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Rusting and leaky pipes have forced BP to shut down its Prudhoe Bay oil field in Alaska. But it is more than lost profits which will worry the board says Miles Costello.

BP's inability to provide a timetable for restarting production at Prudhoe Bay makes it perilously difficult to estimate the impact of its Alaskan closure in terms of lost revenues and profits for the group.


But BP owns 26 per cent of the field, with its partners at ExxonMobil and Conoco Phillips each owning 36 per cent and unnamed other parties holding the remaining 2 per cent.

Based on its ownership level, BP reckons that Prudhoe Bay accounts for about 100,000 barrels of oil production a day, against total daily production at its American sites last year of 612,000 barrels.

The oil giant, which also operates oil fields in the Gulf of Mexico, and at several onshore locations, generated sales and other operating revenues from its US businesses of $16.89 billion last year, with pre-tax profits from exploration and production nearing $9.5 billion.

Leading analysts of the oil and gas industry remained relatively sanguine today about the damage to BP's revenues, also arguing that the oil market remains well-supplied despite the Alaskan setback.

Jonathan Wright at Citigroup said in a note that even if Prudhoe Bay stays shut for the rest of the year, BP would suffer a fall in revenues of just 2 per cent.

Based on 2005 figures, this would mean lost revenues of $337.8 million (£177 million) which, although on the face of it a big number, is pretty modest when set against the size of BP's business.

It is predicted to make pre-tax profits for this year of about £19.65 billion, and is currently valued by the stock market at more than £126 billion.

Mr Wright said he assumed that Prudhoe Bay would be out of action "for some months".

More of an issue for the world's second-largest oil group is the potential reputational damage, particularly as it is the latest in a string of problems at the American division, which BP is planning to tackle with $7 billion.

Mr Wright noted: "...This is another slur on BP's US credentials, following the earlier Alaska pipeline leak in March, the Texas City explosion last year and recent further delays to start-up at its Thunder Horse and Atlantis deep water fields."