Trans-Alaska Pipeline Temporarily Restarts; Further Work to Be Done (BP, USO)
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Although the Trans-Alaska Pipeline is back on and pumping, albeit at a reduced rate, energy and oil equities are showing little sign of the move.
The Pipeline was shut down last weekend, after a leak formed in a pipe that connects a storage tank to a pump at the system's northernmost pumping station.
The new plan provides for a little oil spilling as workers will re-shut down the pipeline in order to install a bypass. The pipeline operator, the Alyeska Pipeline Service Company, says that a little leakage is better than allowing the oil to sit idle in freezing temps, as water in the system would freeze and cause further damage. Moving oil through the pipeline generates enough heat to avoid this possibility. One worker said that a freeze in the pipeline would be a "nightmare,a worst-case scenario" which could shut the pipeline down for weeks.
According to Bloomberg, the shutdown has forced BP Plc, ConocoPhillips (NYSE: COP), and Exxon Mobil Corp. (NYSE: XOM) to suspend 95% of production from the North Slope area.
One notable stock is BP plc (NYSE: BP) which owns a major portion of the pipeline. The WSJ has BP transporting about 180,000 barrels through the pipeline per day, which, at a price of $91 per barrel, equates to a loss that could hover around $82 million so far (since last Saturday). The loss isn't good news for BP, as the company is still trying to recover from the Gulf of Mexico oil spill that ran through much of 2010.
BP shares are up 0.9% today, and USO is 0.4% higher as well.
The Pipeline was shut down last weekend, after a leak formed in a pipe that connects a storage tank to a pump at the system's northernmost pumping station.
The new plan provides for a little oil spilling as workers will re-shut down the pipeline in order to install a bypass. The pipeline operator, the Alyeska Pipeline Service Company, says that a little leakage is better than allowing the oil to sit idle in freezing temps, as water in the system would freeze and cause further damage. Moving oil through the pipeline generates enough heat to avoid this possibility. One worker said that a freeze in the pipeline would be a "nightmare,a worst-case scenario" which could shut the pipeline down for weeks.
According to Bloomberg, the shutdown has forced BP Plc, ConocoPhillips (NYSE: COP), and Exxon Mobil Corp. (NYSE: XOM) to suspend 95% of production from the North Slope area.
One notable stock is BP plc (NYSE: BP) which owns a major portion of the pipeline. The WSJ has BP transporting about 180,000 barrels through the pipeline per day, which, at a price of $91 per barrel, equates to a loss that could hover around $82 million so far (since last Saturday). The loss isn't good news for BP, as the company is still trying to recover from the Gulf of Mexico oil spill that ran through much of 2010.
BP shares are up 0.9% today, and USO is 0.4% higher as well.
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