BP to decide this week on Prudhoe management plan

NEW YORK - Oil major BP Plc will decide at the end of this week whether it will completely shut down its giant Prudhoe Bay oil field in Alaska, or continue to run the western half of the field, the company told analysts in a conference call on Tuesday night.

BP announced on Monday that it was shutting down the entire 400,000 barrels-per-day field after government-ordered internal inspections on one transit pipeline that links part of the eastern portion of the field to the Trans Alaska Pipeline revealed serious corrosion damage.

The pipeline problem, which hit at the heart of the US summer driving season, raised fears of supply concerns and sent oil prices sharply higher earlier this week. Prudhoe Bay is the biggest US oil field, accounting for 8 per cent of US production.

By Tuesday, production at the field was down to 200,000 bpd, but BP officials said they were studying options to maintain some output from the western side of the field.

"We will be making a decision with the federal and state governments by Friday as to whether we need to continue taking down (the western portion) for safety purposes or whether we can maintain production," Bob Malone, the head of BP's US operations, told analysts on the call.

BP officials said they are looking at plans either to bypass the transit line that connects Gathering Centre 1 to the Trans Alaska Pipeline or to ensure that corrosion monitoring practices on the GC-1 line were sufficient to detect any problems.

A second transit line known as OT-21 which connects Gathering Center 2 with GC-1 has been shut down since March after it ruptured and spilled 200,000 gallons of crude. Production from GC-2 is currently pumped through a high-pressure natural gas pipeline that has been converted to bypass OT-21 and carry crude oil. BP believes the bypass line is serviceable.

Production from GC-2 and GC-1 currently totals about 185,000 bpd, BP officials said.

- REUTERS