Expect oil prices to go up again.

'97 V8 · 08-06-2006, 10:09 PM

http://news.yahoo.com/s/ap/20060807/...field_shutdown

ANCHORAGE, Alaska - In a sudden blow to the nation's oil supply, half the production on Alaska's North Slope was being shut down Sunday after BP Exploration Alaska, Inc. discovered severe corrosion in a Prudhoe Bay oil transit line.

BP officials said they didn't know how long the Prudhoe Bay field would be off line. "I don't even know how long it's going to take to shut it down," said Tom Williams, BP's senior tax and royalty counsel.

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 percent of U.S. supply including imports, according to data from the U.S. Energy Information Administration.

The shutdown comes at an already worrisome time for the oil industry, with supply concerns stemming both from the hurricane season and instability in the Middle East.

"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.

A 400,000-barrel per day reduction in output would have a major impact on oil prices, said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.

"Oil prices could increase by as much as $10 per barrel given the current environment," Emori said. "But we can't really say for sure how big an effect this is going to have until we have more exact figures about how much production is going to be reduced."

Malone said the field will not resume operating until the company and government regulators are satisfied it can run safely without threatening the environment.

Officials at BP, a unit of the London-based company BP PLC, learned Friday that data from an internal sensing device found 16 anomalies in 12 locations in an oil transit line on the eastern side of the field. Follow-up inspections found "corrosion-related wall thinning appeared to exceed BP criteria for continued operation," the company said in a release.

Workers also found a small spill, estimated to be about 4 to 5 barrels. A barrel contains 42 gallons of crude oil. The spill has been contained and clean up efforts are under way, BP said. "Our production while all this is in place is going to be marginal," said Will Vandergriff, spokesman for Gov. Frank Murkowski. "That presents some technical problems because it's a high capacity line and it's meant to be filled."

Vandergriff said he did not know exactly what potential problems a sudden drop in oil flow might cause the pipeline. Alyeska Pipeline Co. officials could not immediately be reached for comment.

A prolonged shutdown would be a major blow to domestic oil production, but even a short one could be crippling to Alaska's economy.

According to forecast figures from the Alaska Department of Revenue, a 400,000 barrels of oil per day production drop would mean approximately $4.6 million per day lost to the state. That is money going to both the state treasury and the state's oil wealth savings account, the Alaska Permanent Fund.

"That starts adding up to big bucks in a hurry," said House Finance Co-Chairman Mike Chenault, R-Nikiski. "It could start having a disastrous effect on the state as early as today."

BP said it was sending additional resources from across the state and North America to hasten the inspection of the remaining transit lines. About 40 percent of the lines have been inspected.

BP previously said it would replace a 3-mile segment of pipeline following inspections conducted after up to 267,000 gallons of oil spilled onto the frozen ground about 250 miles above the Arctic Circle in March.

House Speaker John Harris said it was admirable that BP took immediate action, although it's sure to hurt state coffers.

"This state cannot afford to have another Exxon Valdez," said Harris, R-Valdez.

The Exxon Valdez tanker emptied 11 million gallons of crude oil into Prince William Sound in 1989, killing hundreds of thousands of birds and marine animals and soiling more than 1,200 miles of rocky beach in nation's largest oil spill.

Like its not enough that [rices rose sharply a few days ago, we get slammed with this. Will the a$$ pounding ever end?

**Rick** · 08-06-2006, 11:30 PM

Just what we need

moose1 · 08-07-2006, 10:50 AM

greeeeaaaattttt.......so does anyone think this will cause a $4 a gallon price.

*snocross1985* · 08-07-2006, 11:13 AM

I don't know if this will cause $4 a gallon, but I think we will see $4 in our time. I don't beleive gas will go back down like it was a few years ago.

'97 V8 · 08-07-2006, 11:56 AM

Well pump prices where i live have began to climb. 2.94 yesterday and now its 3.07-3.15

*Dan Whitaker* · 08-07-2006, 01:29 PM

It will be interesting to see what thier profits will be like after they fix it.
Sounds like Exxon all over again

**Rick** · 08-07-2006, 01:39 PM

Just another example of big oil not investing in their current infrastructure. This should have been discovered through inspections and regular testing before it became a major problem.

