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/.