Trans-Alaska Pipeline System Leak Causes BP To Shutdown 95% Of Prudhoe Bay Production
Is it about to be deja vu all over again? The FT reports that "oil markets were braced on Monday for the impact of the loss of up to 15 per cent of US crude after a pipeline leak forced BP, the UK-based oil company, to shut down 95 per cent of production from North America’s biggest field...The leak is in the Trans-Alaska Pipeline System, which carries 14-15 per cent of US crude oil production 800 miles to Valdez, where it is shipped out in tankers. It is the only line carrying oil to market from Prudhoe Bay." And yes: BP will be blamed again: "Prudhoe Bay is jointly owned by BP, with 26 per cent; ConocoPhillips, with 36 per cent; ExxonMobil, with 36 per cent; and others with 2 per cent. BP is the operator of the field." And just as the authorities had managed to put a temporary lid on oil prices: "The cause of the leak is being investigated by state and federal regulators, as well as the company itself, but if it is not fixed within a few days, the incident could put upward pressure on oil prices once more." Time to go through the list of all BP CDS counterparties all over again?
From the FT:
BP said it was working to shut down production, taking precautions to prevent the lines from freezing.
Alyeska, which is also the pipeline’s operator, said the leaked oil was discovered in the basement of a pump room. It said the leak was in piping encased in concrete and had to be excavated before it could be repaired.
The company added that it was considering a variety of options to restart the line as quickly as possible, including bypassing that section of piping.
A person involved in the situation said that the leak had not spilt out on to the tundra and would probably be fixed within the week.
The pipeline carried an average of 642,261 barrels per day in December, higher than the monthly average last year of 620,000 barrels.
The Marine Terminal at Valdez has 18 storage tanks, with total capacity of more than 9m barrels. But only 14 of those tanks are in operation. On Sunday morning, Alyeska said they still held 35 per cent of their inventory, or about 2.5m barrels of oil. There is no significant storage on site to make up for a prolonged outage.
In August 2006, BP had said it would shut the entire field after corrosion data and a leak indicated its pipelines were corroded. That information followed the biggest-ever leak at Prudhoe Bay in March of that year. In the end, it was only forced to shut half the field.
- advertisements -