BP Shuts Down Oil Pipeline

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Get ready for higher fuel prices.
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New York Times
 
http://theoildrop.server101.com/ubb/ultimatebb.php?ubb=get_topic;f=8;t=008747

http://theoildrop.server101.com/ubb/ultimatebb.php?ubb=get_topic;f=8;t=008743

And I disagree with panicking and stampeding with the rest of the sheeple who are easily manipulated by manipulative press reports.

Get a grip.

Edited to add, that that last statement was metaphoricly directed at the entire overreactive public(not use personaly) and specifically the press using inflamatory language to stir fears of shortages when no such potential exists.
 
quote:

One analyst said prices at the gas pump could rise five cents in the next few days.

in times where a rumour of a drizzle will jack prices by 20 cents a gallon - this is a joke.

odd that we only get a tiny percentage of our supply from there....some say 8% some say as low as 2%, but just enough to jack prices.... yeah baby!

get rich quick scheme that really works - buy oil stocks and then disrupt the pipeline - instant millionaire.
 
This is a decent article to keep things in perspective. http://foxnews.smartmoney.com/onedaywonder/index.cfm?story=20060807

"odd that we only get a tiny percentage of our supply from there....some say 8% some say as low as 2%,"

The 400k barrel prediction would be 8% of domestic prodiction. That is half of north slope production that varies feom 800k to 1 million BPD. So if you include the sattelite fields the domestic production of prudhow bay is 16% of the nations.
To translate that into actual usage the North Slope produces about 5% of what the nation uses. This shutdown is half of the north slope production so you can expect a 2.5% shortage. But this will be buffered by reserves in storage tanks as well as supplies and production increases from other sources. In other words, there will be no shortage. But emotion overwhelms reason during war. in the article posted it suggest there is a $20 a barrel war premium . So in peacefull times the market price should be $50-$55 per barrel.
The War premium is the price of panic.
 
The age and the complexity of the reservoirs are being blamed. If it ain't broke, don't fix it, eh? That approach invites worst case scenarios. Laissez faire was my car dealer's motto, too. Catching up with proper maintenance took me a couple years.
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quote:

Originally posted by Zee1:
get rich quick scheme that really works - buy oil stocks and then disrupt the pipeline - instant millionaire.

How much will you sell that oil for, the oil that isn't coming out of the closed pipeline?

Overall, BP will lose money on this shutdown.
 
I agree with Bryan, and the many experts, who say that there is no oil shortage. There never has been. I also agree that the Prudhoe Bay oil is a small percent of what the U.S. produces and uses. I've read that the Prudhoe Bay oil is
2 1/2% of what we use and 8% of what we produce. What ticks me off is that given the above, why has the price at the pump already gone up since yesterday morning when the pipeline problem hit the news? Between the time I went to work yesterday morning and the time I went home 8 hours later gas shot up an average of 5 cents a gallon in Helena, a city of about 30,000 that I live 15 miles out of. And why is everyone predicting, no doubt rightly so, that the pipeline shutdown will continue to result in increased prices at the pump?

My answer is that its not the news media that's doing the manipulating. Its the oil industry. A lot of people are fond of chanting "supply and demand", "supply and demand", "the market determines the price", "the market determines the price". Well, they need to take a course on economics.

Here are some of the basic rules of supply and demand. Demand only results in a price increase when the supply of the product is insufficient to meet demand. When the supply is greater than the demand, the price should go down. The laws of supply and demand only work when there is no manipulation of the market, by the government, the industry supplying the product, or both.

There is massive manipulation of the oil market by the oil industry. Big Oil and OPEC are manipulating the market, starting with the supply, which they together limit to the point that supply just barely keeps up with demand. There is in fact plenty of oil in the ground to meet demand, and as I said above, there've been no shortages (other than spot shortages in isolated areas caused by such things as Katrina).

Therefore, demand is not what's driving the price up. The price is being driven up by the
greed-driven manipulation of supply, and price, by OPEC and Big Oil.

