New misery for BP over Trans-Alaska pipeline leak

A leak in an Alaskan pipeline, that carries 12 per cent of America's oil, has meant that BP's shares have dropped by 2.5 per cent, since Friday (January 7).

The leak forced the Trans-Alaskan pipeline system to close on Saturday (January 8).

Oil prices are expected to increase rapidly, as will the price of fuel will also increase. A fact not relished by US motorists already accustomed to frequent rises in petrol costs.

The leak will put the oil industry's safety record under scrutiny yet again, just days after the final report was released as to the cause of the Deepwater Horizon spill.

BP is the largest shareholder in Alyeska Pipeline Service, who run the Trans-Alaskan pipe from Prudhoe Bay, which is America's largest oil field.

The leak cut off 95 per cent of oil production at the site.

The Alaskan oil field produces an average of 630,000 barrels of crude oil a day, which equates to 40 per cent of a country like Great Britain's daily oil consumption.

When FTSE 100 began trading today (January 10), BP shares fell the most, with shares dropping as much as 12p to 480.7p. This eroded some of the recovery since the Gulf of Mexico oil spill, last April. The cost of insuring BP's debt against default also rose by over 10 per cent, according to Gavan Nolan at Markit.

Prudhoe Bay is one of BP's main resources, and at present BP is planning to build a new pipeline to tap into Alaska's gas reserves.

A BP spokesman refused to comment on the leak this morning, referring inquiries to Alyeska.

Aleyska's new president, Admiral Tom Barrett said: "Our goal is to engineer and implement a solution so that we can safely return the pipeline to service as quickly as possible."

Fortunately, the surrounding environment was not harmed in any way.

Author: Charity Knight | Climate Action

Image: HBarrison | flickr