Oil could be barged to US West Coast to ease ANS shortfall: Bodman

Oil could be barged to US West Coast to ease ANS shortfall: Bodman

Baltimore, Maryland (Platts)--7Aug2006

US Energy Secretary Samuel Bodman said Monday the government was
"concerned" about the closure of the 400,000 b/d Prudhoe Bay field in the
Alaska North Slope because of pipeline corrosion.

BP said Sunday the decision to shut the entire field down was made
following receipt of data July 4 from an inspection of two pipelines conducted
in July under an order from federal pipeline regulators. BP officials said it
will take several days to shut down the field. The shutdown of Prudhoe Bay
removes 8% of total US production and more than 50% of Alaska's production.

Speaking to reporters in Baltimore, Maryland, Bodman said the Department
of Energy would "try to accommodate" any requests by US West Coast refiners,
which received much of their supplies from the ANS, for crude from the federal
Strategic Petroleum Reserve to make up for any shortfalls. Bodman, however,
said DOE has not received any requests from West Coast refiners.

Any crude taken from the SPR, which is held in storage caverns in
Louisiana and Texas, would have to be shipped by barge or made available
through exchanges between refiners, Bodman said. The West Coast is essentially
disconnected from the rest of the US' pipeline system.

DOE officials have contact BP to better understand the extent to the
problem with the pipelines and the extent of the shutdown (story 1300 GMT).

The news of the shutdown, the second major setback for BP's Alaskan
operations this year, sent US' benchmark crude prices spiking over 2% in New
York and saw BP's shares dive by over 2% in London.

Last month, the UK oil major pledged to spend an additional $1 billion
over the next four years to upgrade safety at its US refineries and to repair
and replace infield pipelines in Alaska.

--Mike Schmidt, mike_schmidt@platts.com

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