'97 V8 · 08-07-2006, 02:49 PM

Was the last refinery in the USA built in 1976? I think i heard this somewhere on the site or on tv, i just want to make sure this is true.

**mattadams** · 08-07-2006, 04:54 PM

It was a long-ass time ago... blame the earth lovers for that, no matter where they want to put one they do an environmental impact study, find that some endangered species will be minorly invonvenienced if they build there, and we end up in the current situation we have. Same goes for many power plants.

I had a chance to check out the alaska pipeline many years ago in person. It is a pretty impressive feat of engineering. I'm kind of suprised they didn't find this problem sooner, because the pipeline is (or at least was back then, according to their claims) inspected (roughly) by helicopter to make sure no one was trying to "break into" it, and they also ran a "pig" through it (as I recall that was its names) that would look for weaknesses in the pipeline as it was going through with the oil and would report any problems at that time.

Just FYI though, gas here was $3.08 on Sunday and $2.99 today. Maybe they haven't heard of the pipeline problem yet LOL.
Seriously though, if what I"m reading is correct, this pipeline delivers 2.9% of our supply of oil. While that is a big amount, to me its not like Katrina or something when a much larger percentage was cut off and gas skyrocketed... but lately it seems like an oil driller farts and the price skyrockets.

*sn0border88* · 08-07-2006, 05:28 PM

Since my new job I walk to work now, Ive been on the same tank for 3 weeks and it just dropped below the full mark. Gas prices? What gas prices?

BttlScars00x · 08-07-2006, 05:36 PM

I envy all of you that are just now hitting the 3.15/gal mark. Gas in Chicago is topping 3.50/gal

97BlackX5.0 · 08-07-2006, 06:00 PM

i believe we will see 5.50 + a gallon in our lifetimes..... maybe in the next few years.... will be a sad day when the price per gallon eclipses the minimum wage and people will still say theres nothing wrong with it.

*Rhett* · 08-07-2006, 06:08 PM

Quote:

Originally Posted by Rick

Just another example of big oil not investing in their current infrastructure. This should have been discovered through inspections and regular testing before it became a major problem.

It sure should have. Well you know, BP execs had to buy that new Lear Jet, you know...rather than hire a few more pipeline crews...

One of my relatives worked on the Alaska Pipeline in the 1960's. It is *rough* going up there--he said you could spit, and it would freeze before it hit the ground. And it's mandatory to carry a high-powered rifle out there, because of the grizzly and polar bears. They will eat you like pumpkin pie.

shamaal · 08-07-2006, 10:42 PM

Quote:

Originally Posted by mattadams

It was a long-ass time ago... blame the earth lovers for that, no matter where they want to put one they do an environmental impact study, find that some endangered species will be minorly invonvenienced if they build there, and we end up in the current situation we have. Same goes for many power plants.

It's interesting how many people believe that some alfalfa sprout eating tree-hugger making $6 an hour at the local day-care center can stand up to Exxon, Weyerhauser, whatever and bring them to their knees.

The energy market works like any other - supply and demand. It's true no new refineries were built, but capacity has tripled. Does anyone honestly believe that when BP wants to build a new refinery next to Exxon, Exxon thinks it's a really swell idea? No, their lawyers and PACs swing into action financing owl studies and restrictive construction covenants to stifle competition. Elections are financed, laws are drafted and passed. Idled refineries are excess capacity and do not make money waiting to smooth out the next spike in consumption. When expanding existing refineries, environmental rules and efficiencies are not applicable because the existing plants are "grandfathered" (thank you Pres. Bush).

