October 31, 2007
As part of the guilty plea BPXA has agreed to pay a $12 million criminal fine, $4 million in community service payments to the National Fish and Wildlife Foundation (NFWF) for the purpose of conducting research and activities in support of the arctic environment in the state of Alaska on the North Slope, and $4 million in criminal restitution to the state of Alaska, and serve three years of probation.
The Justice Department and State of Alaska have agreed not to bring further criminal charges against BPXA in connection with the March and August 2006 spills.
This investigation involved two different leaks from oil transit lines (OTLs) operated by BPXA. The leaks occurred in March and August of 2006, and were the result of BPXA's failure to heed many red flags and warning signs of imminent internal corrosion that a reasonable operator should have recognized. The first pipeline leak, discovered by a worker on March 2, 2006, resulted in more than 200,000 gallons of crude oil spreading over the tundra and reaching a nearby frozen lake, where oil spread out onto the ice along one shore. This spill was the largest spill to ever occur on the North Slope.
The second leak occurred in August of 2006, but was quickly discovered and contained after leaking approximately 1,000 gallons of oil. Nevertheless, the second leak led to the shut down of Prudhoe Bay oil production on the eastern side of the field. BPXA shut down production because it could not guarantee the condition of the line and whether it was fit for service.
The leak and the resulting 4,800 barrel spill impacted 1.9 acres and is the largest oil spill to ever occur at Prudhoe Bay. The plea agreement acknowledges that BPXA promptly and thoroughly cleaned up the discharged oil. No lasting harm to the surrounding environment is expected.
"This leak, and the spill that resulted from it, revealed a significant gap in our corrosion management program -- a gap that existed because our approach to assessing and managing corrosion risk in these lines was not robust or systematic enough," said BP America Chairman and President Bob Malone.
"We regret that our monitoring of these lines did not meet the expectations of the State of Alaska and the U.S. government," Malone said. "Since this incident we have worked with state and federal regulators to ensure the safe, reliable operation of critical Prudhoe Bay pipelines which deliver processed oil to the Trans Alaska Pipeline."
Following the March spill, BPXA said they worked with the U.S. Department of Transportation to make periodic maintenance and smart pigging part of BPXA's oil transit line corrosion inspection, monitoring and inhibition program.
BPXA said replacement of the 16-mile Prudhoe Bay oil transit line system will be completed in 2008. BPXA began construction of the $250 million project in early 2007.
During the investigation the United States obtained a section of pipe where the March 2006 leak occurred. Approximately six inches of sediment were found on the bottom of the thirty-four-inch-diameter pipe. When sediment builds up in a pipeline it forms an environment in which acid-producing bacteria can thrive undisturbed by the flow of oil and chemicals intended to protect the pipe from corrosion. The acid produced by these bacteria can cause corrosion, which causes pits or, if unchecked, holes in the wall of the pipe.
Knowing this the Justice Department said, BPXA should have cleaned the OTLs with a piece of equipment called a maintenance (or cleaning) pig and inspected the pipes for corrosion with a smart pig-- an inspection tool able to make a complete evaluation of a pipeline's integrity. A maintenance pig would have disturbed the bacteria and cleared out the stagnant water and sediment that harbor the acid-producing bacteria. A smart pig would have provided a clear picture of the corrosion activity that was occurring in both areas where leaks eventually occurred.
The case was prosecuted by Trial Attorneys J. Ronald Sutcliffe and Christopher J. Costantini of the Environmental Crimes Section of the Department of Justice and Assistant U.S. Attorney Andrea T. Steward and Special Assistant U.S. Attorney Daniel Cheyette of the U.S. Attorney's Office for the District of Alaska.
The case was investigated by the EPA's Criminal Investigation Division and the FBI with assistance from and the Department of Transportation's Office of Inspector General. Technical assistance was provided by the Pipeline and Hazardous Materials Safety Administration and the Alaska Department of Environmental Conservation.
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