Anchorage Daily News
April 7, 2006

Congressmen, EPA probe Prudhoe spill
QUESTIONS: Legislators want to know if trans-Alaska pipeline could have similar corrosion.
The Associated Press

Last month's Prudhoe Bay oil spill, the largest ever on the North Slope, is drawing attention from a growing stable of investigators.

U.S. Environmental Protection Agency investigators who are conducting a criminal probe into a
Beaufort Sea drilling spill in 2003 have reportedly added the Prudhoe spill to their inquiry list.

Last week, two congressmen started their own investigation into the spill, and they are questioning whether the 800-mile trans-Alaska pipeline is susceptible to the same type of corrosion that ate a hole in a major Prudhoe feeder pipeline, allowing the oil to spill.

Democratic Reps. John Dingell of
Michigan and George Miller of California are dispatching to Alaska next week Christopher Knauer, the minority investigator of the U.S. House Committee on Energy and Commerce.

They asked the head of Alyeska Pipeline Service Co., the Anchorage-based oil company consortium that runs the trans-Alaska pipeline, whether the chemical additives suspected to have caused the corrosion in the Prudhoe feeder line could have reached the main pipeline.

The spill was discovered March 2 in a pipeline connecting two processing plants in the
Prudhoe Bay oil field. As much as 270,000 gallons of crude spilled onto about two acres of tundra over a period of five days or more.

Last week, Dingell and Miller sent Steve Marshall, president of BP subsidiary BP Exploration (
Alaska) Inc., a list of questions on the leak's cause and corrosion testing the company had conducted on its pipes. BP runs Prudhoe on behalf of itself and other owners.

Marshall sent the congressmen an 18-page response Monday. In it, Marshall writes the investigation is not complete, but "recent and aggressive internal corrosion is the likely cause of the leak."

State environmental regulators and Marshall say a possible contributor to the corrosion was an emulsion-breaking additive in the line.

The additive is used to reduce water and silt in the oil.

In their query to Alyeska president Kevin Hostler, Dingell and Miller asked whether the chemical additives used by BP have hurt the trans-Alaska pipeline, which carries
North Slope oil south to the tanker port at Valdez.

"Assuming the theory that the rapid onset of corrosion was caused by the emulsion-breaking additive proves true, it would suggest that (the trans-Alaska pipeline) itself may be vulnerable to the same corrosion caused by the additive," the letter reads.

Dingell and Miller also asked Alyeska whether the pipeline company uses the same additives as BP. The congressmen further asked about Alyeska's methods and frequency of testing for corrosion.

Alyeska spokesman Mike Heatwole said company managers are preparing to meet with the committee investigator next week.

Dingell and Miller's inquiry is one of a growing number of investigations into the spill.

State environmental regulators said this week that
fines as high as $2.1 million could result from their investigation, which is being conducted jointly with BP.

Additionally, the EPA has launched its own investigation into the spill, according to The Wall Street Journal. A Washington-based spokesman for the EPA, Dale Kemery, would neither confirm nor deny any probe, citing agency policy.

Glen Plumlee, an
Anchorage resident and strategic planning coordinator for Alyeska, said he has spoken with federal criminal investigators multiple times in recent months about corrosion spending and other matters. Plumlee said he also has filed a Labor Department complaint accusing Alyeska executives of retaliating against him, after he disclosed he talked with investigators, by reneging on the promise of a consulting job after he retires this Sunday.

The congressional committee does not have the power to prosecute. If the investigator finds evidence of criminal wrongdoing, Dingell and Miller plan to turn over that evidence to the Justice Department, said spokeswoman Jodi Seth.

In his response to the congressmen, BP's
Marshall said the leaking line will not be brought back into service until its integrity is confirmed.

Ultrasonic tests showed increasing corrosion in the pipeline last fall, but the amount was manageable,
Marshall said. Additional inspections were added as a result, he said.

The leak was at a point where the pipeline was buried for a caribou crossing, and it was not accessible to direct visual inspection. Ultrasonic testing of that area was not done,
Marshall wrote.





Wall Street Journal
April 6, 2006 (p. A3)

BP's Pipeline Problems Spur U.S. Criminal Probe
Big Alaska Oil Spill Gives Company Fresh Black Eye After '05 Texas Explosion

U.S. environmental regulators are conducting a criminal investigation into BP PLC's management of pipelines in Alaska's North Slope, according to people familiar with the matter, adding to mounting regulatory scrutiny of the British energy titan's U.S. operations.

These people said the investigation, which has been under way for several months by officials at the Environmental Protection Agency, was expanded to include an early March spill of an estimated 134,000 to 267,000 gallons of crude from a BP-operated pipeline at
Prudhoe Bay. Alaska state conservation officials say the pipeline ruptured from internal corrosion, causing what is considered the largest oil spill ever in the energy-rich North Slope.

One person familiar with the matter said the federal investigators are looking at corrosion issues on the ruptured line, as well as others in the area, to determine if BP has committed any violations of the federal Clean Water Act. The act carries criminal and civil penalties for violations, such as allowing oil to spill into a federal waterway.

A BP spokesman, Daren Beaudo, said that EPA investigators were on site during the first several days of the spill and that BP hadn't heard from the agency since. "If they do contact us again, we will cooperate fully with their requests," he said in a written response to questions.

The EPA probe is just the latest embarrassment for BP -- the world's second-largest publicly traded oil company, after Exxon Mobil Corp. -- and Chief Executive John Browne, who has aggressively promoted the company as environmentally friendly and socially responsible.

The North Slope allegations come as U.S. investigators continue to pore over details of an explosion last year at the company's Texas City plant, which killed 15 and triggered a $21.3 million fine from workplace-safety regulators. The Labor Department referred the case to the Justice Department for possible criminal charges. Current and former plant workers accused BP of skimping on staff and maintenance; BP has said its spending decisions have had no effect on safety.

The allegations also come amid record profits for BP from rising crude-oil and gasoline prices, as well as amid rising political scrutiny. BP posted net profit of $22.63 billion last year.

Also yesterday,
Alaska's Department of Environmental Conservation said it will seek fines that could amount to between $900,000 and $2 million against BP as restitution for much of the spilled oil. BP's Mr. Beaudo told Dow Jones Newswires that BP expected the action.

North Slope spill covered a two-acre area of tundra and ice, as well as part of a lake. It prompted BP to curtail production by 95,000 barrels of oil a day, or about 10% of the normal amount that flows down the Trans-Alaska Pipeline to tanker ships in the port of Valdez. Crews are still attempting to clean up the crude. State officials say the line is expected to resume full production in about a week.

The investigation is being conducted by the EPA's criminal-investigation division. If investigators find any violations of the Clean Water Act, they will likely discuss the case with the
U.S. attorney's office, which could forward the matter to a federal grand jury for possible prosecution, said a person familiar with the matter.

Charles Hamel, who for years has served as a conduit for safety-related complaints by oil-industry workers, said he alerted the EPA last year to the complaints from several past and current employees that BP has allegedly ignored their concerns regarding corrosion since at least 1999.

The 75-year-old Mr. Hamel, who lives in
Alexandria, Va., said he went to EPA investigators for help after BP officials declined to act on warnings from some employees that cost-cutting had significantly reduced the company's program to monitor and repair corrosion at the network of aging pipes at Prudhoe Bay.

Mr. Beaudo, the BP spokesman, said the company has devoted more resources to its anticorrosion program, with spending rising to $71 million for inspection and chemical treatment this year, up from $58 million last year and $50 million in 2004.

--Chip Cummins contributed to this article.