BP is not necessarily going to lose money by shutting down the Alaska Pipeline. BP also pumps oil out of many other places around the globe. It is entirely possible that the increased profits BP will make off the other oil it pumps, the extra money that will be made by BP because of the increase in petroleum product prices supposedly caused by the pipeline shutdown, will be greater that the profits BP loses from not selling the Prudhoe Bay oil. That's why its wouldn't surprise me a bit if there's nothing wrong with the pipeline and the shutdown is a phony ploy to increase profits. This kind of thing has been done before in many industries to increase profits.
 
quote:

$50-$55 per barrel.

which would be back to $1.80 a gallon? oh the good old days.

quote:

How much will you sell that oil for, the oil that isn't coming out of the closed pipeline?

stocks.... the pipeline will return, you just make money off of the downtime because when the pipeline is down the price of oil will go up - not talking about investing in one companies oil but more like oil in general - like a commodity.
 
JMacmaster,

I have seen the leaks and spills. I have seen the corroded pipelines and we are constantly doing sleeve repairs and have a entire work trying to keep up with the issue. The fact is the rate of corrosion findings is outrunning our ability to do in service repairs.
I was at a spill sight last night on my final walkthrough before I hit the sack, we have a crew removing insulation on this pipe so we can put a pressure sleeve on the weak spots. Another crew is working on evacuating the contents of the pipe that failed and spilled hundreds of barrels in March. This is serios and that is why such drastic measures have to be taken. Would you rather BP continue to spill things and be involuntarily shut down by the government??
There is no conspiracy that 30 year old pipe that transits salty wet crude is going to have corrosion.
I am sorry if you can't believe that. The bad pipes have to be replaced to protect the environment. Thirs for inexpensive oil cannot override environmental regulations. BP,Exxonmobil and CP cannot knowingly break the law and run fields that have potential for damaging spills. These weak spots have to be repaired. or they fice fines and revocation of production rights.
Yes it is inconvenient timeing. I have to buy gas and plane tickets myself.
World wide instability, wars and environmental events are out of yours and my control. How are we going to rationally deal with them? I would rather make adjustments myself than try to find someone to blame for my personal inconveniences.
 
quote:

Originally posted by jmacmaster:
I agree with Bryan, and the many experts, who say that there is no oil shortage. There never has been.

There is no shortage at 3.00 gas..but there will at $2.50

quote:

Originally posted by jmacmaster:
My answer is that its not the news media that's doing the manipulating. Its the oil industry.

I'd explain how oil is priced-again..but I'd be wasting my time.


quote:

Originally posted by jmacmaster:
A lot of people are fond of chanting "supply and demand", "supply and demand", "the market determines the price", "the market determines the price". Well, they need to take a course on economics.

No disrespect but I doubt you understand how the free market, commodities (futures/options) operate.
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quote:

Originally posted by Al:
No disrespect but I doubt you understand how the free market, commodities (futures/options) operate.
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I'm sort of curious as to how the oil futures market actually works since they seem to be the ones that have given us the panic pricing recently.

At one point in the past a few people almost cornered the world silver market. A bit of adjustment of the laws involved and that problem was taken care of. I wonder if that might not be needed here...

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The price will go up until people reduce their demand 2% overall. Not much you'd think but it's hard to get through to the vast majority.

Still seems to be lots of people out there who think "others" should take the subway, others should trade in SUVs, others should carpool. Yet they're somehow special
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and the others should save them some gas.

Am trying different stuff to reduce my demand an additional 2%, I already shop on my way home from work, trip chain, roll through stop signs, etc. But now I turn the car off at long red lights... yup, I'm the guy.
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Another announcement with a website link at the end for more updates for those of you who are interested.

