With a massive corrosion in the oil pipeline on August 6, 2006, the British Petroleum PLC, the second largest oil company and the petroleum giant, has shut down its operations at Prudhoe Bay Oilfield, in Alaska. The article discusses its impact on both the oil and the base metal prices.
Crude
oil refineries and gas stations are not well equipped
to handle crisis like sudden abrupt in production and
supply of oil. The recent shutdown of Prodhoe Bay BP
PLC could be another blow to consumers, already hard
hit by energy costs. A precipitous shutdown in mid,
summer, and in the middle of middle east war, has jumped
the price of crude by $2.22 a barrel. If BP could have
carried out the repairing job when the corrossion was
first discovered in March 2, 2006, the intensity of
the crisis could have been avoided. The Alaskan oil
destinated for the California market now faces a supply
crisis. And the big winner is Atlantic Rich Field Company
(ARCO), a 100% subsidiary of BP PLC, and the largest
retailer in California. Oil prices, already on record
high, rouse putting pressure on prices at gas stations.
The Light sweet crude for September delivery on the
New York Mercantile Exchange slipped 33 cents to $76.65
a barrel in electronic trading by midday in Europe.
September Brent crude oil at London's ICE Futures exchange
fell 40 cents to $77.90 a barrel.
The discovery of severe corrosion of oil pipeline along
the 800 mile Trans-Alaska Pipeline System (TAPS), and
spilling of oil in the Arctic Ocean has forced the BP
to replace all 16 miles of main transit pipeline at
the huge Prudhoe Bay oil field. The 800 mile oil pipeline
laid by BP extends from Alaska's North Slope to the
port at Valdez. BP's huge Prudhoe Bay oilfield produces
8% of total US crude oil production producing 4,00,000
barrels a day. Petroleum giant BP PLC said in a press
that its Prudhoe Bay could be closed for weeks or months
because of damage, and to replace it, 73% of a pipeline
is required from the field.
The BP Company has nearly 26% stake in the Prudhoe Bay
oil field, and its production would nearly cut by 1,00,000
barrels per day, or around 2.5% of global's production.
The pipeline carries a combination of both crude oil
and natural gas, and water out of the Point McIntyre
field, north of Prudhoe, to a western Prudhoe separation
plant. Production of oil on the western side of Prudhoe
remained unaffected while the production on the eastern
half suffered because of the corroded pipelines.
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