BP can continue to pump Prudhoe, but must inspect daily

Aug 11, 2006, 17:56 GMT

New York - BP will try to keep some production running from Alaska's Prudhoe Bay oilfield, but must inspect the weakened pipelines four times a day using a heat sensitive device to check for leaks.

The federal Department of Transportation on Thursday allowed about a quarter of the field's oil to keep flowing if inspections are carried out four times a day on its feeder lines, Bloomberg financial news service reported..

BP discovered corrosion in a pipeline earlier this week and indicated it would have to totally shut down production of America's largest source of domestic oil while it replaces a 26-kilometre stretch of pipe. The field produces about 8 per cent of US daily output, or 400,000 barrels.

On Thursday, BP said it had totally shut down the eastern part of the oil field, and was only pumping 120,000 barrels in the wester portion.

A decision is to be made early next week whether the western part must be totally shut down. US transport officials and Alaska's state environmental officials are conferring on the issue, Bloomberg financial news service reported.

Oil revenues make up about 90 per cent of Alaska's state budget.

Oil prices jumped early in the week on reports of the Prudhoe problems, but fell on Thursday after the foiling of a terrorist plot against airliners that investors thought could curb air travel for some time.

Alaska Governor Frank Murkowski is considering suing British oil giant BP for compensation. Murkowski launched an official investigation into the incident and alleged that BP misled the state with satisfactory maintenance reports. He told state legislators that the shutdown was costing the resource-rich state more than 6.4 million dollars per day in lost tax revenues.