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No Estimate for Reopening of Alaska Oil Pipeline

Source: Reuters 1/9/2011, Location: North America

The Trans Alaska Pipeline was shut for a second day on Sunday, with no indication of when it would reopen, after a leak was discovered at Prudhoe Bay, forcing oil companies to cut production to 5 percent of their average 630,000 barrels per day.

The shutdown of one of the United States' key oil arteries, which carries about 12 percent of the country's production, is the latest setback for the aging, 33-year old pipeline, which handles less than a third of the oil it did at its peak in the 1980s.

Closures of the pipeline, although short, have provoked criticism of its operators, particularly major owner BP, whose reputation is already at an all-time low after the Gulf of Mexico blow-out last year, causing the largest-ever U.S. oil spill.

The shutdown of the 800-mile (1,280 kilometer) line, which runs from the Prudhoe Bay oilfield to the tanker port of Valdez, has not yet affected shipments, and tankers are being loaded on schedule at Valdez, meaning there is no immediate danger of restricted oil supply. Oil produced during the shutdown will be stored at Prudhoe Bay until the pipeline reopens.

Alyeska Pipeline Service Co, the operator of the pipeline which discovered the leak on Saturday morning, had no estimate of how much oil leaked, but none seems to have escaped beyond concrete encasing the pipeline at the intake pump station at Prudhoe Bay.

"The concrete encasement is why we don't believe there's any environmental impact," said Alyeska spokeswoman Michelle Egan. "Until we can excavate, we won't be able to say that definitely."

She provided no estimate of when the pipeline would reopen or when normal oil production could resume.

Alyeska is owned by oil companies with interests on Alaska's North Slope, the third-largest U.S. oil producing region after the Gulf of Mexico and Texas. Major owners in the region are BP, ConocoPhillips and Exxon Mobil Corp. BP owns about 47 percent of the venture, with ConocoPhillips and Exxon Mobil holding 28 percent and 20 percent respectively.

The leak was discovered in the basement of a building that holds booster pumps for Pump Station 1, the intake station for the oil artery, Egan said. The booster pumps are housed in a building separate from the main pump building, and the leak appears to be in a concrete-encased pipeline on the exterior.

The last time the pipeline was shut down unexpectedly was in May, when a power outage at a pump station triggered a series of events that caused an estimated 210,000 gallons (5,000 barrels) of crude oil to spill out of the storage tank at Pump Station 9, located about 105 miles south of Fairbanks.

The spill, which shut the pipeline for 79 hours, was the biggest in Alaska since the 212,252-gallon spill in 2006 from a corroded transit pipeline at the Prudhoe Bay field.

Alyeska has been automating and centralizing operations, part of its plan for coping with reduced throughput and dramatically increased cost per barrel shipped. Oil flow through the line peaked in 1988 at over 2 million barrels a day, but output from Prudhoe Bay and other maturing North Slope fields has dwindled significantly since then.

Critics argue that Alyeska's operational changes pose safety risks, and they directed much of their ire at former Alyeska President Kevin Hostler, who retired in September.

To replace Hostler, Alyeska's owners hired retired U.S. Coast Guard Vice Admiral Thomas Barrett, the former head of the Department of Transportation's Pipeline and Hazardous Materials Administration. Barrett officially started at Alyeska on Jan 1.

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