House Energy and Commerce Committee Chairman Joe Barton (R-Tex.) questioned BP PLC’s commitment to safety, reliability, and responsible stewardship of US energy resources on Aug. 11.
In a letter to BP Chief Executive John Browne, Barton said representatives of the multinational oil company assured the committee that the condition of an Alaskan North Slope oil pipeline that leaked in March was an anomaly, and that the company’s corrosion control program was effectively monitoring and maintaining the pipeline infrastructure there.
“News that BP production of roughly 400,000 b/d of crude oil at Prudhoe Bay has been shut down due to excessive corrosion of its oil transit lines contradicts everything the committee has been told. The fact that BP’s consistent assurances were not well-grounded is troubling and requires further examination,” Barton continued.
The company’s Alaskan exploration subsidiary said on Aug. 8 that it was taking the system’s eastern operating area out of service because of internal corrosion problems. The leak in March occurred in the system’s western operating area.
Noting that he has called a hearing of the full committee on Sept. 7 to examine the situation at Prudhoe Bay, Barton said questions would include:
- Why BP apparently has not operated its US facilities up to US industrial standards.
- Why BP waited for the US Pipeline and Hazardous Materials Safety Administration to issue a corrective action order before taking action on the Prudhoe Bay pipeline that leaked in March.
- Whether there was a market strategy to BP’s decision to shut down part of the system on the North Slope, “particularly in light of the allegations of BP’s propane gas market manipulation practices.”
On June 28, the US Commodity Futures Trading Commission charged BP Products North America with cornering the domestic propane market and trying to drive up its price in February 2004. The subsidiary has denied the allegation.
Barton said the energy market disruptions resulting from BP Alaska’s decision to shut down part of the Prudhoe Bay system were inexcusable, “particularly in light of substantial evidence that BP’s chronic neglect directly contributed to the shutdown.” Barton wrote Brown: “At a time when supply and demand are already constrained due to geopolitical and global market pressures, and at a time of already record-high oil prices driving record-high profits for your company, this additional disruption jars an already constrained domestic and global market.”