The point is it is very complicated, as you can well expect when there is a lot of money in play. Some easy numbers:
Daily Crude oil & Products export (2004)

Mexico - 209, 000 barrels
Canada - 158,000 barrels
Japan - 63,000 barrels

With a little bit of thought, you can see that nothing is as it seems

*dogfriend* · 08-10-2006, 10:04 AM

I just watched Matt Lauer interview BP President Bob Malone on the Today show. Matt actually asked some good questions:

1. Did you cut back on pipeline maintenance as a cost cutting measure?

Bob weaseled out of answering this question, giving a figure of $70 mil / per year in pipeline maintenance. Matt pointed out that BP made $7.3 Billion in profit last quarter and the amount spent on corrosion prevention ($ 17.5 of the $70 mil) amounted to 1/4 of 1 cent for each dollar of profit.

2. Can you use the windfall profit ($7.3 Billion) to pay for the cost of repairs without passing it along to the consumers?

Yeah right. Bob evaded answering this question both times Matt asked him.

If I were there, I would have walked over and kicked him in the nuts.

'97 V8 · 08-10-2006, 11:12 AM

Lmao

08-06-2006, 10:09 PM	#1
'97 V8 Wannabe Elite Explorer Lima, Ohio '97 mounty 5.0 4x4 baby!! Join Date: Apr 2005 Posts: 3,696 Vehicle Specs (Original Poster)	Expect oil prices to go up again. http://news.yahoo.com/s/ap/20060807/...field_shutdown ANCHORAGE, Alaska - In a sudden blow to the nation's oil supply, half the production on Alaska's North Slope was being shut down Sunday after BP Exploration Alaska, Inc. discovered severe corrosion in a Prudhoe Bay oil transit line. BP officials said they didn't know how long the Prudhoe Bay field would be off line. "I don't even know how long it's going to take to shut it down," said Tom Williams, BP's senior tax and royalty counsel. 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 percent of U.S. supply including imports, according to data from the U.S. Energy Information Administration. The shutdown comes at an already worrisome time for the oil industry, with supply concerns stemming both from the hurricane season and instability in the Middle East. "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. A 400,000-barrel per day reduction in output would have a major impact on oil prices, said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo. "Oil prices could increase by as much as $10 per barrel given the current environment," Emori said. "But we can't really say for sure how big an effect this is going to have until we have more exact figures about how much production is going to be reduced." Malone said the field will not resume operating until the company and government regulators are satisfied it can run safely without threatening the environment. Officials at BP, a unit of the London-based company BP PLC, learned Friday that data from an internal sensing device found 16 anomalies in 12 locations in an oil transit line on the eastern side of the field. Follow-up inspections found "corrosion-related wall thinning appeared to exceed BP criteria for continued operation," the company said in a release. Workers also found a small spill, estimated to be about 4 to 5 barrels. A barrel contains 42 gallons of crude oil. The spill has been contained and clean up efforts are under way, BP said. "Our production while all this is in place is going to be marginal," said Will Vandergriff, spokesman for Gov. Frank Murkowski. "That presents some technical problems because it's a high capacity line and it's meant to be filled." Vandergriff said he did not know exactly what potential problems a sudden drop in oil flow might cause the pipeline. Alyeska Pipeline Co. officials could not immediately be reached for comment. A prolonged shutdown would be a major blow to domestic oil production, but even a short one could be crippling to Alaska's economy. According to forecast figures from the Alaska Department of Revenue, a 400,000 barrels of oil per day production drop would mean approximately $4.6 million per day lost to the state. That is money going to both the state treasury and the state's oil wealth savings account, the Alaska Permanent Fund. "That starts adding up to big bucks in a hurry," said House Finance Co-Chairman Mike Chenault, R-Nikiski. "It could start having a disastrous effect on the state as early as today." BP said it was sending additional resources from across the state and North America to hasten the inspection of the remaining transit lines. About 40 percent of the lines have been inspected. BP previously said it would replace a 3-mile segment of pipeline following inspections conducted after up to 267,000 gallons of oil spilled onto the frozen ground about 250 miles above the Arctic Circle in March. House Speaker John Harris said it was admirable that BP took immediate action, although it's sure to hurt state coffers. "This state cannot afford to have another Exxon Valdez," said Harris, R-Valdez. The Exxon Valdez tanker emptied 11 million gallons of crude oil into Prince William Sound in 1989, killing hundreds of thousands of birds and marine animals and soiling more than 1,200 miles of rocky beach in nation's largest oil spill. Like its not enough that [rices rose sharply a few days ago, we get slammed with this. Will the a$$ pounding ever end? __________________ 1997 Mercury Mountaineer 4x4 V8 3" bl, manual t-case. Dana 60/14 bolt combo with 36x13.5x17 iroks on H2 rims. 5.13's. Future plan: 3.9 or 5.9 Turbo diesel cummins

