Reply #24: Decaying pipes risk 20% gains to energy prices

[Ghost Dog]

http://www.gulf-times.com/site/topics/article.aspx?cu_no=2&item_no=104883&version=1&template_id=36&parent_id=16

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"What we have is an entire generation of oil infrastructure that more or less came on stream at the same time,’’ said Deborah White, an analyst at Societe Generale in Paris, who helped plan the Prudhoe Bay field development in the 1970s. "It’s now all of a certain age, fragile, and can’t be pushed quite as hard.’’

In the Norwegian North Sea, 8% of wells have weaknesses that disrupt production, according to a study for the nation’s Petroleum Safety Authority. A similar amount of offshore oil and gas output probably is being lost worldwide because of faulty wells, said Jan Andreassen, an author of the Norwegian study.

Russia’s pipeline monopoly, Transneft, estimates its programme to improve its pipeline system will take almost three decades to complete.

Oil consumers depend more than ever on regions such as Alaska and the North Sea that were developed in the 1970s, after the Arab oil embargo led the US and Europe to seek alternative supplies.

Oil prices have more than doubled in the past three years as demand accelerated. Benchmark New York crude oil futures jumped 3% on the day BP revealed the extent of corrosion in the Prudhoe Bay pipeline, which caused leaks and ate away as much as 81% of the steel.

Stavanger, Norway-based Statoil, the country’s largest oil and gas provider, said production this year may be as much as 25,000 bpd below forecast because of extensive maintenance and lower output from older North Sea fields.

Andreassen’s study, published in June, found that 18% of 406 wells tested in Norway’s section of the North Sea had weaknesses and 8% had faults that demanded they be shut. "This is a subject people don’t like to talk about,’’ he said in an August 16 phone interview. "This is not particular to Norway. This is an industry problem.’’

The UK and Norway combined pump 4mn bpd, most from the North Sea, more than every Opec member except Saudi Arabia.

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