Prudhoe Bay woes should weaken Congress' OCS, ANWR efforts

Prudhoe Bay woes should weaken Congress' OCS, ANWR efforts

Washington (Platts)--9Aug2006

Environmental groups Wednesday said the discovery of corroded pipelines
in Alaska's Prudhoe Bay field and the shutdown of operations there should make
more difficult the passage of legislation to open the US Outer Continental
Shelf to drilling and should end debate over drilling in the Arctic National
Wildlife Refuge, also on the Alaska North Slope.

Karen Wayland, legislative director at the Natural Resources Defense
Council, said the Alaska pipeline damage casts doubts on the industry's
ability to maintain infrastructure and lends further credence to arguments
against erecting oil and gas drilling rigs on the OCS.

"The reality of this is that the serious environmental risks are going to
give a lot more strength to states who say they don't want the moratorium
lifted," Wayland said in a conference call with reporters. She said there are
hundreds of thousands of miles of pipelines in the US, including some 47,000
miles in Louisiana alone, and inspections of all the pipelines are inadequate.

The House and Senate each passed bills this summer to open the OCS, with
the House bill potentially opening the nation's entire OCS and the Senate
limiting new drilling to an 8.3 million acre swath in the Gulf of Mexico.
Reconciling the two promises to be challenging as bill sponsors in both
chambers have dug in their heals. The House has passed an ANWR bill but lacks
the 60 votes needed for Senate passage.

Pro-drilling interests said the potential loss of 8% of domestic
petroleum input, as a result of the Prudhoe Bay shutdown highlights the need
to open more areas to drilling, which they say would reduce future disruptions
caused by such supply pinches.

BP's announcement Sunday that it would shut down all or part of Prudhoe
Bay's 400,000 b/d of production becauase of pipeline corrosion drew new
attention to pipeline maintenance. The federal government does not regulate
low-pressure pipelines like those in the Prudhoe Bay field, though one bill
has been introduced into the US House of Representatives. The bill was
scheduled for consideration when Congress returns from its summer break. BP
officials acknowledged Monday that the company had not removed sludge or
adequately inspected the pipeline system from 1992 until the recent inspection
that revealed the corrosion.

"Pipelines are just an example of some of the problems we have with
drilling right now," said Eleanor Huffines, Alaska regional director at the
Wilderness Society. She said the government has "turned a blind eye" to
industry's failure to maintain the pipelines and accused the industry of not
keeping commitments to protect Alaska's environment.

Greenpeace went even further, calling for a permanent shutdown of Prudhoe
Bay oil operations. The organization issued a statement citing BP's alleged
negligence, the aging pipelines and lack of Congressional oversight.

"This should be a wake up call for Congress to return to Washington
immediately," said Melanie Duchin, Greenpeace energy specialist in Anchorage.
"Our national energy plan is corroded as the pipeline in Alaska."

Duchin said Congress should enact legislation increasing the fuel economy
of cars and investments in renewable forms of energy "that will break our
addiction to fossil fuels while reducing the threat of global warming.

--Daniel Whitten, daniel_whitten@platts.com

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