Work proceeds as usual at Prudhoe Bay

Acuren, Kakivik get contracts to do corrosion analysis on transit lines; 10 miles of pipe on order, 6 miles more needed

By Kay Cashman

Petroleum News

Oilfield contractors working in Alaska’s Prudhoe Bay field aren’t expected to be idle in the months ahead; in fact, some will be doing more, not less, work.

In a bold move that will protect the environment but have a negative impact on BP’s Alaska earnings, the Prudhoe Bay operator began turning off production at the giant North Slope oil field Aug. 6 to check for corrosion in the 22 miles of transit lines that transport oil from Prudhoe processing facilities to Pump Station 1 for delivery to market via the 800-mile trans-Alaska pipeline. BP took the action after finding a small leak — four to five barrels — in an eastern operating area line.

But prior to that — in March — another transit line leaked more than 200,000 gallons, the largest in Prudhoe history.

BP has told its employees it is looking at as long as one year before the entire field is brought back on line.

“Basically, we’ve been told, it’s going to take as long as it takes, no matter how high the cost,” said one BP executive who preferred to remain anonymous. “I’m really proud of my company. It took a lot of courage to make that decision, especially with oil prices so high. We’re looking at a number of scenarios for time off-line — the longest is one year — but no one really expects it to take that long.”

So what’s in store for the many oilfield contractors and their employees working at Prudhoe Bay?

All indications are BP intends to keep them working.

On Aug. 9, the man who runs Nabors Alaska Drilling told Petroleum News there was a slowdown in work from Sunday, Aug. 6, to Wednesday, Aug. 9, but aside from normal summer maintenance on rigs, he expects no more slowdowns in drilling: “Our rig crews will continue working and we should see no impact” from the shut in, Dave Hebert said.

Even the three-day slowdown, Hebert said, was “not a complete stop, because the same equipment required to support drilling operations, such as vacuum trucks, were needed to shut down wells.”

“So, it may take a couple of weeks before there is enough support equipment to get things back to 100 percent for us, but both drilling and workover operations will continue moving forward,” he said. “We’ll keep drilling wells and if they are not ready to produce them, they can be capped until they the field is back online.”

Nabors, a major Prudhoe contractor and the largest drilling company in Alaska, has four rigs under contract to BP at Prudhoe.

But some contractors will see even more work because BP has said it will replace 16 of the 22 miles of Prudhoe transit pipelines.

As of Aug. 10, the company had not selected a pipeline contractor to replace the pipe, but BP had hired Acuren USA and Kakivik Management to do corrosion analysis on the existing lines, BP spokesman Neil Chapman told Petroleum News. He said the process would involve ultrasonic testing.

According to BP Exploration (Alaska) President Steve Marshall, the company has also signed contracts with U.S. Steel and Nippon Steel to supply 10 miles of pipe, and was looking for another 52,000 feet of 18-inch and 30,000 feet of 24-inch.

U.S. Steel is supplying 30,000 feet of 24-inch diameter pipe, with the first shipment due to arrive in October, and Nippon will begin delivering 21,000 feet of 18-inch pipe in December, Marshall said.

He also said BP had requested faster delivery.

“The steel that goes into the production of some of the pipe is in very tight supply,” Charles Bradford, an analyst at with Bradford Research/Soleil in New York who tracks steelmakers, has said in press reports.

“There are only three manufacturers (Oregon Steel Mills, Ipsco and Europipe) in North America and they are all sold out through next year,” he said.

But, Bradford said, “I am sure something can become available if they pay enough.”

Marshall said BP would not be deterred by high pipe costs. “Money is not the object,” he said Aug. 7.

Tom Filstrup, spokesman for Ipsco, said its spiral mill in Regina, Saskatchewan, can make up to 80-inch diameter pipes, but it’s booked through the third quarter of 2007. Its other pipe mill, which can make up to 24-inch pipes, is not booked quite so far out, Reuters reported.

“Sometimes we can move jobs around, but the problem is that contract jobs are needed by certain times,” he said.

When asked by Reuters if an urgent job for BP could be bumped ahead of others, Filstrup said: “We wouldn’t do that.”

Marshall and other BP officials have said the company expects 180 workers from across North America to be in Alaska by the end of the week (Aug. 12) to help remove insulation from, and inspect, the existing pipelines.

How many additional staff will be needed?

The number is likely to be in the hundreds, rather than thousands, Chapman told Dow Jones.

Even though the labor market for skilled oilfield workers is tight, Kyle Keith, director of operations at the Canadian Energy Pipeline Association, said BP shouldn’t have any problems picking up people as long as it pays top dollar.