WASHINGTON - Shutting its North Slope operations is only the latest problem for oil giant BP, which already is the target of a federal grand jury, the Environmental Protection Agency and congressional investigators for letting its Alaska pipeline crumble.
The Justice Department is pursing possible criminal charges in connection with the oil spill last March on one leg of BP's feeder system in its Prudhoe Bay field. A federal grand jury is taking evidence in that case in Anchorage. The Justice Department is demanding BP Alaska cut a 12-foot section of pipe where the leak occurred and send it to investigators.
At the same time, members of Congress are pressing for hearings, possibly in September, into BP's maintenance of its pipeline system as the company prepares to complete the shutdown of its North Slope operation to make repairs - at a loss of 400,000 barrels of oil a day.
“The U.S. Congress has an obligation to hold hearings to determine what broke down here,” said Rep. John Dingell of Michigan, the ranking Democrat on the House Energy and Commerce Committee.
Meanwhile, the pipeline repairs - and loss of more than half of Alaska's crude oil - are likely to take months curtailing Alaskan production into next year, according to the Energy Department.
“It will take months to fix so we must deal with the issue at hand,” Energy Secretary Samuel Bodman said Tuesday.
“There seems to be a belief that a complete shutdown of the Purdhoe Bay system may not be necessary,” said Bodman after talking with BP executives. Bodman said BP was looking at ways that might allow continued production from half the oil field while repairs are made
Trying to calm the markets, Bodman said there are adequate supplies of crude oil in inventory and available from other producers to make up for the losses from Alaska. Alaska's oil primarily goes to West Coast refineries.
“Substitutions for Alaska crude oil, we believe, are available,” Bodman told reporters.
Oil prices retreated slightly Tuesday after Bodman's upbeat assessment.
Even before the spill last March dumped 270,000 gallons of oil onto the tundra, BP's maintenance of its pipelines had come into question.
Company whistleblowers reportedly raised concerns about how the company dealt with pipe corrosion as early as 2004.
eventually leading to an inquiry into possible violations of the federal Clean Water Act by the Environmental Protection Agency's office in Seattle - an investigation that intensified after the March spill.
The EPA, following standard policy, declined on Monday to confirm or deny such an investigation.
In a letter in June to the Transportation Department agency that regulates pipeline safety, BP Alaska cited the grand jury probe as one reason it had not been able to comply with agency demands to conduct required corrosion tests on the western half of its feeder pipeline system.
A grand jury subpoena demanded the 12-foot section of pipe where the March spill occurred be cut away and provided to investigators. This could take six months, the company said, preventing the necessary corrosion tests.
But in a letter to PB Alaska last month, the department's Pipeline and Hazardous Materials Safety Administration demanded the company move more quickly and expressed concern about the condition of the pipes.
It noted that BP believed that the “enhanced corrosion” in a three-mile section of pipe, where the March spill occurred, was caused by the development of bacteria in the pipe as a result of too low a dose of corrosion inhibitors being used.
The agency said it also was concerned that months after the spill, some 17,000 barrels of oil had yet to be drained from that section of pipe.
“The stagnant environment ... in combination with other risk factors, including the presence of water in the pipeline, poses an ongoing leak threat,” the agency said in its July 20 letter to BP Alaska. If conditions are not corrected, the agency continued, there could be a risk of “serious harm to life, property or the environment....”
The agency could fine BP Alaska as much as $100,000 a day up to $1 million for each violation if it determines violations have occurred.
A little more than two weeks after the federal agency reiterated its demand that BP Alaska clean and inspect its pipeline system, the company discovered the corrosion-induced leak on the eastern leg of the pipeline system and ordered the production shutdown.
AP-ES-08-08-06 1756EDT
At the same time, members of Congress are pressing for hearings, possibly in September, into BP's maintenance of its pipeline system as the company prepares to complete the shutdown of its North Slope operation to make repairs - at a loss of 400,000 barrels of oil a day.
“The U.S. Congress has an obligation to hold hearings to determine what broke down here,” said Rep. John Dingell of Michigan, the ranking Democrat on the House Energy and Commerce Committee.
Meanwhile, the pipeline repairs - and loss of more than half of Alaska's crude oil - are likely to take months curtailing Alaskan production into next year, according to the Energy Department.
“It will take months to fix so we must deal with the issue at hand,” Energy Secretary Samuel Bodman said Tuesday.
“There seems to be a belief that a complete shutdown of the Purdhoe Bay system may not be necessary,” said Bodman after talking with BP executives. Bodman said BP was looking at ways that might allow continued production from half the oil field while repairs are made
Trying to calm the markets, Bodman said there are adequate supplies of crude oil in inventory and available from other producers to make up for the losses from Alaska. Alaska's oil primarily goes to West Coast refineries.
“Substitutions for Alaska crude oil, we believe, are available,” Bodman told reporters.
Oil prices retreated slightly Tuesday after Bodman's upbeat assessment.
Even before the spill last March dumped 270,000 gallons of oil onto the tundra, BP's maintenance of its pipelines had come into question.
Company whistleblowers reportedly raised concerns about how the company dealt with pipe corrosion as early as 2004.
eventually leading to an inquiry into possible violations of the federal Clean Water Act by the Environmental Protection Agency's office in Seattle - an investigation that intensified after the March spill.
The EPA, following standard policy, declined on Monday to confirm or deny such an investigation.
In a letter in June to the Transportation Department agency that regulates pipeline safety, BP Alaska cited the grand jury probe as one reason it had not been able to comply with agency demands to conduct required corrosion tests on the western half of its feeder pipeline system.
A grand jury subpoena demanded the 12-foot section of pipe where the March spill occurred be cut away and provided to investigators. This could take six months, the company said, preventing the necessary corrosion tests.
But in a letter to PB Alaska last month, the department's Pipeline and Hazardous Materials Safety Administration demanded the company move more quickly and expressed concern about the condition of the pipes.
It noted that BP believed that the “enhanced corrosion” in a three-mile section of pipe, where the March spill occurred, was caused by the development of bacteria in the pipe as a result of too low a dose of corrosion inhibitors being used.
The agency said it also was concerned that months after the spill, some 17,000 barrels of oil had yet to be drained from that section of pipe.
“The stagnant environment ... in combination with other risk factors, including the presence of water in the pipeline, poses an ongoing leak threat,” the agency said in its July 20 letter to BP Alaska. If conditions are not corrected, the agency continued, there could be a risk of “serious harm to life, property or the environment....”
The agency could fine BP Alaska as much as $100,000 a day up to $1 million for each violation if it determines violations have occurred.
A little more than two weeks after the federal agency reiterated its demand that BP Alaska clean and inspect its pipeline system, the company discovered the corrosion-induced leak on the eastern leg of the pipeline system and ordered the production shutdown.
AP-ES-08-08-06 1756EDT
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