January 12, 2011 / 8:00 PM / 7 years ago

UPDATE 2-Alaska oil pipeline resumes flow at reduced rates

* Temporary restart helps manage risk of pipe freezing

* Flow resumption allows Alaska oil production to restart

* Pipeline is back to near two-thirds normal rates

* Repair and permanent restart of line awaits approval (Adds Alyeska, regulator comments)

By Yereth Rosen and Joshua Schneyer

ANCHORAGE/NEW YORK, Jan 12 (Reuters) - Alaska’s key oil pipeline has resumed shipments and was pumping 400,000 barrels per day, almost two-thirds of its normal levels, following a four-day shutdown due to a small leak, its operator said on Wednesday.

Since it was shut on Saturday, the closure of the line that normally transports 640,000 bpd shut in almost 12 percent of U.S. oil production and threatened to prompt supply shortages for refiners on the U.S. West Coast.

The pipeline was brought back into operation on a temporary basis late Tuesday to prevent its oil and water contents from freezing as temperatures in Alaska dropped.

A small leak on the line still hasn’t been repaired, but pipeline operator Alyeska is containing the leaked oil at a pump station along the 800-mile (1,280-kilometer) line. Alyeska awaits regulatory approval to repair the line and resume full shipment volumes, a process that requires welding a stretch of bypass line into place.

The Trans Alaska Pipeline System will continue to run at reduced rates over the coming days, said Thomas Barrett, president of Alyeska, in a statement.

Normal operations would resume after the bypass that sources familiar with the pipeline’s operations say could take around five days.

“This interim restart is an important and necessary step to restoring operations while managing the risk of severe damage (to the) TAPS system (during) and extended winter shutdown,” the operator said in a statement.

    There is no estimate yet of how long it will take to get the pipeline back to normal, said a spokeswoman for the “unified command” of Alyeska and state and federal regulators, which is directing efforts to fix the problem.

    “We’re still working on fabrication of that bypass line for Pump Station 1,” she said.

    The pipeline may have to be idled again briefly to complete the bypass, a source familiar with pipeline operations said, but that may take only one or two days when it happens.

    The pipeline’s restored flow should allow Alaskan North Slope oil producers like BP Plc (BP.L) to resume most of the state’s normal oil output of more than 600,000 bpd, while helping to replenish inventories at the Valdez terminal where oil stocks have fallen to around 27 percent of capacity since the pipeline was first shut down on Saturday.

    A prolonged outage at TAPS had threatened to send U.S. refiners scrambling for substitute supplies, and has been helping to drive up U.S. benchmark oil futures for a third consecutive day this week. Oil CLc1 rose 57 cents to trade at $91.67 a barrel.

    The temporary restart officially occurred at 9:03 p.m. Alaska time on Tuesday, though Alyeska started opening valves before then.

    Overnight, crews recovered 25 barrels (1,750 gallons) of crude oil from the leak site in the basement of the booster-pump building at Pump Station 1. Alyeska and regulators said they have found no leaked oil on or in the ground outside of the building. (Editing by Marguerita Choy)

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