BP: Pipeline closing may last for months

Oil transit and other pipelines run past the area affected by a March 2, 2006, 200,000 gallon oil leak, Friday, Aug. 4, 2006, on Alaska's North Slope near Prudhoe Bay. BP Exploration Alaska Inc. began shutting down the Prudhoe Bay oil field Sunday after the discovery of unexpectedly severe corrosion and a small spill from a Prudhoe Bay oil transit line. (AP Photo/Al Grillo)

I've been watching this BP story on the Alaskan pipeline today, but I have not had a chance to comment on it. At least until now. So this is from Yahoo News:

ANCHORAGE, Alaska--BP said Monday it discovered corrosion so severe that it will have to replace 16 miles of pipeline at the huge Prudhoe Bay oil field--work that could shut down the nation's single biggest source of domestic crude for months and drive gasoline prices even higher.

Oil prices climbed more than $2 a barrel on the news, and gasoline futures rose, too. The West Coast is expected to be squeezed particularly hard, and the government is considering releasing oil from its emergency stockpile to ease the crunch.

BP PLC said it will have to replace most of the 22 miles of so-called transit pipeline at Prudhoe Bay, which produces about 2.6 percent of the nation's daily supply, or about 400,000 barrels a day.

Map of Alaska showing the Trans-Alaska Pipeline. British energy giant BP was shutting down America's biggest oil field after an ageing Alaskan pipeline sprang a leak, sending Brent crude prices shooting up to a new record high.(AFP/Graphic)

A section of pipeline on display at the Prudhoe Bay oil field on Alaska's North Slope Friday, Aug. 4, 2006 shows corrosion on the inside of a pipe. (AP Photo/Al Grillo)

BP, the world's second-largest oil company, discovered the extent of the corrosion with tests that were ordered by the federal government after a big oil spill last March at Prudhoe Bay, situated above the Arctic Circle, 650 miles north of Anchorage.

The oil company said it was surprised to find such severe corrosion, and had gone 14 years without using a device called a "pig" to clean out its lines because it did not believe it was necessary.

Bob Malone, chairman of BP America, said that in a worst-case scenario, it could take weeks or months to replace the pipelines. But the company said it will try to put portions of the network back into operation as they are repaired.

A maintenance pig, used clean the inside of pipelines, sits on a shelf in the pig barn on at the Prudhoe Bay oil field on Alaska's North Slope, Friday Aug. 4, 2006. BP began shutting down the Prudhoe Bay oil field Sunday, Aug. 6, 2006 after the discovery of unexpectedly severe corrosion and a small spill from a Prudhoe Bay oil transit line. (AP Photo/Al Grillo)

You have got to love the oil companies--no matter how "green" they are. To start, BP discovers a leak in one of their pipelines to Alaska's Prudhoe Bay oil field--which produces 2.6 percent of the nation's daily supply of domestic oil. This leak is so bad that BP has to replace 16 miles of pipe in a construction job that could last for months--in fact, nobody really knows how long it could take to repair the pipeline. This whole little accident was caused because BP didn't realize there would be severe corrosion in the pipes, and that they refused to even clean out the pipes for 14 years because BP felt it was unnecessary?

Seems to me that BP's "image" of "being green" is simply that--an image. In fact, the only green that BP is interested in is the green dollar bills it can get from American consumer's wallets. And what is one way to increase short-term profits? How about cut maintenance costs! Continuing with the Yahoo story:

Steve Marshall, president of BP Alaska Exploration Inc., said tests Friday indicated that there were 16 anomalies in 12 areas in a transit line on the eastern side of Prudhoe Bay. Tests found losses in wall thickness of between 70 percent and 81 percent. Repair or replacement is required if there is more than an 80 percent loss.

BP also said Sunday that workers found a small spill of about four to five barrels.

The aging pipeline system on the North Slope has been fraught with problems lately.

BP discovered corrosion in the transit lines only after the U.S. Transportation Department ordered their inspection following a spill of up to 270,000 gallons in March. It was the biggest spill in North Slope history, and has become part of a criminal investigation into the company's Alaskan operations.

Company officials said they did not believe a routine maintenance "pigging" of those lines was necessary because they carry clean crude from which water has been removed.

Marshall said the company believed ultrasonic testing of pipeline wall thickness was sufficient. But he said the company has since learned otherwise.

Bob Newton uses ultrasound to scan a section of pipe looking for weak spots along a oil transit pipeline that leaked up to 267,000 gallons of oil in March 2006, at the Prudhoe Bay oil field on Alaska's North Slope Friday Aug. 4, 2006. BP Exploration Alaska, Inc. began shutting down the Prudhoe Bay oil field Sunday after the discovery of unexpectedly severe corrosion and a small spill from a Prudhoe Bay oil transit line. (AP Photo/Al Grillo)

You just have to love the excuses BP gives in its press releases. The "pigging" of those lines were unnecessary because the oil was clean oil, and that BP believed ultrasonic testing was sufficient. I would say that ultrasonic testing was cheaper to perform as a maintenance cost than sending a machine through an empty pipeline to clean it out.

This is pure greed on BP's part. They decided to cut corners on maintenance of the pipeline for greater profits. For 14 years, BP never bothered to send a machine through the pipeline, just to see what was going on. And because of BP's incompetence, the U.S. oil supply has just gotten tighter:

The news sent the price of light, sweet crude oil up 2.22, or 3 percent, to settle at $76.98 a barrel Monday on the New York Mercantile Exchange, after peaking at $77.30 earlier in the day

The average U.S. retail price of a gallon of unleaded, regular gasoline was $3.036 on Monday — near its all-time high of $3.057, reached Sept. 5 after Hurricane Katrina hit the Gulf Coast.

Gasoline futures also rose, indicating that the market expects prices at the pump to increase further.

Because of the disruption of supplies, the Energy Department said it is prepared to provide oil from the government's emergency supplies if a refinery requests it.

And you can bet that as oil prices and gas prices increase, BP will be making bigger profits on the increased prices and constricting supply

Incredible.