BP Sees Alaska Pipeline Construction Mostly Done by 1H 2008

SAN FRANCISCO Feb. 2, 2007 (Dow Jones Newswires)

BP PLC's (BP) construction project to replace much of its Alaska pipeline network will be mostly finished by the first half of 2008, company executives said Thursday.

Bob Malone, chairman and president of BP America, described the construction as a two-year project with only a few months of the year allowing for construction. Only during the winter months is the tundra on Alaska's North Slope frozen hard enough for heavy trucks and equipment to operate without damaging the environment.

As a result, almost all of the major construction will be finished by the first half of 2008, a company spokesman said.

BP, which partially shut its giant Prudhoe Bay oil field in August after finding severely corroded pipelines, has described the project as a $150 million to $200 million venture. The company restored full production in October, employing a patchwork of bypass pipelines that required some new construction.

BP in August announced a plan to replace 16 miles of "transit" lines that transport oil from Prudhoe Bay to the Trans-Alaska Pipeline. From there it feeds into U.S. refineries, predominantly on the West Coast. The decision came after government-mandated testing pointed to severe corrosion in the eastern half of the field and after oilfield workers found a small oil spill in that area. The federal pipeline safety regulators ordered the tests after BP reported the largest oil spill in the history of North Slope production in March, also due to pipeline corrosion.

Of the 16 miles of pipe being replaced, BP continues to pump oil through about 10 miles of the transit lines. The company has permanently shut down about three miles of pipeline on each side of the field because of severe corrosion, according to BP and regulators.

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