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Last Updated: Sunday, 13 August 2006, 13:32 GMT 14:32 UK
Partial reprieve for BP oilfield
BP engineer examining section of oil transit pipeline
BP has been told to conduct thorough pipeline inspections
BP says part of its Prudhoe bay oilfield in Alaska will stay open, after considering a total shut-down.

The oilfield's western side will keep running as pipe repairs and "enhanced surveillance" get under way, the company said.

The move will allow BP to supply up to half of the oilfield's usual output, which accounts for 8% of US production.

The site's eastern half had been shut down after pipes were found to be corroded following a small spillage.

Pipe inspection

"With greatly enhanced surveillance and response capability, I am confident we can continue to safely operate the line," said Bob Malone, BP America chairman.

Last Thursday, regulators said BP could keep running the western line while ordering the firm to inspect pipelines more strictly.

Right now, I haven't seen any data that suggests we would need to order a shutdown, [of the western line]
Tom Barrett, pipeline administrator, US Department of Transportation

But earlier the firm had said the entire oilfield could be shut down.

The firm's latest announcement comes after it re-examined a five-mile stretch of a 22-mile pipeline.

BP is also obliged to fulfil certain tests before the closed pipelines can be opened again.

"Right now, I haven't seen any data that suggests we would need to order a shutdown, [of the western line]," said Tom Barrett, pipeline administrator for the US Department of Transportation.

The oil giant is also examining ways to enable the eastern side to operate partially, with federal regulators' permission.

BP has said it will replace 16 miles of pipeline at the site after corrosion was discovered on an oil transit line.

Rising prices

Repairing and substituting corroded pipes could cost around $170m (89m), said BP spokesman Neil Chapman.

It is unclear how this cost would be shared between BP - which owns a quarter of Prudhoe's output - and ConocoPhillips and ExxonMobil, which own the rest.

Prudhoe Bay, which produces around 400,000 barrels per day (bpd), is the largest US oilfield.

The threat to this supply comes as conflict in the Middle East and worries over supplies from Nigeria have prompted oil prices to hit record highs recently.

On Friday Brent crude closed at $75.83, but this was some $3 below the record high induced by the Prudhoe Bay leak. US light, sweet crude reached $74.45.

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