BP (BP.)

 

BP hit by oil leak in Alaska

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Oil giant BP (BP.) was left cursing more bad luck on on Monday, as its shares slipped into the red after an oil leak forced the company to shut a major Alaskan pipeline.

The Trans-Alaska pipeline, responsible for transporting oil from the Prudhoe Bay field, was closed on Saturday after oil was discovered in the boost pump basement at Alaska's North Slope pumping station.

This has resulted in 95% of production to be cut off.

Alyeska Pipeline Service, the company responsible for running the pipeline, in which BP owns a 47% stake, said the process of recovering oil from the site got underway on Sunday afternoon.

In a statement, Alyeska said contractors, as well as state and federal agencies, were working together to return the pipeline to service, although no date was given.

"Engineers are evaluating options, including developing a plan to bypass the affected piping in order to safely restart the pipeline," the company said.

Prudhoe Bay - the largest oil reserve in the US - pumps out an average 630,000 barrels of oil each day.

Oil prices were driven higher as a result of the shutdown and ensuing supply fears, with a barrel fetching $88.66 by midday, up 0.7%.

The news will come as a further blow to BP, which has struggled to restore its reputation in the wake of last year's catastrophic Gulf of Mexico oil spill.

However, analyst Tony Shepard at Charles Stanley, said he believes this will not pose a major step-back for the company, as Aleyska was careful to point out that there was no injuries or "apparent impacts to the environment" as a result of the incident.

He added: "Obviously it's not good news for the company but it is just one of many BP assets and won't pose a big issue providing there are no environmental repercussions."

Referring to the downturn in shares, Shepard said: "The share price had a tremendous run of late so it's natural that it will drop back slightly."