Oil giant BP (BP.) was left cursing more bad luck on Monday, as its shares slipped into the red after an oil leak forced the company to shut a major Alaskan pipeline.
The [800-mile or 1,287-kilometer] Trans-Alaska Pipeline [System or TAPS], responsible for transporting oil from the Prudhoe Bay field [on the North Slope, south to the Port of Valdez -- see map below], was closed on Saturday after oil was discovered in the boost pump basement at Alaska's North Slope pumping station. [Pump Station 1 at the beginning of the pipeline at the Prudhoe Bay field.]
This has resulted in 95% of [North Slope] production to be cut off.
Alyeska Pipeline Service, the company responsible for running the pipeline, in which BP owns a [nearly] 47% stake, said the process of recovering oil from the site got underway on Sunday afternoon.
In a statement, Alyeska said contractors, as well as state and federal agencies, were working together to return the pipeline to service, although no date was given.
"Engineers are evaluating options, including developing a plan to bypass the affected piping in order to safely restart the pipeline," the company said. ...
Oil prices were driven higher as a result of the shutdown and ensuing supply fears, with a barrel fetching $88.66 by midday, up 0.7%.
The news will come as a further blow to BP, which has struggled to restore its reputation in the wake of last year's catastrophic Gulf of Mexico oil spill. [Read also my blog post, including remarks, here -- D.R.]
However, analyst Tony Shepard at Charles Stanley, said he believes this will not pose a major step-back for the company, as Aleyska was careful to point out that there was no injuries or "apparent impacts to the environment" as a result of the incident.
He added: "Obviously it's not good news for the company but it is just one of many BP assets and won't pose a big issue providing there are no environmental repercussions."
Referring to the downturn in shares, Shepard said: "The share price had a tremendous run of late so it's natural that it will drop back slightly." More
(The TAPS normally carries between 630,000 and 650,000 barrels a day from the North Slope. Oil flow through the TAPS (corresponding to the North Slope oil production) peaked in 1988 at over 2 million barrels a day, but output from Prudhoe Bay and other maturing North Slope fields has dwindled significantly since then. Namely, the volume of oil flowing through the TAPS has decreased to c. 650,000 barrels a day in 2010. Alaska supplied 12 percent of the U.S. domestic crude oil production as of 2009. In 1988 it was c. 25% of total U.S. crude oil production. Prudhoe Bay field (discovered in 1968) came on stream in 1977, rapidly increasing output until the field's maximum rate was reached in 1979 at 1.5 million barrels a day. This rate was maintained until early 1989. Field's production declined to 1.1 million barrels a day in December 1993 and further to 1 million barrels a day at the beginning of 1995. Prudhoe Bay produced an average of 855,000 barrels a day during the 1996. Production totaled approximately 475,000 barrels a day on January 1, 2004. Nevertheless, the North Slope�s Prudhoe Bay field today is still the largest oil field in United States, producing 331,408 barrels a day on January 7, i.e. a day before the shut-down. Alyeska is a consortium owned by five oil companies: BP Pipelines (Alaska) Inc. 46.93%; ConocoPhillips Transportation Alaska, Inc. 28.29%; ExxonMobil Pipeline Company, 20.34%; Unocal (which merged into Chevron in 2005), 1.36%; and Koch Alaska Pipeline Company, L.L.C., 3.08%. -- D.R.)
Source: U.S. EIA, here
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