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: Congressional Hearing to Look at BP Stewardship of Alaska Oil Field



From: Rachel D'Oro, Associated Press
Published August 16, 2006 12:00 AM

Congressional Hearing to Look at BP Stewardship of Alaska Oil Field

ANCHORAGE, Alaska — A congressional committee has scheduled a Sept. 7 hearing to examine the management of the nation's largest oil field by British operator BP PLC.


The House Energy and Commerce Committee will look at BP's corrosion control practices for its oil-transit lines at Alaska's Prudhoe Bay, such as those involved in two spills this year before the partial shutdown last week of the sprawling oil field near the edge of the Arctic Ocean.


The London-based company launched a complete shutdown after leaks and corrosion were found Aug. 6 during an inspection of a transit line. BP ultimately decided to keep the western half of the field open after reviews of ultrasound pipeline inspections and discussions with federal and state regulators. As of Tuesday, daily production was 150,000 barrels of crude and natural gas, with the eventual goal of 200,000 barrels, or half of normal production. The full production of 400,000 barrels a day won't resume until 16 miles (26 kilometers) of pipe is replaced.


As much as 13,000 barrels of oil remains inside the corroded line. The company on Monday submitted a plan to the U.S. Department of Transportation to remove the oil. Another 23 barrels -- or 966 gallons (3,657 liters) -- seeped into the delicate tundra grasses.


The incident followed repeated assurances from BP that a March spill at Prudhoe Bay was an anomaly and the company's corrosion control program was adequate, energy committee Chairman U.S. Rep. Joe Barton, a Texas Republican, said in a Friday letter to BP's chief executive, John Browne. The March spill, estimated to be up to 267,000 gallons (1.01 million liters), is the largest ever on the North Slope.


"The fact that BP's consistent assurances were not well grounded is troubling and requires further examination," Barton wrote. "The consequent disruptions to energy production and delivery and resultant adverse impacts on American consumers and the American economy are not excusable, particularly in light of substantial evidence that BP's chronic neglect directly contributed to the shutdown."


Barton could not immediately be reached Tuesday, but in his letter referred to the March spill at Prudhoe and an explosion last year at BP's Texas City, Texas, refinery that killed 15 workers and injured more than 170.


"This latest incident once again calls into question BP's commitment to safety, reliability, and responsible stewardship of America's energy resources," he wrote.


Tom Mueller, a BP spokesman, said the company had not been approached by the committee about the hearing. But he said BP is cooperating fully with state and federal officials looking into the matter.


Company representatives are regularly updating Washington, D.C.-based congressional staffers and also plan to attend a meeting Friday with Alaska legislators.


As other BP officials have done over the past week, Mueller acknowledged the company fell short in monitoring corrosion. BP is spending $72 million (euro56.6 million) this year on its anticorrosion program for its Alaska fields.


"Frankly, we thought it was adequate but clearly it was not," Mueller said. "Now our job is to repair the lines and investigate what corrosion activities are going on inside that line."


Barton's scathing tone was appropriate, but the letter fell short in specific questions raised, said Dan Lawn, a former state environmental regulator and current president of the Alaska Forum for Environmental Responsibility, a watchdog group.


For example, he said, the letter asked why BP does not operate and maintain its U.S. facilities up to U.S. industrial standards. But low-pressure lines like the corroded Prudhoe Bay pipe are exempt from federal regulations, although officials are pushing for federal rules and standards for such lines.


"Regulatory authorities are not specifically regulating this pipeline other than to say don't spill oil, don't degrade the environment," Lawn said. "If regulatory authorities indeed were doing what the law mandates, they would demand that the oil industry maintain the equipment it uses. They would have regulators constantly at the oil fields."


A bipartisan team of energy committee staffers, however, is investigating and will travel to Alaska next week to tour Prudhoe Bay. It will be a follow-up trip for Christopher Knauer, an investigator for the committee's Democratic members who was dispatched to Alaska after the March spill.


Knauer said they want to look at the impact of reduced production on the trans-Alaska oil pipeline, which carries North Slope crude 800 miles (1,300 kilometers) south to Valdez in Prince William Sound for shipping to domestic refineries.


"There's a concern about what happens upstream, and how it effects what happens downstream," Knaur said. "The point is to see the health of the pipeline."


The 29-year-old pipeline was designed for a significantly greater volume of oil. When that is reduced, adjustments have to be made for such factors as changes in pressure and heat.


But reduced flow is nothing new since the end of the boom years in the late 1980s, when as much as 2.1 million barrels moved from the North Slope daily, said Mike Heatwole, a spokesman for Alyeska Pipeline Service Co., which operates and maintains the line. In response to the gradual slowdown, Alyeska has shut down several pump stations along the line and plans to upgrade and automate the rest by mid-2007, according to Heatwole.


Before BP's partial shutdown, Prudhoe's daily production of 400,000 barrels was about half the current output by all fields in the Alaskan North Slope and 8 percent of domestic production. With its present system, Alyeska was prepared to adjust to the total shutdown of Prudhoe. Adapting the line to reduced flows is possible through various changes, including adjusting the speed of turbines that move the oil, Heatwole said.


"It's not without challenges to have a lower throughput," he said. "Can we do it? Absolutely."


Source: Associated Press


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