BP says to start replacement of Prudhoe Bay pipeline this winter

Washington (Platts)--29Dec2006

BP plans to begin replacing 16 miles of corroded pipeline in its Prudhoe
Bay oil field in Alaska this winter, with an eye toward completing work over
the next two years, a company spokesman said Thursday.
The first of four segments of pipeline to be built, a 3.1-mile stretch
from Gathering Center 2 to GC1, is to replace a 34-inch diameter pipe that
leaked in March, the spokesman said. The 20-inch diameter line is be built in
2007 and commissioned for service in early 2008, he said.
The smaller diameter reflects current and anticipated future production
at Prudhoe Bay, the spokesman said.
The remaining three segments of pipeline are to be put down "over the
course of this winter and next," he said.
According to the spokesman, these are the 5-mile segment from GC1 to Skid
50, in the Prudhoe Bay's Western Operating Area; the 3-mile long segment from
FS2 to FS1 in the Eastern Operating Area; and a 4.8-mile segment from Flow
Station 1 (FS1) to Skid 50, near the connection to the Trans-Alaska Pipeline.
Cost estimates will be refined as project engineering advances, he said.
The pipeline replacement project, however, had earlier been estimated to
cost about $150 million-$200 million.
BP on December 22 submitted a detailed plan and time schedule for the
work to the US Department of Transportation's Pipeline and Hazardous Materials
Administration, which December 7 sent its own letter to BP demanding more
information from BP about its plans to replace the pipeline.
In its letter, the regulator cited its "continuing investigation" of
pipeline leaks on the line, and said the information was needed to "determine
the need for additional corrective action."
BP has orders from the agency to better maintain key lines inside the
Prudhoe field since March, when the pipeline leaked an estimated 201,000
gallons of crude oil.
In August, BP was forced to halt output from the eastern side of Prudhoe
Bay after discovering severe corrosion in the field's pipeline network. BP,
which operates Prudhoe, the US' largest oil field, on behalf of itself and
other owners including ConocoPhillips and ExxonMobil, pursued a bypass plan in
its Eastern Operating Area to resume production and feed crude to the 800-mile
Trans-Alaska Pipeline System.
By early December, Prudhoe Bay production was back to its normal levels
of about 400,000 b/d, which equals about 8% of US consumption.
BP's woe sparked a firestorm amongst US lawmakers, prompting oversight
hearings and spurring Congress to pass legislation tightening federal
regulation of low-pressure oil pipelines, the type that leaked in Prudhoe.
Federal criminal investigators also are investigating the Prudhoe Bay
pipeline problems, and have subpoenaed documents from BP.
--Cathy Landry, cathy_landry@platts.com
--Richard Rubin, richard_rubin@platts.com

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