BP Pipeline Repair May Hit $100 Million

Oil giant BP expects the replacement of corroded pipelines at the Prudhoe Bay oil field in Alaska to cost about $100 million, a company source said Thursday, but the total cost to BP will probably be several times that figure.

The expected cost includes $20 million to $30 million for a steel pipeline, the source said, well above the $15 million that one steel analyst estimated Wednesday.

The BP source said the higher-than-predicted cost was because the company was “a distressed buyer.”

A BP spokesman said it was too early to give a figure for repairs at the field, in which BP has a 26% stake. Exxon Mobil Corp. and ConocoPhillips own 36% each.

Separately, the company said it might be able to keep one side of the nation’s largest oil field open, just days after BP said it was closing the entire field as a precaution because of leaks and severe corrosion.

Executives of London-based BP said they might be able to keep the western side of the field open because the company didn’t want to shut down the pipeline entirely. A decision was expected this weekend.

BP unexpectedly announced the phased shutdown of the oil field Sunday to replace 16 miles of pipeline at the field after it discovered severe corrosion.

As of Wednesday, production had been halved to 200,000 barrels a day. BP, the third-largest fully publicly traded oil company by market value, expects a decision today about whether a full shutdown can be averted.

The company has not put a figure on how much the lost production will cost it, but a spokesman said BP’s average profit margin in the U.S. was $25 a barrel. That suggests a full outage would cost BP $2.6 million a day, or $350 million if the field is fully shut down through 2006.

BP’s U.S.-traded shares fell 50 cents to $69.76.

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Reuters and the Associated Press were used in compiling this report.