Corrosion in pipeline leads to BP shut down of largest US oil field.

By Brendan Smith
brendansmith@transworldnews.com

In Alaska’s Northern Slope the BP oil field at Prudhoe Bay have been shut down. Output has been halted as a result of severe corrosion in 16 miles of BP pipelines. An industry analyst estimated it could take between 2-3 months to make the repairs and get back on line. At a loss of 400,000 barrels a day the shut down will cut 8% of US output.

The shut down has led the Energy Department to look at possibly supplying emergency reserves to ease the pressure. Experts have put the rise in price for a gallon of gas anywhere from 10-20 cents. The 700 million reserve barrels held by the government on the Gulf Coast are designated for serious supply disruptions. The government most recently dipped into their reserves last year when Hurricane Katrina ripped through the Gulf and crippled oil supplies.

Perhaps the most effected by the shut down will be Alaska and its residents. Oil represents close to 90% of the state’s income. The 400,000 barrels lost each day represent over $6 million lost in revenue through royalties and taxes. Prudhoe Bay is responsible for half of the output that comes out of the North Slope.

BP is the largest oil and gas provider in the U.S.

The London-based company has experience several problems with its U.S. operations over the past year and a half. The 267,000 gallon oil spill in Prudhoe Bay last March has led to a criminal investigation and the company recently settled a claim for $500 million arising from a refinery explosion in Texas that killed 15 workers.

Speaking about the shutdown of production in Prudhoe Bay, BP’s American chairman and president Bob Malone said “BP deeply regrets that it’s been necessary to take this drastic action, BP will commit the necessary human and financial resources to complete this job as safely and quickly as possible.”

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