Aug. 8, 2006

Dear BP Employees,

On August 4, our enhanced inspection and maintenance program revealed unexpectedly severe corrosion in one of our oil gathering and transmission lines on the east side of the Prudhoe Bay Oil Field. Given the potential environmental risks, we quickly made the decision to begin an orderly and phased shutdown of the east side of the Prudhoe Bay oil field. Once the field is shut down over the next few days, we will have reduced Alaska North Slope oil production by almost half – 400,000 barrels per day.

We deeply regret the need to take this action; however, such a decision is the culmination of, and an outcome of, our shared company values. There was no other course of action that we could have committed to as a company given our commitment to safety, compliance and to protecting the environment.

We have made the decision to replace the main oil transit lines at Prudhoe Bay, and have committed the human and financial resources to complete this work as safely and quickly as possible. This will be accomplished as part of our overall plan for ensuring the field’s integrity.

I am currently in Alaska supporting the identification and mobilization of additional resources from across Alaska and the BP Group in order to speed inspection of the remaining oil transit lines and to complete the work to return Prudhoe Bay to normal operations.

BP regrets the impact this action will have on our partners, the nation and the State of Alaska. I would like to thank the State of Alaska, DOT, Alyeska and our partners for their current and longer term support. In addition to this immediate response, we will be conducting a parallel study with these agencies to determine when it’s possible to safely resume operating portions of the field.

Our priorities moving forward are to assure the safety and integrity of our operating infrastructure, minimize impact on the environment, continue the cooperative working relationship with the relevant agencies and restore production as soon as it is safely – and I reinforce safely – possible.

At the same time, I appeal to each of you to recommit to the highest levels of safety and compliance performance in your own teams.


Bob Malone

NOTE: An external website has been launched for communications about this situation: http://usresponse.bp.com. Employees can also refer to Planet BP for regular updates.

There are links withing the websites for photos etc. It's a transparent operation so browse at will. here's a couple of phtos of the sight. http://usresponse.bp.com./go/doc/1249/127580/
http://usresponse.bp.com./go/doc/1249/127579/
 
Another update.

Updated Statement

BP Exploration Alaska Inc. (BPXA) continued the phased and orderly shutdown of production of the Prudhoe Bay oilfield on the North Slope of Alaska. The company began shutting in production August 6th as a precautionary measure after inspections indicated corrosion on one of its Eastern Operating Area (EOA) crude oil transit lines.

BP's top priorities remain assuring the safety and integrity of the oil field, minimizing environmental impacts and cooperating with federal and states agencies.

To date, 200,000 barrels of daily crude oil production have been shut in. The shut in Prudhoe Bay pipelines and facilities will not return to normal operations until BPXA is satisfied they are safe and meet all BP state and federal regulatory operations criteria.

BP is studying options with the US Department of Transportation and Alaska Department of Environmental Conservation for safely operating portions of the Prudhoe Bay field while inspections are conducted and a forward plan is developed.

Total production impacted by the decision to shut-in the operating area could reach 400,000 barrels per day. This volume comprises about 50 percent of all North Slope oil production.

BP's supply and logistics and refining and marketing organizations are working around-the-clock to minimize supply disruptions and to bring additional supplies of crude oil and motor fuel into the US.

Actions Taken and Ongoing Activities

· BP is mobilizing additional inspection resources from operations across Alaska and North America to expedite evaluating the condition of the crude oil transit lines to ensure safety and environmental protection.

· Over the next week BP will be supplementing our workforce with the additional resources:

· 156 pipe insulation stripping personnel

· Five additional automated ultrasonic testing crews (for a total of eight), and

· 21 manual ultrasonic testing personnel

Inspection and Spill Response

· During supplemental inspection of the line, BP workers identified, and emergency responders are cleaning up an oil spill currently estimated to be about five (5) barrels.

· The Flow Station 2 Oil Transit Line was maintenance-pigged in July. Following the cleaning of the line, BPXA ran a smart-pig - an industrial diagnostic tool used to evaluate the operability condition of a pipe - on July 22. On August 4, preliminary smart-pig data interpretation indicated 16 anomalies, where the wall thickness of the pipe may not have met BP and industry standards and criteria for safe operation.

