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Alaska oil pipeline disruption enters third day, boosts prices

ANCHORAGE/SINGAPORE (Reuters) - A shutdown of the Trans Alaska Pipeline, which ships 12 percent of U.S. crude output, entered a third day on Monday, boosting prices and raising pressure on operators including BP to restore shipments.

A leak was discovered at the northern end of the pipeline in Prudhoe Bay early Saturday, near production facilities, forcing oil companies to cut output to 5 percent of their average 630,000 barrels per day.

The shutdown is the latest setback for the 33-year old duct, which is becoming more expensive to maintain as it ages. It currently handles less than a third of the oil it did at its peak in the 1980s.

Closures of the pipeline, although short, has provoked criticism of its operators, particularly major owner BP, whose reputation was diminished after the Gulf of Mexico blow-out last year caused the largest-ever U.S. oil spill and attracted renewed government scrutiny of the oil production industry.

"Particularly for BP, it is really important to fix this quite soon," said Hannes Loacker, oil analyst at Raiffaisen Bank International.

"This company sold a lot of assets, and it's probably facing a small production decline compared to previous quarters. It's in a transformation phase and all the assets they have should be working properly."

The shutdown of the 800-mile line, which

runs from the Prudhoe Bay oilfield to the tanker port of Valdez in southern Alaska, has not yet affected shipments, and tankers are being loaded on schedule at Valdez, meaning there is no immediate danger of restricted oil supply.

Oil produced during the shutdown will be stored at Prudhoe Bay until the pipeline reopens.

"For the global overall market, it should justify a minor reaction," Loacker said. "It's of course a problem for North America, but it wouldn't justify that the price increases by 2 or 3 percent."

U.S. crude for February jumped as much as 2.2 percent earlier on Monday, but then retreated to add 0.8 percent to $88.73 at 5 a.m. EST.

Response crews have recovered nine to 10 barrels of oil from the basement of a booster pump building, about 90 percent, Alyeska Pipeline Service Co., the operator of the pipeline, said on Sunday.

Engineers are considering options for restarting the line, including a plan to bypass the affected piping, Alyeska said.

Alyeska is owned by oil companies with interests on Alaska's North Slope, the third-largest U.S. oil producing region after the Gulf of Mexico and Texas.

Major owners in the region are BP, ConocoPhillips and ExxonMobil Corp. BP owns about 47 percent of the venture, while ConocoPhillips and ExxonMobil hold 28 percent and 20 percent respectively.

The pipeline carries all crude produced from Alaska's North Slope oilfields. Normally, about 43 percent of oil flowing through the pipeline belongs to ConocoPhillips, 30 percent to BP and 20 percent to Exxon Mobil.

The last time the pipeline was shut down unexpectedly was in May, when a power outage at a pump station triggered a series of events that caused an estimated 210,000 gallons (5,000 barrels) of crude oil to spill out of the storage tank at Pump Station 9, located about 105 miles south of Fairbanks.

Oil flow through the line peaked in 1988 at over 2 million barrels a day, but output from Prudhoe Bay and other maturing North Slope fields has dwindled significantly since then.

(Reporting by Yereth Rosen with additional reporting by Alejandro Barbajosa; Editing by Ed Lane)

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