BP permitted to keep oil partially flowing at Prudhoe oilfield

17-08-2006

Oil giant BP has been told by the US government that it can keep oil from the western half of its closed Alaskan oil field, Prudhoe Bay, flowing.

BP began closing America's largest oil field, which produces around eight per cent of total US oil output, on Sunday after identifying corrosion in its pipelines.

The company had said earlier this week that the corrosion at the site was such that it faced having to close the whole oil field indefinitely.

The world's third-largest oil company by market value said yesterday that it had yet to decide whether to continue production from Prudhoe Bay's western pipeline after being given the go-ahead by the US department of transportation.

In a statement posted on its website, the department's Pipeline and Hazardous Materials Safety Administration (PHMSA) outlined the measures BP must take to reopen its closed eastern line, while stressing that it could continue to move oil through its western line.

Under the terms of the agency's order, BP must conduct four daily surveys of all its feeder lines on the North Slope and use heat-sensing equipment to identify leaks and perform vital inspections across Prudhoe Bay's entire 22-mile network of pipes.

The company reportedly plans to replace around 16 miles of pipeline following corrosion, with BP sources claiming that the operation could cost the firm around $100 million (£53 million).

"The order also directs BP to strip the insulation from its western operating line, which may continue to move oil, and conduct an ultrasonic test, using technology similar to a sonogram, to obtain a complete picture of the line's conditions," the PHMSA said.

BP expects to decide before next week how much of the western line production it will maintain.

"The key is safe production, and if it's safe production, then as much as possible," said BP spokesman Neil Chapman.

The order imposed by regulators means that the company could continue to pump around 120,000 barrels of crude oil per day through its western line - representing around a quarter of Prudhoe Bay's usual 400,000 barrels a day output.

Analysts hope that the US government's ruling will ease pressure on oil prices, which have soared amid concern over the security of supplies in the wake of the current crisis in the Middle East.


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