SOHIO PREPARES PLAN TO BYPASS PANAMA PIPELINE

SOHIO PREPARES PLAN TO BYPASS PANAMA PIPELINE

Sohio Oil Co., Cleveland, the largest shipper of crude oil across the Isthmus of Panama, was readying contingency plans Thursday so it could continue to move its Alaskan crude in case of further disruptions on the trans-Panamanian pipeline.

The line was still shut as of press-time Thursday, but oil industry officials expected operations to resume imminently.U.S. crude oil prices on the New York Mercantile Exchange gained 32 cents a barrel to close at $16.32 for April delivery. May crude was $16.15, up 27 cents. Prices recovered sharply, after loosing as much as 20 cents earlier on news of the reopening of the pipeline and price cutting by Saudi Arabia.

Oil movements through the line that runs through the northern part of the country were halted Wednesday when striking utility workers shut off electricity throughout Panama. One of the pipeline's two pump stations operates on electricity supplied from the national grid. The other has its own generating equipment.

Thursday, the Panamanian government announced it was taking over all public services following widespread strikes. The strikes were sparked by a cash crisis brought on by a U.S. District Court restraining order that froze Panamanian deposits in U.S. banks.

We're going to get ready with ship-to-ship transfers, said a source with Sohio. The company is a subsidiary of BP America, the United States arm of British Petroleum Co.

The ship-to-ship method was used from 1977 until the early 1980s when the Petroterminal de Panama pipleline was built. The large oil tankers that carry Alaskan crude oil from the Port of Valdez, the southernmost terminal of the

trans-Alaska Pipeline System, are too big to fit through the Panama Canal.

Before the pipeline was built, the oil was lightered onto smaller tankers that went through the canal and delivered the oil to refineries on the U.S. Gulf and East Coasts, in Puerto Rico and the Virgin Islands.

Sohio estimates it can move 300,000 barrels a day by this method, compared to roughly 500,000 b/d it can move through the pipeline. An Exxon Corp. subsidiary moves a small amount of oil through the line, too.

The source with Sohio said that as long as the pipeline was operating the company would ship oil through it.

It is more economical to use the line, so if it is open, we will use it, he said. The cost per barrel of lightering onto smaller vessels is significantly higher, he said, but would not quote a specific figure.

He said Sohio was positioning vessels needed to support a ship-to-ship transfer, such as workboats that were dispatched from the United States, so they would be available on short notice.

There will be some extra expense, but we felt it was the prudent thing to do, he said.

When the pipeline is operating, the ships from Alaska unload on the Pacific side of the isthmus. The crude is pumped through the Petroterminal pipeline to the Atlantic side where it is loaded onto smaller ships for delivery to the refineries.

The roughly 550,000 b/d that moves through the line is about 7 percent of total U.S. oil production (8.2 million b/d), and is 26 percent of total Alaskan North Slope production (2.1 million b/d).