Pipeline leak forces Alaskan oil production cuts

A leak discovered Saturday in the massive Trans-Alaska Pipeline System has forced BP and other oil producers on Alaska’s North Slope to cut output while the problem is addressed.

Alyeska Pipeline Service Co. said in a statement Saturday night that the pipeline remained shut down after a leak discovered earlier in the day, when oil was discovered in the basement of a pumping station.

“There are no injuries or apparent impacts to the environment as a result of this incident,” the company said in a statement.

Alyeska — which operates the pipeline that’s owned by a consortium of oil producers — has instructed North Slope producers to cut output by 95 percent. North Slope oil production, while in decline for years, is roughly 630,000 barrels per day and includes Prudhoe Bay, the nation’s largest oil field.

The incident could have implications that reach all the way to Capitol Hill — any prolonged reduction in output could renew calls for further diversifying U.S. exploration and production.

The Interior Department is already under pressure from Republicans and pro-drilling Democrats to allow resumption of deepwater drilling projects in the Gulf of Mexico that were halted after the BP oil spill.

At the same time, the incident also highlights environmental concerns about oil production.

The shutdown could also affect oil prices that were trading at two-year highs at the beginning of the year before retreating somewhat, according to an analyst quoted by Bloomberg.

“If there’s no resolution by tomorrow, we may see prices heading towards $90 a barrel or higher,” said Gavin Wendt, founding director at Mine Life Pty Ltd. in Sydney, Australia, in their piece. “The market is very susceptible to supply-side problems.”

Alaska accounts for roughly 14 percent of U.S. oil production.

The 800-mile Trans-Alaska Pipeline carries oil from Alaska’s North Slope to the port of Valdez. It’s owned by a consortium of companies including BP, which has the biggest stake and is the North Slope’s biggest producer, as well as ConocoPhillips, Exxon and others.

Here’s how Alyeska described the incident in a release last night:

“Oil was discovered in the booster pump basement Saturday morning and as a result the Operations Control Center in Anchorage shut the pipeline down just before 8:50 a.m. The booster pumps have been isolated and at approximately 4 p.m., crews began recovering oil from the site.”

The leak appears to have come from an underground section of piping that leads to the basement of the pump station, according to Alyeska, which said that engineers are developing a plan to safely re-start the pipeline.
 
A spokeswoman for the company told the Anchorage Daily News that there’s “no visible oil” on the tundra.