The NewStandard ceased publishing on April 27, 2007.

Oil Firms to Profit Off Foreseen Alaska Pipe Problems

by Jessica Azulay

Aug. 8, 2006 – Years of pipe problems and the prospect of even greater profits for all US oil companies materialized yesterday when oil-giant BP revealed that it had found its oil-transit lines in Alaska severely corroded.

As a result of the discovery, said the company, it would be shutting down the largest oil field in the United States.

While economic analysts differed in their predictions on how the loss of approximately 400,000 barrels pumped each day through Alaska’s Prudhoe Bay would affect the US oil supply, most agreed gas prices would sharply increase. The oil field provides about 2 percent of the oil used in the US daily.

The California-based Foundation for Taxpayer and Consumer Rights (FTCR) pointed out that a rise in prices at the pump would further fatten industry profits.

"Drivers will pay through the nose for this very preventable emergency, while oil companies will boost their already record profits even further," Judy Dugan, FTCR’s director of research, said in a press statement. She continued, "Every increase in the price of crude oil is translated immediately into more gravy for the oil companies because they don't just pass through the price of crude oil, they tack on indefensible profits for the oil itself and again at the refinery."

BP has taken heat recently for pipe corrosion at its Prudhoe Bay operation. As reported by The NewStandard in March, BP had resisted government mandates that it install a leak-detection system in its Alaska pipes and the company has been responsible for several oil spills in the region. The most recent was the largest ever for Alaska’s North Slope: 270,000 gallons.

“Drivers will pay through the nose for this very preventable emergency, while oil companies will boost their already record profits even further.”

Yesterday, BP announced it had begun an "orderly and phased shutdown of the Prudhoe Bay oil field following the discovery of unexpectedly severe corrosion and a small spill from a Prudhoe Bay oil transit line." The findings reportedly came only when BP was forced by government regulators to inspect its pipelines with a "smart pig," a device that runs through the lines to detect corrosion, cracks or other defects.

BP said that so far, 40 percent of its 22 miles of transit pipelines at Prudhoe Bay had been inspected using smart pigs and that the company had found sixteen "anomalies" in twelve locations.

Previously, the company had been using less-expensive technologies – x-ray and ultrasound – to test for corrosion.

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The NewStandard ceased publishing on April 27, 2007.


This News Report originally appeared in the August 8, 2006 edition of The NewStandard.
Jessica Azulay is a staff journalist.

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