BP shuts down largest U.S. oil field.

Discussion in 'In the News' started by Chuck, Aug 7, 2006.

  1. Chuck

    Chuck just the messenger

    Indefinite closure removes 8 percent of U.S. production, raises price fears.

    MSNBC staff - August 7, 2006

    Two caribou near the Prudhoe Bay oil field in Alaska

    ANCHORAGE, Alaska - In what could be another blow to consumers already hard hit by high energy costs, petroleum giant BP PLC said Monday its Prudhoe Bay facilities in Alaska will be shut down for weeks or months due to damage that will require it to replace 73 percent of a pipeline from the field.

    The shutdown, which drove oil and gasoline prices sharply higher on energy markets, removes about 8 percent of daily U.S. crude production.

    Light, sweet crude oil rose $1.59 to $76.35 a barrel in electronic trading on the New York Mercantile Exchange, while gasoline prices rose more than 4 cents to $2.2725 a gallon.

    BP, the world’s second-largest oil company, began shutting down the pipelines on Monday and said it would replace 16 miles of the 22 miles of transit pipeline in the Prudhoe Bay field following a leak discovered Sunday.

    Company officials told a news conference they did not immediately know how much it would cost to replace the lines. They will continue to keep the oil field closed and bring parts back into service once it’s safe to do so.

    Because of the disruption of supplies, the Energy Department is prepared to provide oil from the government’s emergency supplies if a refinery requests it. Spokesman Craig Stevens said the department will be in contact with BP and West Coast refiners later Monday to assess the situation.

    “If there is a request for oil we’ll certainly take a serious look at that,” he said.

    Steve Marshall, president of BP Exploration Alaska Inc., said Sunday night that the eastern side of the Prudhoe Bay oil field would be shut down first, an operation anticipated to take 24 to 36 hours. The company will then move to shut down the west side, a move that could close more than 1,000 Prudhoe Bay wells.

    Possible major impact on oil prices
    Once the field is shut down, BP said oil production will be reduced by 400,000 barrels a day. That’s close to 8 percent of U.S. oil production or about 2.6 percent of U.S. supply including imports, according to data from the U.S. Energy Information Administration.

    BP said Sunday workers found a small spill of about 4 to 5 barrels, which has been contained and is being cleaned up.

    The shutdown comes at an already worrisome time for the oil industry, with supply concerns stemming both from the hurricane season and instability in the Middle East.

    A 400,000-barrel per day reduction in output would have a major impact on oil prices, said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo. A barrel contains 42 gallons of crude oil.

    “Oil prices could increase by as much as $10 per barrel given the current environment,” Emori said. “But we can’t really say for sure how big an effect this is going to have until we have more exact figures about how much production is going to be reduced.”

    But Victor Shum, an energy analyst with Purvin & Gertz in Singapore, said he expected the impact to be minimal since crude inventories are high.
    Last edited by a moderator: Aug 7, 2006
  2. brick

    brick Answers to "that guy."

    Re: 8% of US Production Offline With Prudhoe Bay Shutdown

    Everybody panic.
  3. Chuck

    Chuck just the messenger

    Re: 8% of US Production Offline With Prudhoe Bay Shutdown

    ANWR drilling proponents are not happy today.
  4. tbaleno

    tbaleno Well-Known Member

    Re: 8% of US Production Offline With Prudhoe Bay Shutdown

    This will help them sell the gulf drilling platform legislation. Basicly they always win. A problem in the gulf helps them get support for ANWR, Problems in alaska helps them get support for more gulf drilling.

    It is all a big game. They never lose.
  5. brick

    brick Answers to "that guy."

    Re: 8% of US Production Offline With Prudhoe Bay Shutdown

    It's that or they're thrilled. I'm pretty sure that Prudhoe Bay is a separate issue from ANWR. If you spin this the right way, you basically use it to prove that we don't have enough capacity in the US and need to have other sources available to us. It would be an especially effective message if this pans out and somehow drives fuel prices up even farther into the $3 realm.

