BP says pipeline leak may hit Alaskan oil output

NEW YORK (Reuters) - BP Plc said on Monday it may shut in a small amount of its production at Alaska’s giant Prudhoe Bay oil fields as it repairs an idled pipeline that began spilling oil over the weekend.

The line is one of dozens serving Prudhoe Bay, which produces more than 400,000 barrels per day of crude. BP said any production curtailments would be minor, and analysts said the incident was unlikely to cause disruptions that would affect world oil prices.

BP is assessing damages after it found the pipeline leak early Sunday, spokesman Steve Rinehart said.

Output at Prudhoe Bay, the largest U.S. oilfield complex, remains unaffected by the spill. BP said it may have to shut in some production as it repairs the line or idles others that share a T-shaped pipe support infrastructure, Rinehart said.

“Whether we will have to shut in any production is not yet known, but any production impact is likely to be minor,” Rinehart said.

Trans Alaska Pipeline System (TAPS), the major conduit for Alaskan crude, was not affected and shipped nearly 700,000 bpd on Sunday, a TAPS spokeswoman said.

BP’s spill occurred on an 18-inch (45-cm) common line carrying a mixture of crude, water and natural gas, Alaska’s Department of Environmental Conservation said. The amount of crude spilled and the cause of the leak are under investigation.

The line was out of service when the leak was found, although it still held oil and gas, Rinehart said. The oil spill covered 8,400 square feet (780 square meters) of “snow-covered tundra,” according to a situation report, but although the pipeline was still leaking crude, the spill area wasn’t expanding.

In 2006, BP faced serious operational issues in Alaska, when it discovered extensive pipeline corrosion following an oil spill. That forced the British oil giant to temporarily shut in much of Prudhoe Bay’s output and later pay environmental fines.

Analysts said BP’s newest pipeline fixes could result in a reduction of Alaskan crude output, but that may not affect oil prices much since U.S. crude stocks are high amid poor demand from refiners.

“Conditions are vastly different from (2006) when the previous BP incident in Alaska occurred,” said Mike Fitzpatrick of MF Global in New York. “At that time every marginal barrel removed from the market had a supportive effect (on prices).”

The line affected by Sunday’s spill is linked to the Lisburne production center, which processes some of Prudhoe Bay’s output, according to a company website. A cleanup plan for the spill site is subject to approval by Alaskan authorities, Rinehart said.

BP shares fell on Monday by 1.6 percent on the London Stock Exchange.

Additional reporting by Bruce Nichols in Houston and Robert Gibbons in New York; editing by Marguerita Choy