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Alaska oil field shutdown forces new record

Monday, August 7th 2006 - 21:00 UTC
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Oil reached Monday a new record, above 78 US dollars a barrel, after British Petroleum announced it would have to close one of the largest oilfields in the United States, in Alaska because of a pipeline leak.

The indefinite shutdown of the Prudhoe Bay oil field, which produces about 8% of US daily oil output, comes at a time when oil markets are already jittery because of the ongoing conflict in the Middle East.

US Energy Secretary Sam Bodman said the government would loan oil from the nation's Strategic Petroleum Reserve if needed.

BP said the oilfield which produces 400.000 bpd has suffered extensive corrosion on sixteen miles of an oil transit line. BP, the world's second-largest oil company, discovered the extent of the corrosion with tests that were ordered by the US government after a big oil spill last March at Prudhoe Bay, situated above the Arctic Circle, 650 miles north of Anchorage.

The oil company said it was surprised to find such severe corrosion, and had gone 14 years without using a device called a "pig" to clean out its lines because it did not believe it was necessary.

Bob Malone, chairman of BP America, said that in a worst-case scenario, it could take weeks or months to replace the pipelines. But the company said it will try to put portions of the network back into operation as they are repaired.

"BP deeply regrets it has been necessary for us to take this drastic action," Malone said.

BP operates the Prudhoe Bay oil field for itself and for other oil companies, namely ConocoPhillips and ExxonMobil. Prudhoe Bay and other oilfields on Alaska's North Slope feed oil into the 800-mile trans-Alaska pipeline. The North Slope produces approximately 800,000 barrels a day; Prudhoe Bay accounts for half of that.

Steve Marshall, president of BP Alaska Exploration Inc., said tests Friday indicated that there were 16 anomalies in 12 areas in a transit line on the eastern side of Prudhoe Bay. Tests found losses in wall thickness of between 70 and 81%. Repair or replacement is required if there is more than an 80% loss.

Bill Hedges, BP's technical expert on corrosion, said the Prudhoe Bay pipelines were initially designed to last 25 years, but have now lasted 29 years, with many of the lines in "excellent condition."

Experts forecast the worst hit area will be the US West Coast particularly California which receives about 20% of its oil from Alaska.

Categories: Mercosur.

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