has a working inventory capacity of 6.6 million barrels of crude oil. Alyeska Pipeline Service Company generates its own electricity for the terminal through a power vapor facility, and it has its own emergency and fire response team.

Managing the loading of the oil into the tankers at Valdez is a full-time process that Alyeska Pipeline Service Company’s operations director, Melanie Myles, describes as simple yet complicated. Raised in Alaska, Myles is a mechanical engineer by discipline. “I did a stint with the State of Alaska managing the oil fields and checking their production and development before joining Alyeska in the operations sector,” she says.

For Alyeska Pipeline, Myles oversees the organization and scheduling for transfers of the oil from the pipeline to the tankers. “All of the loads for the tankers have to be scheduled, and we typically know twenty-eight days ahead of time which tankers will be arriving when,” she explains. “Even with arrival information, there are a lot of pieces to the puzzle, and our team needs to be certain all the players are in the right places so that we are ready to deliver the oil when the tanker arrives.”

Oil is gravity-fed to the ships through hydraulically controlled metal arms. “Workers that monitor and manage the berth operations are responsible for the vessel getting docked and anchored properly and then connected to the loading arms,” says Myles. “They often refer to it as pulling up to the pump.”

Myles also receives information on the anticipated amount of oil arriving on any given day. “We get estimates each month of what the oil companies anticipate they are going to produce,” she explains. “The numbers are forecasted predictions, and there can be variability but it’s typically not significant. If it is a bit lower than anticipated, it slows the pace a little.”

Valdez is where the dollar value of North Slope crude is monetized, according to Brad Keithley, an industry observer who keeps a close watch on oil shipments. “They are owned by the producers at that point and consist of whatever share of their oil has been shipped down the pipeline,” he explains. “Producers are able to sell their oil at that point. They are also able to designate the share of their oil to be loaded onto the tankers.”

A former business executive, lawyer, and consultant with more than thirty-five years of experience working on oil, gas, and fiscal issues, Brad Keithley currently serves as the managing director of Alaskans for Sustainable Budgets. In keeping an eye on the monetary value of Alaska’s greatest natural resource, he monitors the shipments out of Valdez Marine Terminal and notes the goings and comings of the tankers charged with delivering the oil to destinations beyond Alaska.

Tanker ships are owned by private companies and are chartered by the oil companies, Keithley explains. Those major companies in the Alaska market are Hilcorp, ConocoPhillips, ExxonMobil, and Marathon Petroleum, which owns the refinery on the Kenai Peninsula at Nikiski.

“Among the key players, Marathon is a non-producer on the North Slope but has ships coming into Valdez to pick up oil for its Kenai refinery and additional refineries down the West Coast,” Keithley says. “Sales at Valdez are being made to Marathon, but there could also be other buyers.”

Note that much of Alaska’s crude oil remains in state and is refined into asphalt, jet fuel, turbine fuel, heating fuel, kerosene, gasoline, diesel, marine diesel, and ultra-low sulfur diesel. The refined product most Alaskans use comes from Nikiski or the Petro Star refineries in North Pole and Valdez.

Tankers leaving Alaska entirely are primarily destined for either the Puget Sound region of Washington or to a group of refineries in San Francisco and in the Los Angeles area.

“There is one refinery on the island of Oahu in Hawaii that occasionally receives a shipment of Alaska’s crude oil,” adds Keithley. “In the last twelve months, that location received just two percent of the oil from Valdez.”

Voyages to the refineries vary in length and cost. “It takes about five to six days to transport the oil from Valdez to the refineries in Puget Sound,” explains Keithley. “For San Francisco, the journey is six to seven days and another day to get to the Los Angeles area. Tankers often make a stop at one refinery before going on to another to offload the remaining oil.”

An interesting player in the Alaska oil game, Asia also receives an occasional shipment. “During COVID when there were all sorts of disruptions in the oil market, Asia became a bigger market for Alaska oil, at 10 percent to 15 percent,” says Keithley. “But after the Russian invasion of Ukraine, we’ve seen very little shipments from Valdez to Asia—especially in the last twelve months.”

The time, distance, and cost involved in shipments to Asia is significantly greater. “Usually when there’s some price dislocation on the West Coast and Asia is offering a better price, we’ll see more shipments,” says Keithley. “Big maintenance on the tankers is done primarily in Asia, so tankers may transport oil to Asia when going there for maintenance. It takes about fifteen to twenty days to get to Asia and unload the tanker. Then the captain will deadhead back to Valdez, so the entire journey can be anywhere from thirty to forty days.”

Historically, Alaska’s tankers were built and used solely for Alaska service. Through Keithley’s monitoring of the ships, he’s noted some recent changes. “One of Alaska’s ships looks like it has been redeployed to the US Gulf Coast,” he explains. The tanker sailed all the way around South America to Texas.

Keithley suspects the reason for the redeployment may have been the recent decline in Alaska oil production. However, with two big developments in progress on the North Slope—ConocoPhillips’ Willow Project and Santos’ Pikka Project—production is projected to increase in the next few years.

“Alaska used to be the dominant supplier of oil to the US West Coast, but over the last several years we’ve declined, and Alaska only counts for about 20 percent of the West Coast supply. We’re still a significant force, but we don’t dominate,” Keithley says. “As production increases, I would anticipate we would take more of the West Coast market.”