Oil Company Shuts Down a Pipeline at Prudhoe Bay, Alaska, the Largest Oil Field in the United States


2006-8-10

This is the VOA Special English Economics Report.

The oil company British Petroleum has shut down a pipeline connecting the Prudhoe Bay oil fields in Alaska to the Trans-Alaska pipeline. The Prudhoe Bay field, north of the Arctic Circle, provides eight percent of America's oil production. It is the largest oil field in the United States.

On August seventh, B.P. said it had discovered a leak and a small oil spill of four or five barrels in the frozen arctic area. The company said thinning of the wall of the pipeline had taken place. At the time, B.P. said it was testing the thirty-five kilometer oil transit pipeline.

Last Sunday, B.P. cut the flow of two hundred thousand barrels of oil a day. B.P. plans to shut down the rest of the line soon. The company says the four hundred thousand barrels of oil a day represent half of all the oil produced in Alaska's North Slope area.

On news of the shutdown, the price of oil increased three percent to about seventy-seven dollars a barrel.

The Department of Energy remains hopeful that the reduction in oil production will be limited. On Wednesday, Secretary of Energy Samuel Bodman said he believed other supplies could be found to take the place of the Alaskan oil. But, experts say it would probably be months before the flow of oil from Prudhoe Bay returns to normal.

B.P. said it deeply regretted the action it had to take. It said it is using all necessary resources to complete the work. BP is not the only company affected by the shutdown. The Wall Street Journal reports that oil companies Exxon Mobil and ConocoPhillips own even larger shares in Prudhoe Bay than B.P.

The shutdown is expected to affect the economy of the state of Alaska the most. Almost ninety percent of Alaska's money comes from taxes on oil. The state does not have a sales tax or income tax. The Associated Press reports that Alaska is losing more than six million dollars in oil taxes every day. Alaska Governor Frank Murkowski has temporarily stopped all hiring of new state employees. He has called for an investigation of the shutdown.

The affected pipelines are not part of the Trans Alaska pipeline, but feed into it. B.P. owns forty-seven percent of the Trans-Alaska pipeline system.

And that's the VOA Special English Economics Report, written by Mario Ritter. Transcripts and archives are at WWW.51VOA.COM. I'm Steve Ember.