BP's Prudhoe failure a 'giant' setback for Alaska E&P: US senator

Washington (Platts)--12Sep2006

BP's failure to maintain its Prudhoe Bay pipelines sets back any attempt
to open Alaska's North Slope to additional oil and gas development, US Senator
Jim Bunning, Republican-Kentucky, said Tuesday.

It's a "giant step backwards," Bunning told BP Chairman and President
Robert Malone, who was testifying before the Senate Energy and Natural
Resources Committee. "You assured us that nothing like this would happen."

Malone told Bunning, "You have our commitment to operate Prudhoe Bay as a
gold standard. I have the financial support, and people and resources."

Bunning noted that he visited Prudhoe Bay three years ago. "You bragged
to us about how good you were doing," he said. "Don't tell us you didn't have
an inkling that the pipes were eroding."

Malone testified that BP is increasing spending on Prudhoe Bay major
maintenance to $197 million in 2007, nearly a fourfold increase from 2004
spending levels, as well as investing in replacement pipe.

Bunning said the company's spending for maintenance "is chicken feed when
you're looking at $70 billion in profits," which BP reported earlier this
year.

Committee Chairman Pete Domenici, Republican-New Mexico, said "We won't
get the votes we already have" to open the Arctic National Wildlife Refuge in
Alaska to development if BP fails to live up to its commitment to improve its
performance.

--Gerald Karey, gerry_karey@platts.com

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