BP Exploration (Alaska) Inc. decided it could safety continue production from the Prudhoe Bay Western Operating Area (WOA), following review of WOA pipeline inspection data and extensive consultations with federal and state regulators.
Prudhoe Bay field production on Aug. 12 was 150,000 b/d of oil and NGL. It was expected to increase to 200,000 b/d once Gathering Center 1 ramped up to full production after completion of a planned maintenance shutdown.
The Eastern Operating Area (EOA) of the field was shut down pending replacement of 16 miles of severely corroded oil transit line that resulted in a small spill (OGJ, Aug. 14, 2006 p.26). Early reports indicated the corrosion was microbial, BP spokesmen said.
BP worked with the US Department of Transportation and Alaska Department of Environmental Conservation. BP, ConocoPhillips, and ExxonMobil Corp. all produce oil from Prudhoe Bay field.
In the EOA, more than 17 bbl of oil was recovered from the area of the spill near the transit line’s Flow Station 2. The cleanup involved booming off the spill vicinity and pumping water from a lake to flood the area. Oil was recovered as it floated on the water.
Since March, BP completed 2,200 ultrasonic inspections in the WOA and continues 24-hr visual and infrared surveillance of the line.
Ten metal sleeves were installed over sections of EOA pipeline showing any corrosion damage. The company also ordered 16 miles of pipeline to replace existing transit lines at Prudhoe Bay. US mills are expected to deliver the pipe this year.
Refining
“BP’s West Coast refining and marketing system remains adequately supplied in the short term, and no disruptions of crude or fuel supplies are expected at this time,” the company said.
As of Aug. 12, it had bought more than 4.5 million bbl of crude on the global market to help cover the shortfall in Prudhoe Bay output. “Additional crude oil and refined products will be acquired as necessary,” the company said.
Pending the possibility of a complete shutdown of Prudhoe Bay field, ConocoPhillips filed a document with the US Securities and Exchange Commission estimating its own production loss at 120,000-125,000 b/d.
Previously, BP said a complete shutdown would involve 400,000 b/d total.
ConocoPhillips said the ultimate effect upon its production will be determined, in part, by the duration and extent of the shutdown. BP has said it does not know how long it will take to repair the transit line.
In addition, ConocoPhillips sent a force majeur letter to inform its crude oil customers that deliveries might fall short because of the Prudhoe Bay field shutdown.
A force majeur is a formal declaration that an event beyond a company’s control could cause it to breach contracts. The declaration was made to help avoid financial penalties.
The International Energy Agency said Alaskan North Slope crude from Prudhoe Bay is 31º gravity and contains 1% sulfur. ANS primarily is refined on the US West Coast with limited volumes exported to Asia.
Lighter Middle Eastern grades, including Arab light, and a number of heavier West African grades as well as Russian Urals oil are similar in quality to ANS, IEA said.
“However, US West Coast refineries lack pipeline infrastructure to pull alternative US-landed supplies of domestic or foreign crude westwards,” IEA said. “Replacement supplies will likely be sourced from Asia and Pacific Latin American ports or by diverting import cargoes, otherwise destined for the US Gulf via the Panama Canal.”
The US Department of Energy has said it will consider releases from the Strategic Petroleum Reserve, but analysts say this is logistically impractical. Meanwhile, no direct request from refiners had been reported as of mid-August.
