Alaska to review Prudhoe Bay field liabilities

Aug. 28, 2006
Alaska Atty. Gen. David Marquez said a taskforce is reviewing the state’s legal rights regarding the partial shutdown on Prudhoe Bay oil field and the extent BP Exploration (Alaska) Inc. might be held responsible for losses incurred by the state.

Alaska Atty. Gen. David Marquez said a taskforce is reviewing the state’s legal rights regarding the partial shutdown on Prudhoe Bay oil field and the extent BP Exploration (Alaska) Inc. might be held responsible for losses incurred by the state.

BP plans to replace an estimated 16 miles of corroded pipeline along the 22-mile oil transit line following a small oil spill on the Alaska North Slope that was found in early August (OGJ, Aug. 14, 2006, p. 26).

Last week, BP raised Prudhoe Bay field production to 220,000 b/d, slightly more than half of the normal level. The field’s eastern side remains almost completely shut in except for Point McIntyre, which is producing 18,000 b/d of oil. The field’s western side continues production.

“After the investigation is complete, appropriate legal action will be taken to protect Alaska’s interests,” Marquez said.

BP has denied suggestions of wrongdoing on its part, saying it cannot eliminate the risk of pipeline corrosion and that it is in the process of reanalyzing its ANS corrosion management program. Meanwhile, the major continues its inspection program and has increased its aerial and ground infrared monitoring efforts.

On Aug. 9, Alaska Gov. Frank H. Murkowski created a cabinet-level team, headed by Department of Natural Resources Commissioner Mike Menge, to ensure that the environment remains protected and that oil companies restore production as soon as possible.

Marquez said potential legal options could include:

  • Potential criminal liability for criminally negligent conduct resulting in an oil spill.
  • Civil penalties for the full amount of actual damages for discharging petroleum on state land. These damages would include direct and indirect costs for cleanup efforts, environmental restoration, and incidental administrative costs.
  • Consequential liability to the state resulting from lost revenues.

Alaska state authorities served subpoenas to BP and Prudhoe Bay field partners ConocoPhillips and ExxonMobil Corp. The subpoenas instruct the oil companies to preserve all documents related to the field’s partial shutdown and pipeline corrosion.

BP statement

BP Exploration (Alaska) Pres. Steve Marshall appeared Aug. 18 before the Joint Alaska Senate and House Resources Committee to discuss the oil transit pipeline corrosion, noting the transit line operated for nearly 29 years without a spill.

“Given our decades of past operating experience, we did not expect to see the degree of corrosion we found in the eastern transit line,” Marshall said. “We are still seeking to understand exactly what caused the pitting of the line, but we won’t know for sure until we can conduct laboratory tests.”

More than 340 engineers and inspection experts are working on the full production resumption project, Marshall said, declining to speculate on when full production from Prudhoe Bay field might be resumed.

Corrosion is more of a threat in some areas of operations than in others because of the composition of the liquids in the lines, he said.

“Corrosion can be caused by a number of conditions or circumstances, including the presence of carbon dioxide, water, solids, and microbes as well as the geometry of the lines, whether there are low spots, and fluid velocity,” Marshall said. “It is only through laboratory testing that we will be able to confirm the corrosion mechanism.”

Previously, BP spokesperson Neil Chapman told reporters that preliminary reports indicate the corrosion was caused by microbacteria buried under sludge in the transit line. Chemicals used to protect against corrosion apparently were unable to kill bacteria under the sludge, Chapman said.