West Coast Refineries May Feel Pinch Due to Shutdown of Alaskan Crude Oil Pipeline

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Researched by Industrial Info Resources (Sugar Land, Texas). BP (NYSE:BP ), one of the world’s largest oil companies, was forced to begin a planned systematic shutdown earlier this week of its entire Prudhoe Bay oil field and pipeline network in Alaska following the discovery of leaks and severe corrosion from oil transit lines. This shutdown could reduce the production of Alaska North Slope oil by approximately 400,000 barrels per day, which is shipped to and processed mainly by refineries located on the West Coast. Sources indicate repairs could last upwards of four to six months.

But Thursday, BP officials announced it will try to keep part of its production running while replacing corroded pipes that have already causes two spills this year. That would mean the western side would be able to keep flowing and maintain production of 140,000 barrels per day, possibly ramping up to 185,000 barrels per day. A decision is expected early next week.

Although it is too early to predict, this could lead to a reduction of refined products produced from petroleum refiners on the West Coast. At this time, we have not seen any discernible impact to West Coast refinery operations, but we do feel that several scheduled turnarounds may be rescheduled if the pipeline shutdown lasts longer than 30-45 days because of a lack of crude oil or a labor constraint. BP, ConocoPhillips, Shell Oil Products US and Tesoro all have planned turnarounds scheduled for this fall.

BP expects to completely empty the Alaskan pipeline by early next week, and begin inspection testing on a 16-mile stretch of 30-inch pipe the weekend of August 19. BP also announced on Thursday that they have finalized two deals to supply ten miles of the sixteen miles of new pipe needed.

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