Major Alaskan oil field shutting down [possible $10 hike]

*Maybe $10 more. Quit driving your SUV's assholes.



ANCHORAGE, Alaska - In a sudden blow to the nation's oil supply, half the production on Alaska's North Slope was being shut down Sunday after BP Exploration Alaska, Inc. discovered severe corrosion in a Prudhoe Bay oil transit line.

BP officials said they didn't know how long the Prudhoe Bay field would be off line. "I don't even know how long it's going to take to shut it down," said Tom Williams, BP's senior tax and royalty counsel.

Once the field is shut down, in a process expected to take days, BP said oil production will be reduced by 400,000 barrels a day. That's close to 8 percent of U.S. oil production as of May 2006 or about 2.6 percent of U.S. supply including imports, according to data from the U.S. Energy Information Administration.

The shutdown comes at an already worrisome time for the oil industry, with supply concerns stemming both from the hurricane season and instability in the Middle East.

"We regret that it is necessary to take this action and we apologize to the nation and the State of Alaska for the adverse impacts it will cause," BP America Chairman and President Bob Malone said in a statement.

A 400,000-barrel per day reduction in output would have a major impact on oil prices, said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.

"Oil prices could increase by as much as $10 per barrel given the current environment," Emori said. "But we can't really say for sure how big an effect this is going to have until we have more exact figures about how much production is going to be reduced."

Victor Shum, an energy analyst with Purvin & Gertz in Singapore, said he expected the impact to be minimal.

"The U.S. market is actually well-supplied; crude inventories are very high," he said. "So while this won't have any immediate impact on U.S. supplies, the market is in very high anxiety. So any significant disruption, traders will take that into account, even though there is no threat of a supply shortage."

Light, sweet crude for September delivery was up 36 cents to $74.95 a barrel in midmorning Asian electronic trading on the New York Mercantile Exchange.

Malone said the field will not resume operating until the company and government regulators are satisfied it can run safely without threatening the environment.

Officials at BP, a unit of the London-based company BP PLC, learned Friday that data from an internal sensing device found 16 anomalies in 12 locations in an oil transit line on the eastern side of the field. Follow-up inspections found "corrosion-related wall thinning appeared to exceed BP criteria for continued operation," the company said in a release.

Steve Marshall, president of BP Exploration Alaska, Inc., said at an Anchorage news conference that testing in the 16 areas found losses in wall thickness of between 70 and 81 percent. Repair or replacement is required if there is over an 80 percent loss.

"The results were absolutely unexpected," he said.

Marshall said Sunday night that the eastern side of Prudhoe Bay would be shut down first, an operation anticipated to take 24 to 36 hours. The company will then move to shut down the west side, a move that could close more than 1,000 Prudhoe Bay wells.

Marshall said BP is looking at repairing, bypassing or totally replacing the line.

Only one of BP's three transit lines is operating. The third was shut down in March after up to 267,000 barrels of oil spilled. BP installed a bypass on that line in April with plans to replace the pipe.

While they suspect corrosion in both damaged lines, they can't say for sure until further tests are complete. Corrosion is primarily caused by carbon dioxide that comes up with water, oil and gas during drilling.

BP puts millions of gallons of corrosion inhibitor into the Prudhoe Bay lines each year. It also examines pipes by taking X-rays and ultrasound images.

"Up until Friday of this weekend we were of the opinion the techniques we were using were ultimately reliable," Marshall said.

Workers also found a small spill, estimated to be about 4 to 5 barrels. A barrel contains 42 gallons of crude oil. The spill has been contained and clean up efforts are under way, BP said. "Our production while all this is in place is going to be marginal," said Will Vandergriff, spokesman for Gov. Frank Murkowski. "That presents some technical problems because it's a high capacity line and it's meant to be filled."

Vandergriff said he did not know exactly what potential problems a sudden drop in oil flow might cause the pipeline. Alyeska Pipeline Co. officials could not immediately be reached for comment.

A prolonged shutdown would be a major blow to domestic oil production, but even a short one could be crippling to Alaska's economy.

According to forecast figures from the Alaska Department of Revenue, a 400,000 barrels of oil per day production drop would mean approximately $4.6 million per day lost to the state. That is money going to both the state treasury and the state's oil wealth savings account, the Alaska Permanent Fund.

"That starts adding up to big bucks in a hurry," said House Finance Co-Chairman Mike Chenault, R-Nikiski. "It could start having a disastrous effect on the state as early as today."

BP said it was sending additional resources from across the state and North America to hasten the inspection of the remaining transit lines. About 40 percent of the lines have been inspected.

BP previously said it would replace a 3-mile segment of pipeline following inspections conducted after up to 267,000 gallons of oil spilled onto the frozen ground about 250 miles above the Arctic Circle in March.

House Speaker John Harris said it was admirable that BP took immediate action, although it's sure to hurt state coffers.

"This state cannot afford to have another Exxon Valdez," said Harris, R-Valdez.

