By Yereth Rosen
ANCHORAGE, Alaska (Reuters) - The Trans Alaska Pipeline was shut for a second day on Sunday because of a leak, with no indication of when it would reopen, sending oil prices higher on fears that a prolonged closure could restrict U.S. supplies.
The leak was discovered at the start of the pipeline in Prudhoe Bay early Saturday, forcing oil companies to cut production to 5 percent of their average 630,000 barrels per day.
The shutdown of one of the United States' key oil arteries, which carries about 12 percent of the country's production, is the latest setback for 33-year old pipeline, which is becoming more expensive to maintain as it ages and handles less than a third of the oil it did at its peak in the 1980s.
U.S. crude futures rose about 1.7 percent, to $89.50 a barrel in early electronic trading in Asia.
Closures of the pipeline, although short, have provoked criticism of its operators, particularly major owner BP, whose reputation is already at an all-time low after the Gulf of Mexico blow-out last year, causing the largest-ever U.S. oil spill and attracting renewed government scrutiny of the oil production industry.
"This adds to what happened in the Gulf of Mexico at a time when U.S. regulators are still looking at regulations around oil drilling," said Ben Westmore, commodities analyst at National Australia Bank. "Events like this carry risk around future regulation that could dramatically reduce supply on a more permanent basis than this temporary outage. There is a possibility the risk is pretty substantial for the (oil futures) market."
The shutdown of the 800-mile (1,280 kilometer) line, which runs from the Prudhoe Bay oilfield to the tanker port of Valdez, has not yet affected shipments, and tankers are being loaded on schedule at Valdez, meaning there is no immediate danger of restricted oil supply. Oil produced during the shutdown will be stored at Prudhoe Bay until the pipeline reopens.
Alyeska Pipeline Service Co, the operator of the pipeline which discovered the leak on Saturday morning, had no estimate of how much oil leaked, but none seems to have escaped beyond concrete encasing the pipeline at the intake pump station at Prudhoe Bay.
"The concrete encasement is why we don't believe there's any environmental impact," said Alyeska spokeswoman Michelle Egan. "Until we can excavate, we won't be able to say that definitely."
She provided no estimate of when the pipeline would reopen or when normal oil production could resume.
Alyeska is owned by oil companies with interests on Alaska's North Slope, the third-largest U.S. oil producing region after the Gulf of Mexico and Texas. Major owners in the region are BP, ConocoPhillips and Exxon Mobil Corp. BP owns about 47 percent of the venture, with ConocoPhillips and Exxon Mobil holding 28 percent and 20 percent respectively.
The leak was discovered in the basement of a building that holds booster pumps for Pump Station 1, the intake station for the oil artery, Egan said. The booster pumps are housed in a building separate from the main pump building, and the leak appears to be in a concrete-encased pipeline on the exterior.
The last time the pipeline was shut down unexpectedly was in May, when a power outage at a pump station triggered a series of events that caused an estimated 210,000 gallons (5,000 barrels) of crude oil to spill out of the storage tank at Pump Station 9, located about 105 miles south of Fairbanks.
The spill, which shut the pipeline for 79 hours, was the biggest in Alaska since the 212,252-gallon spill in 2006 from a corroded transit pipeline at the Prudhoe Bay field.
Alyeska has been automating and centralizing operations, part of its plan for coping with reduced throughput and dramatically increased cost per barrel shipped. Oil flow through the line peaked in 1988 at over 2 million barrels a day, but output from Prudhoe Bay and other maturing North Slope fields has dwindled significantly since then.
Critics argue that Alyeska's operational changes pose safety risks, and they directed much of their ire at former Alyeska President Kevin Hostler, who retired in September.
To replace Hostler, Alyeska's owners hired retired U.S. Coast Guard Vice Admiral Thomas Barrett, the former head of the Department of Transportation's Pipeline and Hazardous Materials Administration. Barrett officially started at Alyeska on Jan 1.
(Additional reporting by Randy Fabi in Singapore)
(Writing by Bill Rigby; Editing by Diane Craft)
