BP Shutdown Could affect the U.S. West Coast

British Petroleum's shutdown of the largest United States oil field has could cause California gas prices to rise.

The company was in the process of closing its operations in Prudhoe Bay, Alaska on Sunday after due to corrosion in oil delivering pipes. The firm is working to rectify the problem, which could take several months. The firm was expected to reduce oil production by 400,000 barrels a day, a figure close to 8 percent of total U.S. oil production as of May 2006, according to the U.S. Energy Information Administration.

"We regret that it is necessary to take this action and we apologize to the nation and the State of Alaska for the adverse impacts it will cause,' said BP America Chairman and President Bob Malone. "We will not resume operation of the field until we and government regulators are satisfied that they can be operated safely and pose no threat to the environment.'

The shutdown could be a detriment to the refineries in California along with Alaska. Gasoline prices in the state could rise since 20 percent of crude oil used by gasoline refineries comes from the area affected by the shutdown.

ConocoPhillips Co., which owns a 36 percent interest in Prudhoe Bay production, said in a statement, "The company has contingency plans to deal with supply interruptions, but we continue to evaluate the effect of the shut-in on the operations of our West Coast refineries.'

Chevron Corp. that had two large plants operating in California said, "We continue to meet the supply needs of our refineries.'

The decision to close the oil field partially by BP was costing the Alaska state's economy of $6.4 million a day in tax revenues during the shutdown, Alaska Governor Frank Murkowski told the state legislators. "With 86% of our revenues coming from oil taxes, we are vulnerable to any decline in production.'

This could have a potential on the Western States. "Prudhoe Bay shutdown is a national issue,' said Murkowski. "The impact of reduced oil (would) flow (to) the nation, particularly California, Washington and Oregon, which are heavily dependent on Alaska oil.'