By WESLEY LOY
Anchorage Daily News
October 01, 2005
The shutdown will knock out a big chunk of North Slope production - about 20,000 barrels a day - at a time when oil prices are running at historic highs in excess of $60 a barrel. Slope production has averaged 811,000 barrels per day so far this month.
But oil field safety trumps high oil prices, and a review of some 2,000 wells in the huge Prudhoe Bay field, as well as the neighboring Endicott field, found that about 70 oil wells need improvements, BP Alaska spokesman Andrew Van Chau said.
The review involved experts not only from London-based BP but from other major Prudhoe owners including Conoco Phillips and Exxon Mobil. BP runs Prudhoe, the continent's largest oil field, on behalf of the partners.
The review found wells that "presented a higher risk than we were ready to accept," Van Chau said. Problems include potential for leaks of oil, oily water or dangerous natural gas, as well as engineering or equipment shortcomings. The review also looked at field operating procedures.
Each well will be overhauled at a cost of about $2 million each, he said, putting the total price tag at $140 million.
"Our focus is on safety," Van Chau said. "We're looking at being on the North Slope for the next few decades."
The process of shutting down the wells began last week, he said.
Steve Marshall, president of Anchorage-based BP Exploration (Alaska) Inc., spoke directly with Alaska Gov. Frank Murkowski about the well shutdown. Murkowski on Sept. 6 had asked BP and other oil companies to increase Alaska oil production to help ease an energy crunch caused by Hurricane Katrina.
John Norman, chairman of the Alaska Oil and Gas Conservation Commission, which regulates oil well operation, said Wednesday his agency encouraged refurbishing the 70 wells, though he said none is out of compliance or unsafe.
Although the production decline hurts - the state collects millions of dollars in taxes and royalties on North Slope oil production - Norman said BP has "very valid reasons why they're undertaking this action."
The basic problem, Norman said, is that Alaska's oil fields are showing some age.
"Many of the wells at Prudhoe Bay are now 30-plus years old. You can imagine that any piece of equipment at that age can develop problems," he said.
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