The Exxon Valdez tanker emptied 11 million gallons of crude oil into Prince William Sound in 1989, killing hundreds of thousands of birds and marine animals and soiling more than 1,200 miles of rocky beach in nation's largest oil spill.

 

That will suck...

 

I watched "Trucks!" on Spike TV this weekend with an episode where Stacey covered how to create bio-diesel fuel in your garage. In years gone by, I wouldn't have thought much about it, but with news like this, it certainly makes ya think about it.

Basically you buy a kit with all instructions for your home garage, acquire waste vegetable frying oil from a restaurant, a few gallons of methanol and some lye, and in a few hours, you have 20 gallons of diesel.

Interesting episode: http://powerblocktv.com/sites/trucks/episodes/TK2005-13.php

 

Don't worry, the oil companies aren't going to lose any profits, they'll just jack the price up some more and let you pay for it

 

Why? I can afford the hike.

Anyway, the gas won't go up that much. We will probably see a 10-50 cent hike max. The supply will be picked up.

I'm having my SUV engine modified next week. It will run on people who tell me to stop driving my SUV.

 

You sure you're not a liberal?

 

I think I watched an episode of 'dirtiest jobs' concerning the same thing. This is probably where we will head.

http://butanol.com/

 

I think our supply of oil would have substain quite descently, had we not had the oil drilling restriction we've had for the last 20-30 years. That and cutting the red-tape on refineries and nucleur/damn energy.

I'm not really angry at the Suv owners as much as the dumbass (primarily dems) that live in a fantasy-world when it comes to energy.

 

hmmm, maybe it's time to park the corvette for the winter lol

 

Start drilling the shit out of ANWAR and then I wouldn't have to...

 

Why? Because I'm able to state the obvious.

Our entire country is hurting (besides the rich) because of oil prices. And guess who's sitting around taking everyone's money? The oil companies which are banking more than any other companies in the world, ever. There's no shortage of oil, we're using just as much as before, they only difference is that now there's a war they can jack up the prices any time they desire.

Perhaps you don't see a problem with greedy companies that hold world monolopies and profit over war, but I do.

 

http://tonto.eia.doe.gov/dnav/pet/hist/mcrfpus2m.htm

Take a look at our historical domestic oil supply. We went up and up and up...till excessive regulation aimed to curb that in so many ways. We produced up to 10 million barrels a day at one point, and now we're on the verge of a consistant 4 million,.... daily...with a much higher demand world-wide. The forbidence of new drilling has been the prime agenda of the dems.

Couple that with the fact that refining petro is growing incredibly fast outside of America (due to our domestics restrictions), and that crude mostly derived foreignely,... the primary blame is more on domestic policy (via the dems) and not on domestic corporations.

That and you got an excessive demand world-wide,...Some of this was envitable due to market growth.




A little math here will tell you that since 2004 refining has added 30¢ while the change in crude oil price has added 69¢. Both need relief, but the crude oil is the greatest impact on price.

Sources:
http://www.eia.doe.gov/bookshelf/brochures/gasolinepricesprimer/eia1_2005primerM.html

http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp

 

When you are looking at the oil supply, don't forget to look at China. Their surge over the past years has put a strain on supply. As they continued to open up their markets and loosen the reigns, their need for oil has risen.

They are the main reason why the supply is being used faster, not SUV owners in the USA.

Also, if I drive an average of 7,500 miles per year in my SUV verses someone in a Honda Civic that drives 15,000 miles--what's worse for the environment? How about, what's worse for the oil supply?

 

yep....

Oil consumption took a big fall after the collapse of the USSR....and it took till 1999 to actually see numbers going back to normal consumption rates. While I personally would love to see China and India evolve in to normal economies, I see the downside of not having a diversified energy source.

The whole SUV thing was a smartass remark, and not extremely serious.

 

It's amazing how oil companies continue to benefit from bad news.
If it weren't for oil company profits the stock market and the economy would be in the negative for the year. This is what is known as a redistribution of wealth.

 

I don't care I can afford it, just means I won't be driving my boat 20 miles offshore

I still think people who drive giant trucks for no logical reason have penis issues, some of those trucks even look like big phallises

but hey to each their own.

What is kind of funny is some of neighbors who have huge suvs which they probably bought totally on credit , commuting ever day to work. Boy that must really get expensive.

 

Instead of complaining about it why don't you write to your representatives and tell them to cut the taxes to give their constituents a break. Better yet why not let us drill in the US instead of letting Mexico do it for us. Oh yeah, we don't want to ruin our view as we look out at the ocean. Oil companies don't set the prices the futures market does.

 

http://news.yahoo.com/s/ap/20060808/ap_on_bi_ge/oil_field_shutdown

BP: Pipeline closing may last for months

*damn...

 

If you invested in oil not too long ago, you wouldn't be mad about the news.

 

They just found out? Surprise that it is such an emergency and soooo unexpected.
Why can't they hold on for a while, without shutting down the pipes and prepare some bypass. That would only take a couple of hours to shut down then.

Ther's something fishy about that.