BP heads off major oil spill
In a move that will reduce US oil production by up to 8 percent, British Petrolium (BP) is shutting down a huge Purdhoe Bay pipeline was found to be severely corroded.
“We regret that it is necessary to take this action and we apologize to the nation and the State of Alaska for the adverse impacts it will cause,” BP America Chairman and President Bob Malone said in a statement.
A 400,000-barrel per day reduction in output would have a major impact on oil prices, said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.
“Oil prices could increase by as much as $10 per barrel given the current environment,” Emori said. “But we can’t really say for sure how big an effect this is going to have until we have more exact figures about how much production is going to be reduced.”
It’s bad news for everyone but it’s a good thing BP found the problem before it resulted in an enormous spill. It will be interesting to see how it translates at the pump. I had no idea one pipeline could amount to so much of our country’s oil production.
Update -
A lot of these “little” energy supply shocks and we as a nation will be forced to try new alternatives. Let’s all hope we have the time to have these events mold our behavior before we are subject to a large supply cut off. I suspect we do not have the time.
Interesting article at Money Central; China’s economy is out of control
If China’s economy falters severely enough, we could be in store for collapsing oil prices. That is, if we can survive the after effects of such an event.
You could be right. I hope we wise up in time.
That’s a frightening article. Given the mutual involvement of our economies I shudder to think of the effects of a Chinese crash.
My ‘alternatives’ include extensive use of a bicycle and only owning cars that get over 30mpg highway.
The fact that BP had not done any major maintenance on the piple line since the early 90s might be a factor. I am sure they will blame their failure to maintain the pipeline on low profits. BP is not a heroic company that is doing a fantastic job in preventing a diaster, they created a potential diaster and have the spin doctors working overtime. Personally I think a little iron bar motel time is do for someone.
That is something I wondered about. How does the inside of an oil pipeline corrode? Is crude oil corrosive? And what can be done to prevent it?
Its called a pig, clears the sludge out of the pipeline to prevent corrosion. The sludge is the problem,water absorption rates, changes flex rates in cold temp etc.. Plain hard fact they didn’t care, it cost money to do the right thing and they didn’t do it.