Alaska Oil Production Drops 5.5% in February After BP Fire

Alaskan crude production dropped 5.5 percent in February from a year earlier after a fire forced BP Plc (BP/) to shut an oil-gathering center and as yield from wells in the North Slope shrank.

Output in February averaged 609,216 barrels a day, a decrease from 644,767 a year earlier and from 624,058 in the previous month, according to a posting on the Alaska Tax Division’s website. Supply peaked for the month at 626,002 barrels Feb. 2 and touched a low of 564,699 barrels yesterday.

Alaska production has declined annually since 2002, and February output has dropped for four straight years, according to the state tax division. London-based BP shut an oil-gathering plant in Prudhoe Bay yesterday after a fire that “extinguished itself,” Steve Rinehart, a BP spokesman in Anchorage, said in an e-mail.

“As a precaution, facility managers decided to shut the plant down,” Rinehart said. “Today the plant is being brought back online.”

The fire’s impact on production is “undetermined,” he said. The plant is one of about a dozen stations in the North Slope that processes oil for delivery across the 800-mile (1,287-kilometer) Trans Alaska crude line running from Prudhoe Bay on the North Slope to Valdez, Rinehart said.

Each of BP’s gathering centers, which separates raw crude, water and gas produced from wells, is designed to process about 350,000 barrels of raw crude oil per day, according to BP’s website.

Production Decline

February’s decline was “strictly because of the ongoing decline in production,” Michelle Egan, spokeswoman for Alyeska Pipeline Service Co., operator of the Trans Alaska line, said in a telephone interview. ‘There’s no operations reason for it,” she said.

Alaskan North Slope (USCRANSW) crude prices have risen 13 percent over the past year, according to data compiled by Bloomberg. The oil traded $18.50 a barrel above U.S. benchmark West Texas Intermediate, unchanged from yesterday.

The Trans-Alaska pipeline was shut for nine days in January 2011 after a leak was discovered at a pump station. That led to a 26 percent drop in Alaskan oil production from the previous month.

Inventories at the Valdez marine terminal, where tankers load oil for delivery to refineries on the West Coast, averaged 4.73 million barrels in February, ranging from 3.54 million on Feb. 14 to 5.96 million on Feb. 12.

To contact the reporter on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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