Congress Increases Scrutiny on BP Alaska

Published Sep 15, 2006 12:01 AM by The Maritime Executive

Amid mounting criticism of BP’s corporate culture for safety and pollution prevention, US Congressional investigators are focusing their attention on the way BP has maintained its Prudhoe Bay facility in Alaska. At the Senate Energy and Natural Resources Committee hearing on Tuesday, BP’s Chairman Robert Malone was told that the much-publicized pipeline problems at their Prudhoe Bay terminal were jeopardizing ongoing efforts to open Alaska’s North Slope region to further oil and gas development.

In early August, BP Exploration Alaska, Inc. began the process of shutting down production from the Prudhoe Bay oil field Sunday after unexpectedly discovering severe corrosion and a small spill from a transit pipeline there. According to the U.S. Energy Information Agency (EIA), the Prudhoe Bay field represents about 8% of U.S. crude oil production and half of Alaska’s daily output. The sudden announcement initially sparked fears that about 400,000 barrels of crude oil per day would be removed from the domestic production and refining equation. BP has since restored more than half of the field’s normal production, now reported at 250,000 barrels per day and regular production levels could be achieved by end of October.

Staff of the House Energy and Commerce Committee have, in recent weeks, reportedly been investigating BP’s pipeline operations on Alaska's North Slope. Immediately following the discovery of the pipeline corrosion problems, the Department of Transportation had ordered more rigorous and regular testing of all pipelines and a September 7 hearing to examine BP’s corrosion control practices for its pipelines was scheduled by the House Energy and Commerce committee.

Bob Malone, chairman and president of BP America, and Steve Marshall, president of BP Exploration Alaska, have appeared before the U.S. House of Representatives Energy & Commerce Committee, subcommittee on Oversight and Investigations. Responding to critics, BP management has pointed to a quadrupling of spending on Prudhoe Bay major maintenance to $197 million in 2007, up from 2004 spending levels, while also investing in replacement pipe. The job becomes increasingly difficult as equipment at the Alaskan oil field ages. Still, Congressional investigations are reportedly centering on issues with BP's maintenance of Prudhoe Bay pipelines. Compounding the oil giant’s woes, a criminal probe into a much bigger Alaskan pipeline rupture in March is still ongoing.

BP’s pipeline problems are not limited to their Alaskan operations. In an incident that reportedly occurred last Friday but was not made public until Tuesday, a BP pipeline at the port of Long Beach, CA spilled about 1,000 barrels of gas oil. Federal, state and BP cleanup crews are now working to contain the oil product which has not reached harbor waters. A Coast Guard spokesman said that most of the oil was trapped in a pump station. None of the spilled oil reached the water. A unified command team of state and federal regulators and BP itself are investigating the leak. The unified command includes BP, the US Coast Guard and the California Department of Fish and Game's Office of Spill Prevention and Response.