08-06-2006, 11:30 PM	#2
Rick Admin Pumpkin Pilot Wayoutin, Aridzona '93 XL Join Date: Feb 1999 Posts: 27,229 Vehicle Specs	Just what we need __________________ Rick Horwitz, AB7FH "Serious Exploration's" Admin Rick's '93/'98 Explorer "The Great Pumpkin" Dodge Dart 512 Resto/Race 10.29 @ 129 2004 Mustang Mach 1 2003 Dodge Ram/Cummins Dually

08-07-2006, 11:13 AM	#4
snocross1985 Explorer-less South Hampton, NH 2002 Sentra SE-R Spec V Join Date: Mar 2003 Posts: 2,728 Vehicle Specs	I don't know if this will cause $4 a gallon, but I think we will see $4 in our time. I don't beleive gas will go back down like it was a few years ago. __________________ Scott My Mug

08-07-2006, 11:56 AM	#5
'97 V8 Wannabe Elite Explorer Lima, Ohio '97 mounty 5.0 4x4 baby!! Join Date: Apr 2005 Posts: 3,696 Vehicle Specs (Original Poster)	Well pump prices where i live have began to climb. 2.94 yesterday and now its 3.07-3.15 __________________ 1997 Mercury Mountaineer 4x4 V8 3" bl, manual t-case. Dana 60/14 bolt combo with 36x13.5x17 iroks on H2 rims. 5.13's. Future plan: 3.9 or 5.9 Turbo diesel cummins

08-07-2006, 01:29 PM	#6
Dan Whitaker One fast putty tat Raytown MO (Kansas City suburb) No Mounty no more. Join Date: Dec 2001 Posts: 6,964 Vehicle Specs	It will be interesting to see what thier profits will be like after they fix it. Sounds like Exxon all over again __________________ P r i c k me, do I not bleed Ford Blue.

08-07-2006, 10:50 AM	#3
moose1 B coupville, wa 99 xlt Join Date: Apr 2006 Posts: 1,106 Vehicle Specs	greeeeaaaattttt.......so does anyone think this will cause a $4 a gallon price.

08-07-2006, 01:39 PM	#7
Rick Admin Pumpkin Pilot Wayoutin, Aridzona '93 XL Join Date: Feb 1999 Posts: 27,229 Vehicle Specs	Just another example of big oil not investing in their current infrastructure. This should have been discovered through inspections and regular testing before it became a major problem. __________________ Rick Horwitz, AB7FH "Serious Exploration's" Admin Rick's '93/'98 Explorer "The Great Pumpkin" Dodge Dart 512 Resto/Race 10.29 @ 129 2004 Mustang Mach 1 2003 Dodge Ram/Cummins Dually

08-07-2006, 02:49 PM	#8
'97 V8 Wannabe Elite Explorer Lima, Ohio '97 mounty 5.0 4x4 baby!! Join Date: Apr 2005 Posts: 3,696 Vehicle Specs (Original Poster)	Was the last refinery in the USA built in 1976? I think i heard this somewhere on the site or on tv, i just want to make sure this is true. __________________ 1997 Mercury Mountaineer 4x4 V8 3" bl, manual t-case. Dana 60/14 bolt combo with 36x13.5x17 iroks on H2 rims. 5.13's. Future plan: 3.9 or 5.9 Turbo diesel cummins

