By Paula Dittrick
Senior Staff Writer
HOUSTON, Aug. 11 -- BP Exploration (Alaska) Inc. has completed shutting in Prudhoe Bay's Eastern Operation Area. Prudhoe Bay field now is producing 120,000 b/d from the Western Operating Area.
The eastern portion of the field was shut down pending replacement of an estimated 16 miles of severely corroded oil transit line that resulted in a small spill (OGJ Online, Aug. 7, 2006). Early reports indicated the corrosion was microbial, BP spokesmen said.
During an Aug. 6 transit line inspection, BP workers identified and cleaned up a 4-5 bbl oil spill. No other spills to tundra have been found, but BP has identified another 5 small holes in the oil transit line, which moves oil to the Trans-Alaska Pipeline System.
The company is advancing parallel plans of shutting in production and considering viable options so that it could safely continue to operate some production. The company ordered 51,000 ft of pipe (about 10 miles), and is working to expedite its delivery. Procurement activities continued Aug. 11 for the rest of the pipe.
BP is working with the US Department of Transportation and Alaska Department of Environmental Conservation toward continued operation on portions of the Prudhoe Bay field.
To support those evaluations, BP has focused its ramped-up inspection activities on the still-producing Western Operating Area (WOA). A decision whether to shut-in the WOA is expected by the beginning of next week.
BP, ConocoPhillips, and ExxonMobil Corp. all produce oil from Prudhoe Bay field.
ConocoPhillips filed a document with the US Securities and Exchange Commission saying it estimates its own production loss at 120,000-125,000 b/d in the event of a complete shutdown of Prudhoe Bay field. BP has said a complete shutdown would involve 400,000 b/d total.
The ultimate effect will be determined, in part, by the duration and extent of the shutdown, ConocoPhillips said. BP has said it does not know how long it will take to repair the transit line.
In addition, ConocoPhillips sent out 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.
IEA report
The International Energy Agency said Alaskan North Slope crude from Prudhoe Bay is 31º gravity and contains 1º sulfur. It is primarily 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 to 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 Aug. 11.
BP reported adequate crude supplies for its West Coast refineries in the short term and no disruption of gasoline supplies for California or the West Coast is expected during this time. The company purchased more than 3.5 million bbl of oil to support its own refineries and marketing operations over the short and medium term.
Contact Paula Dittrick at [email protected].
