BP shuts down part of oil field

One-fourth of Prudhoe Bay production suspended after water pipe leak

Posted: Wednesday, May 23, 2007

BP officials said Tuesday it was too early to determine what caused a water pipe leak that led to the second partial shutdown in 10 months of the nation's largest producing oil field.

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"The best estimate is that it's going to be a few days where we are going through a repair plan," said BP spokesman Daren Beaudo. "We will work as quickly and as safely as we can."

Production at Alaska's Prudhoe Bay was cut by one-fourth after the company discovered the leak early Monday morning, company officials said.

Some 400,000 barrels a day of oil are pumped at Prudhoe Bay, about half of the total North Slope production.

Beaudo said the company discovered a hole about the size of a pencil's diameter to a water line in a facility used to separate oil, water and natural gas.

About 20 barrels of water leaked from the pipe, which is about 12 inches in diameter, before the it was discovered around 1:45 a.m. Monday, Beaudo said.

BP is Prudhoe Bay's operator, and it has a 25 percent stake in the field it shares largely with ConocoPhillips and Exxon Mobil Corp., which hold 36 percent each.

The British company said its production loss would be 25,000 barrels per day; losses for the two majority owners would be about 36,000 barrels a day each.

Light sweet crude for June delivery fell $1.36 to $64.91 a barrel in electronic trading on the New York Mercantile Exchange.

The facility where the water leak occurred is the same one where the largest-ever oil leak on the North Slope occurred last year.

It's an area still under heavy scrutiny as a place identified by critics for poor maintenance practices.

For decades, some critics charge, lax government enforcement along with corporate unwillingness to make costly repairs caused corrosion and other wear-and-tear issues to fester.

"We should be expecting these kinds of things," said Dan Lawn, who previously worked for the Alaska Department of Environment Conservation, but now is with watchdog group Alaska Forum for Environmental Responsibility.

"That's why all of this needs to be looked at well.

"If water and sludge in oil lines are responsible for making corrosion to oil lines, one would think it's natural to know the same material taken out of oil lines and put in any other lines would cause the same kind of problem."

Energy analysts, however, downplayed the significance of the event, at least for the world markets and for U.S. energy consumers.

"It's not that (this lost production) can't be made up elsewhere in the world," said Alaron Trading Corp. analyst Phil Flynn "But we would like to get production here rather than elsewhere."

Last week, members of a House committee investigating last year's spills, admonished the company for what it believed to be scaled back anticorrosion efforts in order to save money. Still, the Legislature

U.S. Rep. Bart Stupak, chairman of the Energy and Commerce investigations subcommittee said in a statement that the lines that remain a huge concern for federal lawmakers.

"While I have not seen all the facts on this most recent leak, it appears to be yet further evidence that BP's cost cutting culture has put our nation's economy at risk," Stupak said. "My subcommittee will continue to hold BP accountable."

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