BP Shuts Down Largest U.S. Oilfield

BP says it has begun shutting down the entire Prudhoe Bay oil field in Alaska for weeks or possibly months following the unexpected discovery of "severe corrosion" and a small spill from an oil transit line.

The closure will reduce North Slope oil production by an estimated 400,000 barrels per day. Prudhoe Bay, the largest oil field in North America, accounts for about 8% of U.S. production but only about 2.5% of domestic oil supply, most of which comes from imports, according to the Department of Energy.

BP says the decision was made after inspection data revealed 16 "anomalies" in a dozen locations in an oil transit line on the eastern side of the oil field. Follow-up tests showed "corrosion-related wall thinning" that appeared to exceed the company's criteria for continued operation. It was during these follow-up tests that BP personnel discovered a leak and a small spill of 4???5 bbl. A barrel contains 42 gal of crude oil.

"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," says BP America Chairman and President Robert A. Malone. "We will not resume operation of the field until we and government regulators are satisfied that [the transit lines] can be operated safely and pose no threat to the environment."

BP was already under pressure to deal with corrosion and maintenance problems that in recent months have drawn the scrutiny of state and federal regulators, as well as members of Congress and federal criminal investigators.

In March, about 6,400 bbl of crude oil leaked from a severely corroded BP pipeline at Prudhoe Bay, the largest spill on the North Slope since oil production began there in 1977. BP installed a bypass on that line in April and plans to replace the pipe. Only one of BP's three transit lines is now operating.

Last month, under orders from the Department of Transportation, BP launched a $50 million initiative to inspect, clean, and replace Prudhoe Bay pipelines. The company is in the process of cleaning and scraping sludge from the inside of the pipes, then sending an electronic device called a "smart pig" through to look for corrosion, which can eat holes through the steel walls of the pipes.

BP says it spends millions of dollars annually to fight corrosion, which is usually caused by water contacting steel. Company officials say BP puts millions of gallons of corrosion inhibitor into the Prudhoe Bay lines each year and also examines pipes by taking X-rays and ultrasound images.

In light of the oil shortfall, DOE spokesman Craig Stevens says the government will consider loans and sales from the Strategic Petroleum Reserve, which currently holds about 700 million bbl of oil. "If there is a request for oil, we'll certainly take a serious look at that," he says.

Congress has left Washington for the August recess, but the senior Democrat on the House Energy & Commerce Committee is already calling for hearings into the Prudhoe Bay leak. "It is appalling that BP let this critical pipeline deteriorate to the point that a major production shutdown was necessary," says Rep. John D. Dingell (D-Mich.).