BP to Shut Down Prudhoe Bay Pipeline

In a move that will cost the US 2.6% of its oil supply, BP Exploration Alaska, Inc. is shutting down its North Slope Alaska pipeline immediately after extensive corrosion was found in the system. The system will be shut down indefinitely for repairs until the company and regulators determine it can be operated without posing a threat to the environment.



This is ominous news. I can think of half a dozen scenarios arising as a result of this shut down, none of them boding well for the American public. The pressure is truly on now, and I will be interested to see how our government reacts.

Related AboveTopSecret.com Discussion Threads:

267,000 Gallon Oil Spill: Undetected for Days

Major Alaskan oil field shutting down

[edit on 7-8-2006 by Icarus Rising]

The initial government reaction looks positive, as the Energy Department is prepared to provide emergency supplies, but only if refineries request it.

"We're taking a very serious look at this," said spokesman Craig Stevens, referring to the loss of nearly half of oil shipments from Alaska's North Slope because of a pipeline corrosion problem.

Stevens said the department will be in contact with BP Exploration Alaska Inc. and West Coast refiners later today to assess the situation. "If there is a request for oil we'll certainly take a serious look at that," he said.


The Strategic Petroleum Reserve is the nation's emergency stockpile of crude oil. It was created after the 1973 oil embargo when Arab countries halted petroleum exports to protest U.S. support for Israel.

link

Predictably, oil prices shot higher on news of the shutdown, which is sure to be reflected in an immediate increase in gasoline prices.

BP Plc said late Sunday it would shut down the Prudhoe Bay oilfield, which represents 8 percent of daily U.S. crude production, due to possible pipeline corrosion. As a result, crude oil futures surged $1.44 to $76.20 per barrel in electronic premarket trading on the New York Mercantile Exchange.

The spike in oil prices weighed heavily on investors concerned about another rate hike from the Fed. While the economy is slowing, leading many analysts to declare that the Fed would not raise rates Tuesday, there's concern that rising energy prices could lead to broader inflation or a halt to economic growth.

link

What the rest of the world fails to realize is the US has a commuter culture and economy, and the gas prices that Europe pays simply aren't sustainable for a country the size of the US with the length of the average commuter's drive to work.

Anybody see (finally) a real conspiracy here. I mean, out of the blue there supposedly is this "extensive corrosion"? I see it as more likely BS to artificially keep oil prices high.

Also, I had heard that Alaska oil is sold overseas, and not to the lower 48. So, why all the hand wringing over shortages, etc?



[edit on 8/7/2006 by centurion1211]

I have to admit I was immediately suspicious (who me?) of the motives behind this pipeline shutdown. The timing, the scope, and the justification all strike me as too pat and contrived. Again, we have to look at who is likely to benefit.

Since when have environmental concerns really been at the fore of oil company motivations?

Great. Not only does BP have the most obnoxious commercials in the world, next to that stupid "baby back" DirectTV ad, but it lets its pipeline corrode, which it only inspects when the federal government demands it.

abcnews.go.com

I guess it is a good thing that they are thinking "Beyond Petroleum."




[edit on 2006/8/7 by GradyPhilpott]

It's the same with all big corporations. Make the big bucks and neglect the housekeeping. After all, renewing and repairing the infrastructure costs money.
On the upside, news of this will get the speculators in a lather and push the prices up a bit, as expected.

It's a bit like the water companies here in the UK, privatised by government and happy making money hand-over-fist for years. As soon as the regulators criticise them for not maintaining the infrastructure and tell them to spend the money, they bleat and plead poverty and go asking the government for help. Truly sickening

Still, that's capitalism at it's best I guess
God forbid there should ever be a requirement for big businesses to actually have to act ethically, instead of getting the PR companies to paint a rosy picture

Wouldn't you love to know who has the (shoddy?) maintenance contracts in Prudhoe?

Please don't let it be "Halliburgler"...

Originally posted by Britguy
Still, that's capitalism at it's best I guess

No. It's capitalism at its worst.

The aging pipeline system on the North Slope has been fraught with problems lately. BP, which posted a net profit of $7.3 billion for the three months ending June 30, operates the Prudhoe Bay field.

abcnews.go.com

The latest update on this story has the shutdown lasting weeks, if not months, and CNN is reporting that gas prices in Los Angeles have already jumped 8.5 cents a gallon on news of the drop in supply.