    Now, us fools would say the opposite and point out that other souces of energy should be developed, not oil. And then there's that energy conservation thingy that we keep hearing about. But what do I know?
  6. hawkgt647

    hawkgt647 Well-Known Member

    Re: 8% of US Production Offline With Prudhoe Bay Shutdown

    I would question BP's ability to operate and maintain their facilities. Between this latest episode and the fire/explosion at a BP Texas refinery last year, their track record doesn't look so good.
  7. Chuck

    Chuck just the messenger

    Re: 8% of US Production Offline With Prudhoe Bay Shutdown

    BP is not looking all that clean these days....
  8. tbaleno

    tbaleno Well-Known Member

    Re: 8% of US Production Offline With Prudhoe Bay Shutdown

    Maybe they are diverting maintenance funds into their other research projects. Maybe this is a good thing ;)
  9. Chuck

    Chuck just the messenger

    On a related note, the expected 3-5 cent hike will set record pump prices, but these days, it seems like much of the population will tolerate $4 a gallon gas.
  10. lakedude

    lakedude Well-Known Member

    This latest spike in prices has the local TV station out interviewing gas price whiners (again).

    [rant mode on]I'm sooooo sick and tired of all the complaining from people who do absolutely nothing about their problems other than whine about them. "BoHoo, my credit cards debt was already too high and now because of the price of gas I need pre-bankruptcy credit counseling." Says the woman driving the Escalade. BARF! I'd love to be a bankruptcy judge. If someone has real problems fine lets help em out with their debt. If someone's biggest problem is that they over spent on luxury items......Oh man look out! Can you say auction? People should lose as many of their fancy things as it takes to pay debts they rang up. If that means they lose the SUV and the house so be it! Let em have a nice mobile home (perhaps shared with another family?) and a bicycle!!![rant off]
  11. Chuck

    Chuck just the messenger

    Agreed, lakedude,

    Anyone have grandparents that talk about getting around during World War II with those gas ration books? If they acted like us now, we would have lost that war.... :(
  12. brick

    brick Answers to "that guy."

    Funny. Today I was in the office of another engineer, who happens to have been born and raised in Poland post-WWII. He had a picture on his cube wall of pump prices in the $9-$10/gal range, which turns out to have been taken in MA at a gas station that was closed and the employees had been having a little fun before they left. Anyway...

    I looked at the picture, got the story, and chuckled. Then he stops me and, very seriously, said "It's not funny." I just kinda let it go, but I have to wonder what's going on in his head? Maybe his frequent trips back to Europe have given him a taste of reality, and he knows better than the rest of us what's actually coming? I know it's due to taxation in their case, but still. It must be quite a difference to see how we use our fuel vs. how the Europeans do, on average.
  13. Chuck

    Chuck just the messenger

  14. brick

    brick Answers to "that guy."

    Maybe I'm delusional, but it looks like we're seeing the leading edge of the price increase here. I just drove past several stations at $3.299 that were $3.199 last time I checked. The "cheap" stations have gone up from $3.139 to $3.159 as of yesterday morning. Sick thing is, I can't say that it really means anything to me anymore. That's not a statement about FE, but simple numbness from watching this go on for six months straight.
  15. AZBrandon

    AZBrandon Guest

    It's pretty impressive how suddenly things can happen. Pipelines being closed, Mexico's oil field going into massive decline, world demand increasing to the point where it soaks up 98% of production... 10 years ago hardly anyone would have thought it possible even!
  16. hobbit

    hobbit He who posts articles

    Well, yeah ... know that feeling as the rollercoaster comes off
    the chain and tops that first hill? here we goooooooooo...
  17. AshenGrey

    AshenGrey Well-Known Member

    Doesn't "BP" allegedly stand for "Beyond Petroleum"? Well, there's no time like the present! I don't care if gasoline hits $4/gallon if it means that someone considering a Hummer buys a station wagon instead, and someone considering a midlevel sedan buys a hybrid.
  18. xcel

    xcel PZEV, there's nothing like it :) Staff Member

    Hi AshenGrey:
    ___You are unfortunately very right about this …

    ___In the average full-sized P/U driving around town, to the little league ball park, or to get groceries and back is costing upwards of $3 and $4.00 RT at 10 mpg. I mean what is the point of going to get a gallon of milk from a local grocery on sale for $2.69 a gallon when the gas cost to get there and back costs more then the milk itself in many cases? It just doesn’t make any sense yet there they are … 75 down the 55 mph limited Interstates, circling and idling in the mall parking lots, slamming on the brakes at every opportunity. I think it is going to take $6.00 + to wake up the majority but at least a small minority is starting to get it …

    ___Good Luck


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