Anchorage (Platts)--1Apr2009

The US Justice Department and the state of Alaska filed civil actions
against BP Exploration Alaska Inc. Monday over 200,000 gallons of crude oil
spilled in 2006 from corroded Prudhoe Bay field crude oil transit pipelines.

BP has replaced the pipelines, but the federal suit alleges two major
spills in 2006 from the older pipelines violated federal clean air and water
laws.

In its suit, the state of Alaska argues BP violated state laws and that a
partial shutdown of the Prudhoe Bay field from August until October, 2006,
resulted in substantial losses of state royalty and tax income.

In a statement, BP said: "We have taken significant steps to ensure that
our operations are safe and reliable and protect the environment. Those
include building a new $500 million system of oil transit lines at Prudhoe
Bay. We have no comment on the legal issues."

The complaint was filed by the justice department on behalf of the US
Environmental Protection Agency and the US Department of Transportation, which
regulates pipeline safety. The state action, filed by the state Department of
Law, was on behalf of Alaska's Department of Environmental Conservation.

The justice department complaint alleges BP failed to prepare and
implement spill prevention, counter measure and control plans in accordance
with good engineering practices, and failed to implement certain spill
prevention measures required by the Clean Water Act.

The complaint also alleges that BP violated the Clean Air Act by
improperly removing asbestos-containing materials from its pipelines and
failing to comply with a Corrective Action Order issued by the US Department
of Transportation's Pipeline and Hazardous Materials Safety Administration, or
PHMSA, which has jurisdiction over pipeline safety. PHMSA's order also
required BP to conduct certain testing, inspection, maintenance and repair
activities.

The suit asks the court to order BP to take action to prevent spills in
the future, including systemically inspecting its pipelines and associated
facilities for corrosion. The suit did not specify an amount for damages,
but asked the court to seek civil penalties up to the maximum amount
authorized by law, according to a US Department of Justice press release
issued Tuesday.

The civil action follows a November 29, 2007, guilty plea by BP to one
count of the criminally negligent discharge of oil to the waters of the US in
violation of the Clean Water Act. BP paid a $20 million fine to the government
on the criminal charge.

Investigations by BP following the 2006 spills found internal corrosion
in the field transit pipelines most likely caused by bacterial action around a
buildup of sludge at the lower part of the pipe. The pipes were installed in
1977 when the Prudhoe Bay field was built, but had operated at below capacity
in later years because of declining production in the field.

Lower volumes of liquid moving at less velocity through the pipes allowed
the buildup of sediments which most likely created an environment for
bacterial action on the metal, BP has said in past briefings.

The new pipes installed are smaller in diameter and are designed for
lower volumes of oil that will flow at greater speeds, which will tend to
discourage sediment buildup, the company said in briefings.
--Tim Bradner, newsdesk@platts.com