BP PLC said Monday it will replace 73 percent of the pipelines from the nation's largest oil field and that it could be closed for weeks or months, crimping the nation's oil supplies at a time of peak demand.

BP, the world's second-largest oil company, began shutting down the pipelines on Monday and said it would replace 16 miles of the 22 miles of transit pipeline in the Prudhoe Bay field following a leak discovered Sunday.

link

The North Slope oil fields serviced by the pipeline will be shut down as well, as there is no other method of transporting the oil from the fields to Prudhoe Bay.

This truly plays right into the oil company's hands.

Originally posted by centurion1211
I see it as more likely BS to artificially keep oil prices high.

Also, I had heard that Alaska oil is sold overseas, and not to the lower 48. So, why all the hand wringing over shortages, etc?
[edit on 8/7/2006 by centurion1211]

RE where it goes, plus the fact that the pipeline is carrying only half the oil it once did

Just 4 percent of North Slope oil trickled to Asia between 1996 and 2000, before the flow shut off almost entirely. Since then, the only export was a single tanker in 2004, which delivered a load of oil to China en route to getting repaired at an Asian port.

The reason is that Alaskan oil fields aren't gushing crude as they once did. Alaskan oil production was cut in half between the 1988 peak and 2000. Now West Coast refineries soak up nearly every drop, according to data from the federal Energy Information Administration.

RE artificially high price
You might be on to something there, as BP is set to be one of the big players in the Alaska natural gas trade, and what better way to have LNG look more profitable than for oil prices to go up?
Interesting the natural gas would still come from Prudhoe Bay, but from a different pipeline; the structures there still would be used, just now for natural gas production.

Edit for quote source
seattletimes.nwsource.com...

[edit on 7-8-2006 by desert]

With props to member nod for his thread linked in the opener, and also members desert and hogtie for pointing out the new Goldman Sachs-DC connection and how the oil futures market is driving prices; I don't think, from a conspiracy angle, we can rule out government collusion with the oil companies on this one.

What better way to squeeze the last drop out of the lemon than contrive to short the public on oil supplies during peak demand, sell off the strategic reserve, and make a killing on taxes and Wall Street at the same time?

BP certainly won't make any extra money because of this, as they have less product to sell, and because of the repair costs.

One wouldn't think that oil, being "slippery", would erode steel, but it certainly does. The Alaska Pipeline is tested a few times per year; ever hear of a "Pig."

Well, we don't have to worry about supply, as all we have to do is open an extra well in ANWAR........ oh, wait..... the Left won't let us drill there.

They were using ultrasound and another method, not 'pigs', to check the thickness of the pipe walls, and thought it wouild be sufficient, as most of the water had been removed from the oil they were shipping through the pipe. When they finally did send in the 'pig', they realized they had a major problem, or so the story goes.

It wouldn't surprise me if BP is able to secure federal funds to help with the repairs, just as it doesn't surprise me that you would introduce partisan politics to the issue.

Originally posted by Icarus Rising
...it doesn't surprise me that you would introduce partisan politics to the issue.

Actually, any discussion of the availability of crude oil and especially one the includes the Alaskan oilfields, must include some mention of ANWAR and everyone knows who's preventing drilling in that area.

There may be hope in the current BP crisis:

BP may not completely shut Prudhoe Bay oil field

Oil major BP Plc (BP.L) is studying ways to avoid a complete shutdown of its Prudhoe Bay oil field in Alaska by using other pipelines to bypass the oil transit pipelines it is shutting down following the discovery of significant corrosion on one transit line over the weekend, a BP Alaska spokesman said.

BP does not intend to continue production without receiving support for its plans from state and federal regulators and a complete shutdown is still being planned, Daren Beaudo said.

yahoo.com

[edit on 2006/8/8 by GradyPhilpott]

everyone knows who's preventing drilling in that area.

Can't argue with that. Let's hope a solution to the current problem doesn't get bogged down in partisan wrangling as well.

Looks like BP is trying to pull an Enron.



Could be the shut it down because they got wind of an upcoming Iranian oil embargo or a strike on Iran plan, so why sell today it at $76/bbl when you can wait a few months and sell it at $100+/bbl tomorrow.

