BP Stops Operations at Alaska Oil Field

From News Services and Staff Reports
Monday, August 7, 2006

ANCHORAGE, Aug. 6 -- The Prudhoe Bay oil field, which produces nearly 3 percent of the daily U.S. oil supply, was being shut down Sunday after BP Exploration Alaska Inc. discovered severe corrosion in an oil transit line.

BP officials said it would take days to shut down the oil field, and they did not know how long it would remain off-line.

Prudhoe Bay produces 400,000 barrels a day, nearly half of the total from Alaska's North Slope, and the drop-off could damage the state and national economy.

A drop in production of that magnitude would cost Alaska approximately $4.6 million per day, state officials forecast. Meanwhile, crude oil prices, which have risen 24 percent in New York this year, jumped Sunday on the news of the shutdown.

"We regret that it is necessary to take this action and we apologize to the nation and the State of Alaska for the adverse impacts it will cause," BP America Inc. Chairman Robert A. Malone said in a statement.

Malone said the field will not resume operating until the company and government regulators are satisfied that it can run safely without threatening the environment.

The shutdown announcement comes at a time when BP, the world's second-largest publicly traded oil company, is facing intense scrutiny over its safety and environmental record.

An explosion last year at a company refinery in Texas City, Tex., killed 15 workers after the facility had twice been cited for safety violations. BP was fined a record $21 million by U.S. refinery and safety regulators, and the company and its executives face a criminal investigation.

Similar violations at a BP refinery in Oregon, Ohio, drew a $2.4 million fine in April.

In March, about 6,400 barrels of crude oil leaked from a severely corroded BP pipeline, the largest North Slope spill.

The Department of Transportation imposed corrective orders on BP after the spill, and last month the agency expressed "significant concern" over the company's limited progress in meeting the terms of the orders.

© 2006 The Washington Post Company