Monday, August 07, 2006

I bet it was the Caribou

My Way Finance - BP Plc is shutting down its giant Alaska Prudhoe Bay oil field due to a damaged pipeline and fears of wider corrosion, slashing West Coast supplies and prompting the U.S. government to consider releasing emergency stockpiles as prices jump.

International oil major BP on Sunday began turning off the taps after discovering a spill at the nation's largest field, which pumps 400,000 barrels per day of crude, or 8 percent of domestic output, and said it could be weeks or months before production resumes.

"BP deeply regrets that it's been necessary for us to take this drastic action to have an orderly and planned shutdown of the Prudhoe Bay oil field. On behalf of the BP Group, I apologize for the impact this has had on our nation," newly appointed BP America Chief Executive Bob Malone said at an Anchorage news conference.

U.S. crude oil prices surged nearly $2.50 to over $77 per barrel amid fears that the shutdown could be lengthy. Shares of BP, already the focus of a criminal probe into a pipeline rupture at the same field in March, were down 2 percent.

U.S. Energy Secretary Sam Bodman said the government was ready to release crude from the government's Strategic Petroleum Reserve to supply refineries on the West Coast that rely heavily on Alaskan crude oil.

Meanwhile, travel club AAA said U.S. pump prices are poised to set a record on the field shutdown, which came during the heart of the U.S. summer driving season.

The surprise discovery of extensive corrosion in the line at the eastern side of Prudhoe Bay has led the company to suspect that corrosion in the aging pipelines may be widespread elsewhere in the field, Malone said.

"We have now taken the decision that we will replace all the main transit lines in the Prudhoe bay field," he said, adding there are about 16 miles of pipeline in the field.