Guess who's the largest recipient of Prudhoe Bay crude?
Why it's California, ahh the parallels.

by Icarus Rising:
They were using ultrasound and another method, not 'pigs', to check the thickness of the pipe walls, and thought it wouild be sufficient, as most of the water had been removed from the oil they were shipping through the pipe. When they finally did send in the 'pig', they realized they had a major problem, or so the story goes.

It wouldn't surprise me if BP is able to secure federal funds to help with the repairs, just as it doesn't surprise me that you would introduce partisan politics to the issue.

REPLY: The "Pig" uses ultrasonics. too. As for the partisonship, I don't care WHO is prohibiting us from drilling, as I'd bring it up either way. Sorry..... the facts are facts; it's not difficult to check who voted for, or against, any issue.

What is troubling me at the moment is the pipeline offline, the same pipeline that would carry ANWR oil. If the pipeline is in this shape at half the flow, how could ANWR oil flow down it at full capacity?

The proposed pipelines will be constructed for a lifetime of a minimum of thirty years.
This is typical of production pipelines on the North Slope. Pipelines can be operated
indefinitely under most circumstances, with the appropriate level of maintenance.

www.google.com...:cvUWws21AeYJ:www.jpo.doi.gov/SPCO/EASTERN%2520NORTH%2520SLOPE%2520PIPELINES/PUBLIC%2520NOTICE%2520FOR%2520APPLICA TION/apln%2520pn.pdf+projected+lifetime+of+the+Alaskan+oil+pipeline&hl=en&gl=us&ct=clnk&cd=6

At 29 years, apparently this pipeline did not have that level of maintenance.


Or, is space weather partly responsible

The lifetime of the Alaskan pipeline is now estimated to be many years shorter than originally planned. At that time, perhaps a decade from now, we will undoubtedly hear more about aggressive last-ditch countermeasures being employed to plug leaks, or replace whole sections of the pipeline. Some of these problems may arrive sooner than later. In 1990, plans to increase the pressure in the Alaskan pipeline had to await the results from a detailed federal investigation of the pipeline's corrosion. Although investigators turned up evidence of gross negligence on the part of the pipeline inspectors, they gave the project a clean bill of health and allowed the higher pressures to be used.

www.solarstorms.org...

BP will keep oil flowing from Alaska:

BP PLC announced it would keep one side of the Prudhoe Bay oil field open as it replaces corroded pipes, enabling it to funnel up to half its previous output and avert a larger crimp in the nation's oil supply.

The company said Friday it decided to continue supplying oil out of the western side of the field after reviewing 1,400 ultrasound inspections on five miles of the 22-mile pipeline and discussing the matter with federal and state regulators.

n ews.yahoo.com

To pig or not to pig:

Pigs, in this context, are bullet-shaped devices pushed through pipelines by the force of the oil behind them. One type of pig, the scraper or cleaner, scours sediment and other deposits from the pipe's inner walls as it goes. After that, a more sophisticated smart pig can move through with sensors that gauge corrosion and wear.

An early version of the scraper, made of a wooden keg wrapped in burlap and barbed wire, emitted a pig-like squeal as it moved, giving the gadget its colorful name.

"When we conducted an intelligent pigging, which gives you a lot of data, we were shocked and disappointed in what it found," BP spokesman Neil Chapman said. "... Because what it said was that the effectiveness of our (corrosion) program -- we had a gap in the program and we're going to fix it."

news.yahoo.com...

[edit on 2006/8/12 by GradyPhilpott]

Maybe this was a form of "oil blackmail" used by BP to get government subsidies to repair their pipelines, or to get environmental regulators off their back, or criminal lawsuits dismissed. They have enough problems all the way around, except when it comes to last quarter's profits.

First they go, "We are shutting down the whole field for weeks or months to avoid an environmental catastrophe." Then its all, "Well, I suppose we could keep half of it open." Which is it? The pipeline wasn't running at full capacity to begin with, so what diffference does it make? If they knew they could reroute production to other transit lines to begin with, why didn't they say so right away?

We used to have a saying in the biz when people would consistently come up short or make mistakes that supposedly cost them business they had already entered into the system. "Either you're stupid, or you're stealing."