UPDATE 1-Labor dispute hits Argentina's biggest oil field
* Pan American Energy halts Cerro Dragon output-source
* Field produces 15 percent of Argentine crude
* Union says pay protest will continue indefinitely
BUENOS AIRES, June 21 (Reuters) - Pan American Energy LLC has halted oil production at Argentina's biggest field, Cerro Dragon, after workers took over some facilities there to demand higher pay, company and union officials said on Thursday.
Cerro Dragon lies in the Patagonian province of Chubut and produces about 100,000 barrels of crude per day, or roughly 15 percent of total output in the country. Pan American, or PAE , is controlled by oil major BP.
The labor dispute coincided with a nationwide fuel transportation strike that was lifted a day earlier than expected after a pay deal was reached.
The source at Pan American said about 500 workers occupied some facilities early Thursday, including the power station that supplies electricity to Cerro Dragon.
"There was a lot of damage done at the site. Pan American halted crude extraction as a security measure," the source said on condition of anonymity.
The protesters are construction workers demanding an 11 percent salary increase that would match their pay with that of maintenance and service workers who perform similar tasks, union spokesman Guido Dickason said.
"We took over the plant because we haven't had a response to our demands. We will continue occupying it indefinitely until we get a response," said Dickason, press secretary for the construction workers union in southern Chubut province.
The company source said the situation could get worse.
"If the power station were to stop operating ... that could threaten all of PAE's production at Cerro Dragon and put at risk the provision of natural gas in nearby towns," the source said, adding that some people were hurt when the workers stormed the site, including police, security guards and employees.
BP owns a 60 percent stake in PAE, while the remaining 40 percent is held by Bridas, which is half-owned in turn by China's CNOOC.