New Alaska oversight team investigates leak

Partial shutdown of oil field continues

Posted: Thursday, May 24, 2007

A state oil and gas industry oversight agency is making its debut by investigating a leak that forced BP to cut production by a fourth from the nation's largest oil field.

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The company discovered a hole about the size of a pencil's diameter in a water line at a facility used to separate oil, water and natural gas earlier this week at Prudhoe Bay on Alaska's North Slope.

By the time work crews diverted the leak to proper drainage and placed a patch over the leak, about 840 gallons of water leaked from the hole.

Company spokesman Daren Beaudo said Wednesday said he couldn't say when BP plans to resume full production, since the company's internal investigation into its cause is still under way.

"We just continue to work on the repair," he said.

Jonne Slemons, the coordinator for the state's new Petroleum Systems Integrity Office, said its one inspector on the spill will remain on the North Slope all week.

No timetable on determining the cause has been established, she said.

"We don't have final or complete answers, yet, but it doesn't appear to be a case of improper maintenance at this time," she said.

Depending on what the findings are, the agency can order corrective action or even call for a change in maintenance practices, Slemons said.

The discovery of the leak early Monday morning forced BP to reduce its Prudhoe Bay production by about 100,000 barrels of oil daily, it's second partial shutdown of the field in less than one year.

The facility where the water leak occurred is the same one where the largest-ever oil leak on the North Slope occurred. Corrosion, much of it hidden by development of high amounts of sludge, caused a leak and spill on a feeder line in March 2006, followed by another leak in August at a second line.

After the second incident, the company shut down the affected lines, resulting in Prudhoe Bay production being cut in half. The company now is spending $250 million to replace 16 miles of questionable pipes.

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.

Federal regulators and hearings followed last year's August shutdown, and a new administration at the state level instituted the PSIO to stave off any appearance that the state was too cozy with oil companies.

Taking that step was prudent, state officials said, especially since Alaska is trying to get a multibillion-dollar natural gas pipeline built from the North Slope.

The perception of lack oversight in the past also weakens the Alaska's argument to federal lawmakers that it should be allowed to produce oil along the Arctic National Wildlife Refuge, Gov. Sarah Palin said.

"We are trying to convince the rest of the country, including East Coast politicians against ANWR, the state can oversee responsible development of oil and gas," Palin said.

The state also intends to have all oil and gas facilities in Alaska inspected within three years.

The Legislature recently approved $5 million to have an outside engineering firm perform the work.

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