BP, Europe's second-largest oil company, and other oil majors active on Alaska's North Slope have been forced to shut down almost all of their output there after a leak was discovered on the Trans Alaska Pipeline. The pipeline has been closed as a result. Analysts said the shutdown of the 800-mile pipeline network could trigger a jump in oil prices unless the leak is repaired quickly, as the region represents a significant slice of domestic U.S. oil output, the Wall Street Journal reported.
BP (BP) said it is too early to tell what impact the pipeline leak would have on its earnings. The Trans Alaska Pipeline usually moves 630,000 barrels of oil per day and producers have been forced to slash production to 5% of that total because of the leak. There is no timetable for when the pipeline will reopen to full capacity.
Alyeska Pipeline Service Co., which operates the pipeline network, ordered companies to shut down the pipeline on Saturday morning. In addition to BP, Exxon Mobil (XOM), Chevron (CVX) and ConocoPhillips (COP), the three largest U.S. oil companies, use the pipeline.
No estimate has been provided yet as to how much oil has leaked from the pipeline. Given that pipeline accounts for about 9% of daily U.S. domestic output, analysts are speculating the closure could spark oil prices above $100 per barrel as the market frets over supply concerns.