ANCHORAGE - Get ready for some more pain at the pump. In a sudden blow to the nation's oil supply, half the production on Alaska's North Slope was being shut down yesterday after BP Exploration Alaska discovered severe corrosion in a Prudhoe Bay pipeline.
"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.
BP officials said they didn't know how long the Prudhoe Bay field would be off-line.
Once the field is shut down, in a process expected to take days, BP said oil production will be reduced by 400,000 barrels a day. That's close to 8% percent of U.S. oil production as of May 2006 or about 2.6% of the U.S. supply including imports, according to government data.
A 400,000-barrel-per-day reduction in output would have a major impact on oil prices, said Tetsu Emori, a commodities strategist in Tokyo.
"Oil prices could increase by as much as $10 per barrel given the current environment," Emori said.
Light, sweet crude for September delivery was up 36 cents in Singapore today to $74.95 a barrel in midmorning Asian electronic trading on the New York Mercantile Exchange.
Source: Associated Press