The shutdown of an Alaskan pipeline sent oil prices upward Monday and generated concerns about gasoline supplies, both of which might raise local prices by 10 cents or more in the coming days.
BP, which operates the transit pipeline from the nation’s largest oil field, discovered over the weekend a leak and excessive corrosion, prompting the shutdown. As a result, about 400,000 barrels a day will be taken out of production until repairs are made.
Replacing about 73 percent of the 22-mile-long pipeline could take “weeks or months,” BP announced Monday.
An analyst with the Oil Price Information Service predicted the disruption will increase retail fuel prices by 3 to 10 cents a gallon nationwide, possibly more in this region.
That’s because Alaskan oil from Prudhoe Bay represents about 15 percent of the West Coast’s oil supply, according to BP and the Western States Petroleum Association.
“Clearly, the vast majority of Alaskan North Slope oil is delivered to refineries on the West Coast, so it’s not far-fetched to believe it’ll be the most affected,” said Tupper Hull, spokesman for the trade association. “It’s too early to say with any clarity what the impact will be.”
On the commodities trading markets, the impact was immediate. Crude oil prices rose more than $2 a barrel to close Monday at $76.98 on the New York Mercantile Exchange, just a few cents short of an all-time record. Unleaded gasoline futures rose 2 cents to $2.25 a gallon.
A check of gas stations around Everett on Monday afternoon didn’t find any sudden spikes in prices, which ranged from $2.92 a gallon to just under $3.06. The average for a gallon of regular unleaded in the area was just under $3.05, according to AAA.
The price has been stable for the past month, and well below the region’s all-time high. By contrast, the national average has crept up to near-record levels in recent weeks, AAA spokeswoman Janet Ray said.
She said motorists shouldn’t be surprised to see price increases as the week goes on, however. Additionally, fuel prices tend to creep into record territory in late August, on the eve of the Labor Day weekend, the last big driving holiday of the summer.
While prices may rise, fuel producers say they don’t foresee shortages, even though a considerable amount of oil going into Washington state’s five refineries comes from Alaska.
Mike Abendhoff, spokesman at BP’s Cherry Point refinery near Blaine, said that facility has enough oil to keep going for a few weeks, and the company’s looking for alternative oil sources to keep up production.
“Right now, the big question mark is how long the (Prudhoe Bay) oil will be out of the system,” Abendhoff said.
At the Shell refinery near Anacortes, spokesman Gerald Baron said its refinery uses Alaskan North Slope oil, but it has sufficient amounts on hand or en route. Tesoro, also near Anacortes, said it also has a “secure” supply of oil for its March Point refinery.
Additionally, the Energy Department said Monday it is prepared to tap the government’s strategic reserve.
“If there is a request for oil we’ll certainly take a serious look at that,” department spokesman Craig Stevens said.
The BP transit pipeline pumps oil from Prudhoe Bay, about 650 miles north of Anchorage, to the trans-Alaska pipeline, which ends 800 miles to the south in Valdez. From there, oil is transported worldwide by tankers.
BP discovered corrosion in the transit lines only after the Department of Transportation ordered an inspection after an oil spill in March. Tests found between 70 percent and 81 percent of the pipeline’s wall thickness had been lost.
While repairs are made, Abendhoff said, BP may be able to set up a temporary line to restore at least partial oil production at Prudhoe Bay.
The Associated Press contributed to this story.
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
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