Fire Will Worsen North Sea Oil Shortage; Prices Rise

LONDON â€”  The oil rig fire off the coast of Scotland will worsen a shortage of North Sea oil and the news quickly boosted prices, but the disaster is not likely to have a big impact on the industry.

Occidental Petroleum Co., owner of the Piper Alpha rig, said a gas leak apparently was to blame for the disaster. There were concerns about claims against the company, and Occidental’s stock fell 50 cents to $26.25 in early trading on the New York Stock Exchange.

The fatal accident prompted the British government’s Department of Energy to postpone the process for granting new offshore licenses, which would open up more areas for exploration. The department had been scheduled to announce today the blocks for which it was inviting bids for the licenses.

“Because of what happened, we’ve decided to postpone that at the moment,� said a department spokesman, who spoke anonymously in keeping with British practice.

The price of Brent Blend, the most widely traded international crude oil, jumped today to $15.05 a barrel for September delivery, up 32 cents from late Wednesday.

The rig produced 167,200 barrels a day, the company said. A barrel contains 42 gallons.

5 Other Fields Shut Down

In addition to the Piper oil field, five other fields were shut down, the department said. They were the Claymore, Tartan, Highland, Scapa and Petronella fields, it said.

That meant production was cut by a total of about 220,000 barrels a day to 250,000 barrels a day, or about one-tenth of the British sector’s production, the department and analysts said.

“There’s pressure on the immediate availability for North Sea crude,� said Philip Morgan, an oil analyst with the London investment firm Warburg Securities.

Lucy Mullins, an oil analyst with the London investment firm Barclays de Zoete Wedd Ltd., added, however: “That’s going to be fairly short-term.�

The related fields should be back in production in a week, and Piper Alpha probably will be out of production for up to a year, Mullins said.

Morgan said the industry was already experiencing a shortage because of regular maintenance, which oil companies generally do in the summer when the weather is milder.

OPEC Producers to Step In

North Sea oil production in the British sector averages 2 1/2 million barrels a day, the Department of Energy says. Production is down 400,000 barrels a day from that level because of the maintenance, Morgan said.

Producers of the Organization of Petroleum Exporting Countries, of which Britain is not a member, will step in to meet demand, Mullins said.

The oil price has also been boosted by favorable statistics released this week, Morgan said.

“There is starting to be a perception that the glut in world supplies in general is not as bad as people thought,� he said.

Occidental Petroleum’s production won’t be severely affected by the fire, because it has other outlets, Mullins said.

The disaster could prove expensive for the North Sea oil producers in general, Morgan said.

“Obviously, questions are going to be raised about safety which might involve companies in a lot more expenditure,� Morgan said.