BP Pipeline Leak Closes Down Biggest U.S. Oilfield

In a move that cuts 8% of U.S. oil output and sent oil prices sharply higher on Aug. 8 BP has begun shutting down the biggest U.S .oilfield due to a pipeline leak. BP said late Aug. 6 it had begun shutting down the Prudhoe Bay oil field in Alaska after discovering severe corrosion on a pipeline and a small spill. When complete, the shutdown will cut Alaska North Slope production by 400,000 barrels per day, it said.

The decision followed an internal report received Aug. 4 on an inspection of an oil transit line in late July, among the 22 lines it operates in Prudhoe Bay. Onsite inspections found "unexpectedly severe" corrosion on the pipeline, a leak and a small spill estimated at four to five barrels, the company said. The spill has been contained and the clean-up operation is underway.

BP said it had notified state and federal officials of the decision and will work closely with the U..S Department of Transportation and the Alaska Department of Environmental Conservation, among others. BP plans to speed up inspection of the remaining oil transit lines in Prudhoe Bay, North America's largest oil field. The problems discovered "have called into question the condition of the oil transit lines at Prudhoe Bay," Malone said. "We will not resume operation of the field until we and government regulators are satisfied that they can be operated safely and pose no threat to the environment."

At about 07:45 GMT, Brent North Sea crude for September delivery spiked $1.55 to $77.68 per barrel in electronic trading, just off its all-time peak of $78.18 set on July 17.

New York's main contract, light sweet crude for delivery in September, surged $1.72 to $76.48 per barrel in electronic deals before the official opening of the U.S. market.

BP America chairman and president Bob Malone said in a statement: "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."

Copyright Agence France-Presse, 2006

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