BP faces fresh scrutiny on Alaska spill with 2001 order

BP faces fresh scrutiny on Alaska spill with 2001 order

Washington (Platts)--11Oct2006

BP Wednesday was facing more questions about its safety program in Alaska
after a Congressional panel demanded to know why the oil major failed to
disclose that it had received an order from the state of Alaska in 2001
requiring the company to inspect its Prudhoe Bay pipelines.

Those pipelines leaked earlier this year, forcing BP to shut down a
portion of its system, a move that caused oil prices to rise briefly in late
August.

House Energy and Commerce Committee Chairman Joe Barton
(Republican-Texas) and some of his colleagues wrote in a letter Tuesday that
the 2001 Compliance Order issued by the Alaska Department of Conservation
undermined BP executives' claims that the company could not have known that
the lines "possibly contained unacceptable amounts of solids" and that they
should have been thoroughly inspected.

The state Compliance Order, included in the letter, required, among other
things, that by April 2002 BP determine the amount of sediment, which can spur
corrosion, in both the Eastern Operating Area and Western Operating Area
pipelines of the system, which connects the fields to the Trans-Alaska
Pipeline System.

The copy obtained by Platts includes a stamp from BPXA's law department
indicating that the order was "fully executed" on June 3, 2002, and also the
signature of Jack M. Fritts, identified as the Greater Prudhoe Bay operations
manager, who agreed to comply.

BP executives testified before the committee in September that the
company did not know that serious corrosion could even be an issue on the
Prudhoe Bay pipelines because of an absence of water.

Barton wants to know why the order was not provided to the committee, as
part of the panel's request for documents ahead of the September hearing. He
also demanded to know whether Fritts still holds a position with BP and to
whom he reported.

He also wants to know if BP America President Robert Malone or BP
Exploration Alaska President Steve Marshall knew about the Compliance Order
prior to their sworn testimony before the committee in September. "If not, why
not? If so, why didn't either of them discuss the Order in their written
testimony, oral testimony, or in response to questions posed by members of the
committee," the lawmakers asked. They said they wanted answers from the
company by October 20.

BP faces a federal criminal investigation into the spills at Prudhoe Bay
this year and other agencies are considering civil action against the company.
Some BP shareholders have also sued the company.

--Cathy Landry, cathy_landry@platts.com

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