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Wednesday, 07 January, 2009, 18:50 GMT | more >>

Cost cuts get blame for Prudhoe spill



By Upstream staff 

Congressional investigators have turned up a "mountain" of evidence that severe cost cutting at BP's Prudhoe Bay oilfield led to last March's oil spill on the North Slope, Bart Stupak, the chairman of the subcommittee investigating the spill said today.

"My review of the mountain of circumstantial evidence can only lead me to the conclusion that severe pressure for cost cutting did have an impact on maintenance of pipelines," Reuters quoted Stupak, a Democrat representative for Michigan and chairman of the House Energy Committee's subcommittee on oversight and investigations as saying.

Stupak's panel is investigating pipeline corrosion at BP's Prudhoe Bay field that led to a spill of at least 200,000 gallons of crude oil onto the Arctic tundra and eventually spurred the partial shutdown of the field, the US' largest.

Stupak and other committee members have focused their investigation on cost-cutting at Prudhoe Bay, arguing the cuts were similar to those that contributed to the unsafe environment at BP's Texas City, Texas, refinery where a 2005 explosion killed 15 workers and injured at least 170.

Carolyn Merritt, chairman and chief executive of the US Chemical Safety Board, testified "there are striking similarities" between the two incidents".

"Most if not all of the seven root causes that BP consultants identified for the Prudhoe Bay incidents have strong echoes in Texas City," Merritt said in testimony, a Reuters report said.

In written testimony, BP America chief executive Bob Malone said that cost cutting was not the problem, but that BP was working to overhaul its operations on the recommendation of independent consultants who have said that Texas City and Alaska both showed BP managers had blurred responsibilities that led to poor assessments of risks.

BP "must change the way we identify, assess, understand and communicate risk... (and) change the way we integrate what we have learned into our operations and budget decisions", Malone stated.

Government investigators have criticised BP for failing to use pigs to clean and inspect the inside of its oil transit pipelines at Prudhoe Bay.

Corrosion-monitoring efforts like smart-pigging were "reduced or put on hold because of budgetary pressures", even as BP reaped more than $106 billion in after-tax profits between 1999 and 2006, Stupak said.

In one email from October 2001 cited by Stupak, an unnamed BP employee writes that "we are under huge budgetary pressure for the last quarter of the year and therefore we have to take some rather disagreeable measures", which included shutting down some corrosion-reduction systems until the end of the year.

Stupak said BP has not been forthcoming in producing documents for the committee. BP has provided several thousand documents, but Stupak said BP "failed to disclose this information" until recently even though the company had them before the committee's last BP hearing on 6 September last year.

BP gave the committee staff over 800 pages of documents late last night, Reuters quoted Stupak as saying.

Wednesday, 16 May, 2007, 14:22 GMT  | last updated: Wednesday, 16 May, 2007, 17:18 GMT

Probe leader: Bart Stupak
 

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