· To validate the initial smart pig data, BP was conducting additional inspections of 16 anomalies at 12 locations on the line where corrosion-related wall thinning may have exceeded BP operational parameters. Inspectors at one of the locations observed oil staining on the underside of the pipeline's protective insulation at about 5:30 a.m. After onsite inspection by Prudhoe Bay operations management, the Prudhoe Bay Incident Management Team was mobilized, and FS 2 began shut down as a precautionary measure at 6:00 a.m.

· As an additional precautionary measure, spill containment equipment was mobilized to an additional inspection location with high corrosion wall loss. During this equipment deployment, leaking oil was observed at about 9:00 a.m. near this location. Responders re-positioned one of the containment tanks to capture the leaking oil and containment and recovery was initiated immediately using vacuum trucks and other oil spill cleanup equipment to minimize environmental impact.

· The size of the leak is estimated to be about five (5) barrels. Currently about 170 barrels of an oil and water mixture has also been captured in and removed from containment tanks. Recovery from this source is ongoing. No other leaking oil has been observed and visual spill detection measures have been increased.

· The crude oil transit line is a 30-inch line that carries about 30,000 barrels of processed crude oil per day from Flow Station 2 to skid 50 and ultimately into the trans-Alaska pipeline.

· BPXA is mobilizing additional inspection resources from operations across Alaska and North America to continue to evaluate the conditions of the crude oil transit lines to ensure safety and environmental protection before returning the Prudhoe Bay to normal operations. Options to resume production include repair or replacement of pipelines.

· BP continuously re-evaluates its inspection and maintenance programs and will modify procedures and policies whenever appropriate.

· Since March approximately 40 percent of all crude oil transit lines in Prudhoe Bay have been inspected via smart pig runs. Of the 22 miles of oil transit lines in Prudhoe Bay, nine (9) miles have been maintenance- and smart-pigged in the last two months; 10 miles remain to be maintenance- and smart-pigged; and three (3) miles from GC-2 to GC-1 (OTL 21) will be cleaned and decommissioned. This is the section that leaked on March 2, 2006.

· All proper agency notifications have been made including the North Slope Borough, EPA, ADEC, and National Spill Response Center.

· The Lisburne production facility continues to operate at about 17,000 barrels per day. The Lisburne line was maintenance- and smart-pigged in July and no areas needing repair were found.

Supply Situation

· The global crude oil market responds quickly to changes in the supply and demand balance. This was evidenced by the large volumes of imported crude oil and gasoline that arrived in the US after hurricanes Katrina and Rita disrupted supply from and into the Gulf of Mexico.

· Crude oil is a globally traded commodity and can be sourced from any number of oil-producing regions. BP's US refineries are some of the most complex in the world. This complexity allows our US refineries to use different varieties of crude oil based on availability.

· According to the US Department of Energy, US crude oil stocks are higher than average for this time of year.

· According to the US Department of Energy, crude oil stocks along the US West Coast are higher than this time last year.

· More than 50 percent of the cost of a gallon of gasoline is attributed to the cost of crude oil. The price of crude oil is determined by the impact of a variety of supply and demand factors on the world market. Things like the weather, war and consumer demand for gasoline all influence the price of crude and therefore gasoline.

· BP is urging customers to not be influenced by panic behavior. Panic buying and hording of fuel adds unnecessary stress to the supply chain.

· We also urge customers to use fuel wisely.

· Fuel prices are determined by the marketplace's reaction to supply and demand factors. A number of states also have emergency orders in effect regarding fuel pricing.

· Consumers should not tolerate price gouging. We urge consumers to report any evidence of price gouging at BP or ARCO branded retail sites to BP consumer relations at 1-800-333-3991 or the office of their state's attorney general at http://www.naag.org/.
 
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