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BP: Half of Prudhoe Bay production restored

Attorney general outlines investigation into partial shutdown

Posted: Sunday, August 20, 2006

ANCHORAGE - BP on Friday said it had restored more than half of the production from Prudhoe Bay, nearly two weeks after threatening to shut the entire field down because of leaks from corroded pipelines.

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"The western operating area has now been restored to production of over 200,000 barrels per day," BP Alaska President Steve Marshall told a joint Alaska Senate and House Resources Committee conducting a hearing on the shutdown.

Alaska Attorney General David Mrquez also outlined the state's investigation into the partial shutdown to the committee.

"A thorough fact-finding investigation of BP's management of the North Slope oil field is taking place," Mrquez said. "After the investigation is complete, appropriate legal action will be taken to protect Alaska's interests."

The discovery of leaks and corroded pipe prompted the company to begin shutting down the nation's largest oil field on Aug. 6, threatening to take 400,000 barrels - about half the current output by all fields on Alaska's North Slope and 8 percent of domestic production - out of production.

Mrquez also said the state has served subpoenas on BP and other Prudhoe Bay leaseholders to preserve all documentation related to the Aug. 6 event and pipeline corrosion dating to 1996.

The wholesale shutdown of Prudhoe Bay was averted when testing of pipelines on the western side of Prudhoe Bay prompted the British operator to keep that side open. It had been producing about 150,000 barrels before production reached 207,000 barrels Wednesday and 217,000 barrels Thursday, Marshall said.

Marshall said the company remains convinced it made the correct decision to start an orderly shutdown of the field because of the potential for a major spill.

The shutdown was the culmination of the discovery of a leak in March on the western field and two more this month on the east side.

BP conducted a "smart pig" inspection of the eastern transit line this summer. After discovering indications of corrosion, the company was confirming that data with ultrasonic inspections when it found stains on the insulation surrounding the pipe at one location and a leak at another section.

What surprised the company, Marshall said, was the severity of corrosion in the fields' transit lines, the pipes that move oil from gathering stations to the pump stations that will push it through the trans-Alaska pipeline.

Oil is pulled from the ground by a well and moved to a flow station, which removes natural gas, plus impurities that can cause corrosion - water, gases such as carbon dioxide, hydrogen sulfide and oxygen, and solids. With those corrosive materials removed, Marshall said, the company did not expect corrosion to be so severe in the transit lines.

Rep. Jay Ramras, R-Fairbanks, asked if the company considered the leaks an act of God, physical deterioration or a result of deferred maintenance.

"We're still in the middle of an investigation," said Bill Hedges, the company's manager of corrosion strategy and planning, but bacteria in the line is a suspect.

The answer will come from laboratory testing, Marshall said.

State Sen. Kim Elton, D-Juneau, said not much new information was revealed at the hearing.

Elton said the company should not have been surprised that corrosion and leaks might be found, and he questioned why it took spills for BP to discover it had a gap in its corrosion program.

BP has offered repeated apologies.

"The other way of saying that is, 'We made a terrible mistake,"' Elton said.



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