Posted on Wed, Aug. 09, 2006

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Shutdown to barely affect S.C. gas prices

Price spikes will be minimal, but not near Katrina levels of last summer

From Staff and Wire Reports

Because of the shutdown of an Alaskan oil field, South Carolinians won’t see lower gas prices anytime soon — but they also shouldn’t expect the kind of price hikes that came in the wake of Hurricane Katrina.

Gas prices here should remain high due to shortages related to the shutdown of the Prudhoe Bay oil field, AAA Carolinas spokeswoman Sarah Davis said.

But since South Carolina does not use Alaskan oil, price spikes should not be as severe as last year when Hurricane Katrina knocked out two regional pipelines.

This summer, prices already were elevated because of the war between Israel and Hezbollah guerrillas in Lebanon, Davis said.

After declining for a few days, prices rose again this week after BP PLC said Sunday that 8 percent of American crude oil production would be cut because of corrosion found in the Alaskan pipelines.

Crude oil prices fell 67 cents to settle at $76.31 a barrel Tuesday on the New York Mercantile Exchange, after rising as high as $77.45.

The Prudhoe Bay field produces about 400,000 barrels a day — about half of all North Slope production — with production shared about equally on its eastern and western side.

The phased shutdown began on the east side, where Sunday’s leak was discovered. It likely will move to the west side, where in March corrosion in another transit line caused a spill of up to 270,000 gallons — the biggest spill in the history of the North Slope or portion of Alaska north of the Brooks Range mountains.

The shutdown on the eastern side was nearing completion, with just 25,000 barrels a day still flowing Tuesday. Oil was still flowing from the west side of the field and company officials said they hope to avoid a complete shutdown there if additional tests prove it can be done safely, company officials said.

Staff writer Jason Ryan contributed to this report.