PRUDHOE BAY, Alaska – The nation's largest oil field got a reprieve of sorts as BP PLC (BP) announced it will try to keep part of its North Slope production running while replacing corroded pipes that have caused two spills this year.
But federal regulators on Thursday ordered the company to conduct more rigorous pipeline inspections to continue operations, and BP must pass a series of tests before restarting pipes it shut down.
The news came as BP gave a tour of its massive Prudhoe Bay facility on the edge of the Arctic Ocean, where a 210-gallon spill led the company to announce earlier this week that it was shutting down its 400,000 barrel-a-day operation.
On Thursday, it said it was moving forward to replace the eastern transit lines that leaked, signing contracts with United States Steel Corp. and Nippon Steel Corp. to supply 10 miles of pipeline. Sixteen miles will be replaced. BP is working to win contracts for the remaining materials.
At the site of the spill, motorized mops snaked through slender tundra grasses soaking up the mess. About 13,000 barrels of oil sat dormant in a 3-mile stretch of pipe above.
Workers used ultrasound to listen for signs of weakness in the carbon steel pipe as about 140,000 barrels of oil flowed toward the trans-Alaska pipeline.
BP planned to keep oil flowing from its western side, buoyed by signs that those pipes are in better shape following thousands of tests conducted after a massive spill of up to 267,000 gallons in March, said Craig Wiggs, an oil field manager.
If the western side keeps flowing, capacity could increase to 185,000 barrels. Steve Marshall, president of BP Exploration Alaska, said a decision will be made early next week on what the company will do.
But in order to keep piping crude to the port of Valdez, BP must adhere to more thorough testing spelled out by the Department of Transportation that would require heat-seeking equipment to detect leaks and visual inspections of all 22 miles of transit lines.
BP said it would comply with the order from the department's Pipeline and Hazardous Materials Safety Administration to survey all pipelines four times a day.
The long-term plan would still be to replace the western pipeline.
BP continued to accept responsibility for the lack of upkeep that led to shutdown.
"BP is the operator of the field. We're ultimately responsible," said Kemp Copeland, manager of the Prudhoe Bay oil field.
BP has a contract with Canadian company Acuren to provide corrosion inspections. The eastern side of the Prudhoe Bay pipeline had not undergone a high-tech inspection called "smart pigging" since 1992, although the western side had undergone the check in 1998 and was scheduled for the test this summer.
Acuren officials did not immediately return messages late Thursday. The Acuren companies are subsidiaries of Rockwood Service Corp., headquartered in Greenwich, Conn.
BP, which operates the oil field, has not yet said exactly how much the project will cost and whether it will divide costs with ConocoPhillips Co. (COP) and Exxon Mobil Corp. (XOM), which share ownership of the field.
For refineries that normally get supplies from Prudhoe Bay, analysts say the shutdown is unlikely to cause short-term problems because most have a stockpile that stretches 30 to 45 days.
If the shutdown lasts several months, it could create further difficulties as refineries turn to other parts of the world for crude oil, said analyst John Thieroff with Standard & Poor's.
A longer-term shutdown could cause a spike in West Coast gas prices because those refineries get about 30 percent of their oil from Alaska.
But Mark Gilman, analyst with The Benchmark Co., said the shutdown may have little impact on overall U.S. gas prices, because other sources of crude oil could compensate for any potential shortfall.
The average U.S. retail gasoline price has hovered around $3.036 a gallon for regular unleaded since BP's announcement Sunday that a leak would require it to shut down the oil field.