BP's problems intensify -
Oil producer, Alaska lose millions of dollars as processing plant fails, cutting output
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By WESLEY LOY
Anchorage Daily News
Published: August 24, 2006
Last Modified: August 24, 2006 at 04:16 AM
Prudhoe Bay was staggered again Wednesday when a major processing plant went on the blink, dropping production from the nation's largest oil field to its lowest level since the Prudhoe crisis began early this month.
The breakdown knocked out 90,000 barrels of oil production per day, driving down overall Prudhoe output to 110,000 barrels per day, said Daren Beaudo, a spokesman for field operator BP Exploration (Alaska) Inc.
Normally the field makes about 400,000 barrels per day, or 8 percent of total U.S. production.
Wednesday's trouble marks another big setback for BP, which on Aug. 6 startled petroleum markets by announcing its intent to shutter Prudhoe entirely because of oil leaks from corroded pipelines.
As it turned out, BP and federal pipeline regulators deemed some of the pipes safe to operate and BP didn't need to carry out the full shutdown, stabilizing output last week at just more than 200,000 barrels per day.
Then came Wednesday's glitch at a plant called Gathering Center 2, which separates the raw stream coming in from wells into oil, water and natural gas.
A compressor that handles the gas went down, and fixing it could take several days, Beaudo said Wednesday evening.
"It was a mechanical failure," he said. "I don't have any more detail about what caused it."
Prudhoe is one of London-based BP's top-producing global assets. BP runs it on behalf of itself and four other owners including Exxon Mobil and Conoco Phillips.
Ninety thousand barrels of oil is worth $6.3 million a day at Wednesday's closing price of $70.06 per barrel on the West Coast spot market.
The new production loss will cost the state roughly $1.5 million per day in oil taxes and royalties until pumping resumes.
For BP, Wednesday's breakdown adds new pressure to a company that surely must be feeling snakebit.
Its troubles began in early March when a leaky pipeline released an estimated 201,000 gallons of oil onto the frozen tundra. It was the largest North Slope oil spill in nearly three decades of production there, and the event attracted scrutiny from federal pipeline regulators, members of Congress and criminal investigators.
The troubles intensified after another, smaller leak prompted BP's Aug. 6 shutdown announcement.
Critics said BP neglected key pipelines at the core of the vast oil field, allowing sludge to build up inside the lines and corrosion to go unchecked. BP executives have apologized and said the corrosion caught them by surprise.
Since the partial shutdown, BP has had also to shut down a pipeline carrying 20,000 barrels of crude when the above-ground line suddenly surged and fell off its mounting rack.
And on Wednesday, BP said workers testing the insulated pipes for corrosion had to stop work due to asbestos contamination. |
