BP more optimistic about Prudhoe Bay production

Posted: Sunday, September 10, 2006

ANCHORAGE - BP has increased Prudhoe Bay production to 250,000 barrels a day, and officials on Friday said they are increasingly optimistic the oil field can be returned to full production before it replaces corroded transit lines next year.

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Tests so far on the transit lines, including the one that leaked Aug. 6, spilling a couple of hundred gallons of crude and leading to the partial shutdown of the country's largest oil field, indicate the lines are serviceable, BP Alaska spokesman Daren Beaudo said Friday.

Between 200 and 300 workers each day are conducting ultrasound and magnetic tests on the lines to check for thin spots caused by internal corrosion.

"We are finding it is in really good shape," Beaudo said.

The discovery of the leak in August and fears over corroded pipe forced the shutdown of the eastern half of the oil field, dropping production to about 200,000 barrels a day or about half the normal amount. The other line is operating.

Prudhoe Bay production stood at 250,000 barrels Friday, up 30,000 barrels a day this week, Beaudo said. Steve Marshall, the president of BP Exploration Alaska Inc., told a congressional hearing Thursday that full production of 400,000 barrels a day - or 8 percent of total U.S. output - could be restored by late October.

BP plans to install a bypass line on the eastern line by the end of October to possibly meet that deadline.

Bringing Prudhoe Bay back up has the potential to push oil prices a little bit lower, said Peter Beutel, oil analyst and president of Cameron Hanover in New Canaan, Conn.

Prices have been tending downward since early August, about the same time that the partial shutdown at Prudhoe Bay occurred, Beutel said.

Prices reached a high of $78.40 on July 14 and finished Friday at $66.25 on the New York Mercantile Exchange.

Beaudo said before the eastern side of the field can be brought back on, the transit line will have to be scraped and cleaned using several different types of maintenance pigs. Then, a "smart pig" using ultrasound will be sent down the pipe to check for thin spots.

It was the smart pig test, ordered by the federal Department of Transportation following a transit line spill of up to 267,000 gallons in March on the west side of the field, which revealed problems in the eastern side transit line.

BP ended up putting a bypass on the western side transit line and kept it operating.

The Department of Transportation will have to authorize bringing the eastern side of the field back up.

BP has said it will replace 16 of 22 miles of transit lines. It expects to get replacement pipe by the end of the year with construction beginning early next year.

The company is replacing the 34-inch transit pipe with smaller diameter pipe to increase the flow rate. That should help sweep out any solids and prevent bacteria from growing in sediment that settles at the bottom of the pipe, Beaudo said. Bacteria is being blamed for causing the corrosion that led to the leaks in the lines.

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