08-07-2006, 04:54 PM	#9
mattadams Tall Man Little Escape Longmont, CO 2010 Escape XLT Join Date: Sep 1999 Posts: 8,250 Vehicle Specs	It was a long-ass time ago... blame the earth lovers for that, no matter where they want to put one they do an environmental impact study, find that some endangered species will be minorly invonvenienced if they build there, and we end up in the current situation we have. Same goes for many power plants. I had a chance to check out the alaska pipeline many years ago in person. It is a pretty impressive feat of engineering. I'm kind of suprised they didn't find this problem sooner, because the pipeline is (or at least was back then, according to their claims) inspected (roughly) by helicopter to make sure no one was trying to "break into" it, and they also ran a "pig" through it (as I recall that was its names) that would look for weaknesses in the pipeline as it was going through with the oil and would report any problems at that time. Just FYI though, gas here was $3.08 on Sunday and $2.99 today. Maybe they haven't heard of the pipeline problem yet LOL. Seriously though, if what I"m reading is correct, this pipeline delivers 2.9% of our supply of oil. While that is a big amount, to me its not like Katrina or something when a much larger percentage was cut off and gas skyrocketed... but lately it seems like an oil driller farts and the price skyrockets. __________________ Matt Adams 2010 Ford Escape XLT 1997 F-150 XL 2000 F-150 XLT 4x4 ORP with tons of fun stuff that I sold years ago and still miss. www.mattstruck.com

08-07-2006, 05:28 PM	#10
sn0border88 Master Apprentice Souderton, PA 1992 XLT Join Date: Jun 2005 Posts: 4,342 Vehicle Specs	Since my new job I walk to work now, Ive been on the same tank for 3 weeks and it just dropped below the full mark. Gas prices? What gas prices? __________________ My Photos---Emily Rose---SAS Thread---My Mug 1992 4dr XLT. SAS'ed HPD44/9" 5.13's Locked F/R 36" SX 1999 4.0 5spd sport on 31" BFG Muds

08-07-2006, 05:36 PM	#11
BttlScars00x Wannabe Elite Explorer Palatine, IL '00 v8 XLT Join Date: Aug 2006 Posts: 80 Vehicle Specs	I envy all of you that are just now hitting the 3.15/gal mark. Gas in Chicago is topping 3.50/gal

08-07-2006, 06:00 PM	#12
97BlackX5.0 Wannabe Elite Explorer Scipio, Indiana 97 X XLT AWD Join Date: Oct 2002 Posts: 624 Vehicle Specs	i believe we will see 5.50 + a gallon in our lifetimes..... maybe in the next few years.... will be a sad day when the price per gallon eclipses the minimum wage and people will still say theres nothing wrong with it. __________________ 97 5.0 v8 Black AWD 31x10.5 Goodyear RT/S MAC air intake Borla Cat Back Exhaust 170,000 and still goin strong with lots of lovin

08-10-2006, 10:04 AM	#15
dogfriend Human-Animal Hybrid Carmichael, CA '97 Sport 4x4 Join Date: Jul 2002 Posts: 8,828 Vehicle Specs	I just watched Matt Lauer interview BP President Bob Malone on the Today show. Matt actually asked some good questions: 1. Did you cut back on pipeline maintenance as a cost cutting measure? Bob weaseled out of answering this question, giving a figure of $70 mil / per year in pipeline maintenance. Matt pointed out that BP made $7.3 Billion in profit last quarter and the amount spent on corrosion prevention ($ 17.5 of the $70 mil) amounted to 1/4 of 1 cent for each dollar of profit. 2. Can you use the windfall profit ($7.3 Billion) to pay for the cost of repairs without passing it along to the consumers? Yeah right. Bob evaded answering this question both times Matt asked him. If I were there, I would have walked over and kicked him in the nuts.

08-10-2006, 11:12 AM	#16
'97 V8 Wannabe Elite Explorer Lima, Ohio '97 mounty 5.0 4x4 baby!! Join Date: Apr 2005 Posts: 3,696 Vehicle Specs (Original Poster)	Lmao __________________ 1997 Mercury Mountaineer 4x4 V8 3" bl, manual t-case. Dana 60/14 bolt combo with 36x13.5x17 iroks on H2 rims. 5.13's. Future plan: 3.9 or 5.9 Turbo diesel cummins