Let's see gas is 3.19 for reg here today so now it will be 4.00 by thursday.... way to go...

Major Alaskan oil field shutting down
ANCHORAGE, Alaska - In a sudden blow to the nation's oil supply, half the production on Alaska's North Slope was being shut down Sunday after BP Exploration Alaska, Inc. discovered severe corrosion in a Prudhoe Bay oil transit line.

BP officials said they didn't know how long the Prudhoe Bay field would be off line. "I don't even know how long it's going to take to shut it down," said Tom Williams, BP's senior tax and royalty counsel.

Once the field is shut down, in a process expected to take days, BP said oil production will be reduced by 400,000 barrels a day. That's close to 8 percent of U.S. oil production as of May 2006 or about 2.6 percent of U.S. supply including imports, according to data from the U.S. Energy Information Administration.

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.

"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 Chairman and President Bob Malone said in a statement.

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.

"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."

"Light, sweet crude for September delivery was up 36 cents to $74.95 a barrel in midmorning Asian electronic trading on the New York Mercantile Exchange.

Officials at BP, a unit of the London-based company BP PLC, learned Friday that data from an internal sensing device found 16 anomalies in 12 locations in an oil transit line on the eastern side of the field. Follow-up inspections found "corrosion-related wall thinning appeared to exceed BP criteria for continued operation," the company said in a release.

Steve Marshall, president of BP Exploration Alaska, Inc., said at an Anchorage news conference that testing in the 16 areas found losses in wall thickness of between 70 and 81 percent. Repair or replacement is required if there is over an 80 percent loss.

"The results were absolutely unexpected," he said.

Marshall said Sunday night that the eastern side of Prudhoe Bay 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.

Marshall said BP is looking at repairing, bypassing or totally replacing the line.
While they suspect corrosion in both damaged lines, they can't say for sure until further tests are complete. Corrosion is primarily caused by carbon dioxide that comes up with water, oil and gas during drilling.

BP puts millions of gallons of corrosion inhibitor into the Prudhoe Bay lines each year. It also examines pipes by taking X-rays and ultrasound images.

"Up until Friday of this weekend we were of the opinion the techniques we were using were ultimately reliable," Marshall said.

 

Here's the way it works....

You don't deliver as much goods. Demand stays the same; supply goes down. Result = Price goes up.

We quite obviously have plenty of money or we wouldn't be driving so many SUVs.

Here's how it should work; for you crybabys out there.

Supply goes down; demand stays same; prices rise
Prices rise -> demand goes down -> Prices go down.

But does that happen? No. We just cry in our beer and drive like normal.

 

Honestly fuel would have to get above $5 or $6 a gallon before I would significantly alter my driving. I wouldn't get rid of the truck but I might try mass transit more (the subway stops a block from work and a mile from my house.)

 

Remember the good ol days when people cried in beer over a woman? Now all we can afford to do is cry over poor fuel mileage

 

That BP oil that is being lost makes up less than 1% of worldwide oil production. Literally a drop in the bucket.

 

Yeah, but gas prices will increase by more than 1%, and when that field comes back online prices won't come back down...

 

Sad but true. I'm in the wrong business.

 

My point exactly. If I were the oil companies; I'd jack prices up another dollar. Supply and Demand.

 

The price will fall once production comes back up.

Price is governed by supply and demand.

If our refining capacity jumped 50% in a day magically our price would drop dramaticly.

 

Greetings from Prudhoe Bay...

I've worked on several spills caused by corrosion in the pipes up here, and it is a huge issue. BP dumped 60 million into corrosion inhibitors last year, and planned for 71 million dollars into inhibitors this year. After the big spill in March, and some new testing that was done on the lines, it was determined to shut the fields down, determine what pipe needs to be replaced and replace it as needed. BP isn't making any money on this as it will cost them a good chunk of change to get this fixed, not to mention the 400,000 barrels per day of oil that will not be flowing through the lines. At $70+ a barrel, don't you think they would try and crank through as much as they could? They are doing this to protect their asses, which means protecting the environment because the agencies are on them like white on rice after these recent spills and past problems with corrosion. The lines are a few years past what the lifespan was expected to be, so it is time for them to have an overhaul.

Hopefully the ramafacations won't be too severe at the pump, or in the short term to the oilfield contractors. This is expected to last weeks, maybe even a couple of months, but they aren't going to slouch around, they are getting right on it. Maybe we can get the middle east to bring their production back up to take the pressure off some. They have dropped off roughly 700,000 barrels per day. This BP partial shut down isn't what has slammed the gas prices up to $3.00 a gallon, it is still a result of supply from the middle east coupled with the lack of refinery space in the US. This sure isn't going to help any though.

 

Um, how does a pipleline filled with OIL CORRODE anyway????? Doesn't the old coat the piping and PREVENT corrosion???



Sorry, i have been dying to ask this all day....
I will get back on my bike and ride 14 miles home now..

 

It's not the oil deteriorating the pipe, it's a combination of contaminates in the oil (i.e. water) and the exterior environment. You have to have a damn good maintenance program to NOT have corrosion on any length of aboveground piping.

I profile jet fuel transfer lines and storage facilities with my company. Within that design we include low point drains every so often in the fuel lines where the water will accumulate. The drains allow maintenance to drain off the water collected within even a very active fuel line. It's normal.

 

That is a pretty big bucket that you are talking about and it probably affects the U.S. more than it affects other countries.

Does anyone know how much oil is exported from Prudhoe Bay to other countries???

 

I wish it was that easy, but it's not. The oil comes out of the ground in individual well houses and it piped through small lines to a drill site gathering center. From there it is transported through larger lines to main gathering centers or processing facilities in which other materials are removed such as water, gas, etc. Alot of the water found in the reservoirs is either processed water, used to pump down hole to keep the pressure up for the oil to flow better, and sea water influenced into the reservoirs due to the close proximity of the ocean.

After the main gathering centers and processing facilities, the oil is transported to Alyeska's Pump Station #1 in which it gets sent into the trans alaska pipeline to Valdez. The main problem lies in the lines coming from the well houses and to the larger gathering centers since it still has contaminants mixed in with the oil. This is where they have used corrosion inhibitors and have had the majority of the problems. The big concern now though is the lines after the main gathering centers and processing facilities. This material is mostly oil, but after testing of the pipes, they have found that some of them have corroded up to 81% of the piping material away. They are doing this change out now to prevent major spills and problems in the future.

 

The pipes can corrode due to water and moisture in the oil that is being pumped. The oil in the pipelines is not purified before it makes its way through the pipes to where it will be refined. Refining oil does many things, one of which is to separate the water and moisture in it.

**** Skip my post since 05RoushMarkLT gave a better answer. ****