BP spills 'may be linked to cost cutting'

A powerful US congressional committee said today it had evidence that deep cost cuts at UK supermajor BP may have been a major factor behind pipeline corrosion that caused the largest ever onshore oil spill in Alaska last year.

Over 200,000 gallons of crude oil leaked from a corroded oil transit pipeline at the 400,000 barrels per day Prudhoe Bay oil ield in March 2006, sparking a congressional probe into BP's corrosion prevention practices, as well as a federal criminal investigation.

Government-ordered inspections in August turned up further severe corrosion in another transit pipeline, forcing the partial closure of Prudhoe Bay, the largest oilfield in the US, for several months.

BP officials rejected accusations that its cost-cutting programme led to unsafe operations at congressional hearings last year and outgoing BP chief executive John Browne characteriszed the Alaska corrosion management program as "world class".

However, BP emails and other documents "suggest that budget pressures were severe enough that some BP field managers were considering... reducing corrosion inhibitor to save money," wrote Representative John Dingell, chairman of the House Energy and Commerce Committee, in a letter sent to BP today, a copy of which was obtained by Reuters.

BP officials were not immediately available to comment.

BP has faced severe criticism in the US since March 2005, when an explosion at its Texas City, Texas refinery killed 15 workers and injured scores more. The US Chemical Safety Board (CSB) said in its final report on the accident that BP cost cuts were a major contributing factor to an unsafe environment at the refinery.

Longtime BP critic Charles Hamel, who has in the past acted as a conduit for worker concerns over safety at Prudhoe Bay, wrote a letter in February to Dingell claiming he had evidence that BP employees substituted water for corrosion inhibitors to save money.

Hamel alleged that Richard Woollam, the manager of the corrosion prevention program at Prudhoe Bay until last September, deliberately used less corrosion inhibiting chemicals than needed to save money.

Woollam invoked his right against self incrimination and refused to answer questions about his activities in Alaska when he was subpoenaed to testify before the Energy and Commerce committee in September.

BP has sought to portray the Texas City accident and the corrosion problems in Alaska as isolated incidents rather than symptoms of a wider problem with the company's safety culture.

"BP turned over documents that probably should have been turned over much earlier," said a committee aide, adding that the documents suggest BP's Alaska operations were operating under a culture similar to the unsafe cost cutting culture criticised by the CSB at Texas City.

"BP is adamant that that doesn't apply to Alaska. I am not sure that is a fair statement."

A US Department of Transportation (DOT) investigation into the spills continues to focus on BP's maintenance practices, which the agency has criticised as being below industry standards, a charge rejected by BP.

BP is currently replacing all 16 miles (26 kilometres) of transit pipelines at Prudhoe Bay and said it is reviewing its corrosion management practices.

Several senior managers in Alaska have also been reassigned, including the head of the Alaska subsidiary BP Exploration and the Prudhoe Bay field manager.

BP owns 26% of Prudhoe Bay and is the operator of the field. US supermajors ConocoPhillips and ExxonMobil each have a 36% stake. Other companies hold the remaining 2% interest in the field.