Oil major BP Plc is aiming to restart oil production at the eastern half of the giant Prudhoe Bay oil field in Alaska by the end of September, sources familiar with the company's plans said on Thursday.
The plans for a partial restart call for the pipeline connecting Flow Station 1 with the Trans-Alaska pipeline to be returned to service, allowing up to half of the 200,000 barrels per day of shut-down production on the eastern side to restart.
Prudhoe Bay normally pumps around 400,000 bpd of oil, or 8 percent of U.S. domestic supply, but BP shut down half of the field in early August after government-ordered pipeline inspections turned up severe corrosion inside a segment of the eastern oil transit line at the field.
News of the unexpected shutdown sent oil prices soaring in August amid fears that refineries on the West Coast of the United States, which depend heavily on oil supplies from Alaska, could run short of crude.
A BP Alaska spokesman would not confirm or deny the end-of-September target date.
"We are still working to complete our plans, but ultimately we need the approval of the Department of Transportation before we can restart," said BP Alaska spokesman Daren Beaudo.
Thomas Barrett, the top U.S. pipeline regulator, is due to tour the Prudhoe Bay facilities on Friday and receive a briefing from BP staff on the progress of the inspections, a Department of Transportation spokesman said.
WINTER FACTOR
The onset of the Alaskan winter is one of the factors driving the restart decision, a source with a regulatory agency that oversees pipelines said.
"Things change from day to day but the picture is getting clearer. The line will either have to be restarted or emptied sooner than later due to the onset of winter. It cannot stay the way it is into the winter," the official said.
BP is required to submit its plans for the eastern oil transit lines by September 9 under a corrective action order issued by the U.S. Department of Transportation.
The company is also required to submit plans to remove the oil from any pipeline it decides not to return to service on that date in order to ensure that the oil does not congeal inside the pipeline, which would increase the risk of environmental damage if the pipelines developed leaks over the winter.
BP is currently performing corrosion-detection tests on the eastern transit line that may be restarted. The data so far are "encouraging" and no signs of serious corrosion have been found, Beaudo said.
BP is currently under investigation by a federal grand jury over an oil spill from a transit pipeline on the western side of the field in March, and the company faces a grilling from three different committees of the U.S. Congress beginning on September 7 over its troubled U.S. operations.
The March spill and the discovery of serious corrosion in August on oil transit lines at Prudhoe Bay have prompted calls for tighter regulation of low pressure oil pipelines, which were largely unregulated.
The Department of Transportation issued a notice on Thursday that it planned to implement a new regulatory regime for low pressure lines.
BP's image in the United States has been tarnished by a string of accidents, environmental incidents and accusations of market manipulation since a deadly refinery blast in March 2005.
