Norway watchdog to inspect BP platform after fire

OSLO (Reuters) - Investigators for the Norwegian oil safety watchdog said they would fly to the BP operated Valhall field on Thursday to probe the causes of a fire that forced a total evacuation of workers and halted output.

A BP spokesman said it was still unclear when production would resume at the field, which was producing about 42,000 barrels per day at the time of the fire.

"We are going offshore this afternoon to investigate," Oeyvind Tuntland, director for professional competence at the Petroleum Safety Authority Norway, told Reuters. "A fire at an offshore platform is always serious."

New-York listed Hess is the majority owner in the field with a 64 percent share, while operator BP holds the remaining 36 percent.

The fire occurred on Wednesday in a vent pipe, used to evacuate gasses that could ignite, on the production and compression platform of the Valhall installations, according to a preliminary report BP sent to the watchdog, Tuntland said.

It broke out around 1500 GMT and was put out about an hour later, he added.

"How it was ignited, we have no idea," he said. "If any place should burn, it was one of the best places for it to happen. It had no big potential to escalate. But a fire is a fire."

BP said the damage on the platform was confined to a small area, which was sealed off while inspections are carried out.

"It is too early to say when production can start again," said company spokesman Jan Erik Geirmo.

He said there was no risk of a spill from the incident.

BP evacuated personnel and all were reported safe. Some 638 people had been working at the site, which is located about 290 km (180 miles) off southern Norway.

AFFECT ON EKOFISK PREMIUMS

The production platform is one of five in a complex serving the oil field.

Valhall's oil production is piped to the offshore Ekofisk Center and then on to Teesside, England, according to BP's website. Natural gas from the platform is transported by pipeline to Emden, Germany.

The platform also processes oil and gas from a smaller field known as Hod, located some 7 miles south of Valhall and also owned by Hess (62.5 percent) and BP (37.5 percent).

Valhall has pumped oil since the 1980s and is located in 70 meters of water.

BP said on its website that Valhall's infrastructure was being revamped this year to ensure the field can continue to operate until 2050.

The oil field produces Ekofisk grade oil -- one of four crude streams, also known as BFOE, on which the Brent contract is based.

Oil traders said news of the outage would further reduce supplies in the North Sea, where reduced output at the UK's largest oil field Buzzard has already led to delayed cargoes and higher prices.

"It is going to be supportive of Ekofisk premiums for sure," said a North Sea oil trader, adding that this could amount to around 1.2 million barrels if output stays down for a full month.

Crude output from nine key North Sea grades is set to fall 8 percent next month to 1.52 million bpd due to summer maintenance and declining output.

Brent crude for August was trading at $118.78 a barrel at 1432 GMT.

Valhall has a total production capacity of some 180,000 bpd, but its current output level is about 42,000 bpd because the platform is old, the BP spokesman said.

He did not have figures for Valhall's gas production.

According to the Norwegian Petroleum Directorate, Valhall was expected to produce some 300 million standard cubic meters of gas and 31,000 bpd of oil in 2011.

(Additional reporting by Emma Farge in London; editing by Jane Baird)