Oil prices rose and BP shares fell last night amid nervousness about the leak that caused the shutdown of the Trans Alaska Pipeline, the supply route for more than 10 per cent of US crude oil.
BP, which is still recovering from the fallout of the devastating Gulf of Mexico oil spill over the summer, is the biggest shareholder in Alyeska Pipeline Service Company, the operator of the 800-mile long system which carries oil from Alaska's Prudhoe Bay field. The shutdown, which entered its third day on Monday, was prompted by the discovery of a leak at the north end of the pipeline.
As a result, oil companies, including BP, have temporarily cut their output from the field by 95 per cent. The operator said there were "no injuries or apparent impacts to the environment as a result" of the incident. The leak was discovered in the basement of a pump building, with Alyeska adding that engineers were "evaluating options, including developing a plan to bypass the affected piping in order to safely restart the pipeline".
Hit by the disruption – the latest in a series during the pipeline's 33-year history – US crude oil prices rose to nearly $90 per barrel before easing to about $88.8 in mid-afternoon trading. BP shares closed 1.25 per cent down at 486.35p.
Despite the reaction, analysts played down the incident, with ING's Jason Kenney saying that "if BP had not had the Macondo incident [in the Gulf of Mexico] last year then this would have just been a minor operational incident for the company".
Separately, in a spot of good news for the group, BP and the China National Offshore Oil Corporation signed an agreement on deepwater exploration in the South China Sea, the British Government said during a visit by China's Vice-Premier Li Keqiang yesterday.