Corrosion discovered in Alaska oil transit line

The shutdown comes at a worrisome time for the oil industry, with supply concerns stemming from the hurricane season and instability in the Middle East.

``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," Bob Malone, BP America chairman and president, said.

A 400,000-barrel-per-day reduction in output would have a major impact on oil prices, said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.

``Oil prices could increase by as much as $10 per barrel given the current environment," Emori said. ``But we can't really say for sure how big an effect this is going to have until we have more exact figures about how much production is going to be reduced."

Malone said the field will not resume operating until the company and government regulators are satisfied it can run safely without threatening the environment.

Officials at BP, a unit of the London-based company BP PLC, learned Friday that data from an internal sensing device found 16 anomalies in 12 locations in an oil transit line on the eastern side of the field.

Follow-up inspections found ``corrosion-related wall thinning appeared to exceed BP criteria for continued operation," the company said in a release.

Workers also found a small spill, estimated to be four to five barrels. A barrel contains 42 gallons of crude oil. The spill has been contained and cleanup efforts are under way, BP said.

``Our production while all this is in place is going to be marginal," said Will Vandergriff, spokesman for Governor Frank Murkowski. ``That presents some technical problems because it's a high capacity line and it's meant to be filled."

Vandergriff said he did not know exactly what potential problems a sudden drop in oil flow might cause the pipeline. Alyeska Pipeline Co. officials could not immediately be reached for comment.

A prolonged shutdown would be a major blow to domestic oil production, but even a short one could be crippling to Alaska's economy.