BP Faces Federal, State Investigations into Alaska Spills

Prudhoe Bay, Alaska
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SAN FRANCISCO (Dow Jones), Dec. 23, 2009

Federal and Alaska investigators are examining BP after two recent oil spills, a new black eye for a company that pleaded guilty to a U.S. government criminal charge two years ago for its management of oil fields in the state.

The U.S. Environmental Protection Agency is investigating a large oil spill that occurred Nov. 29 at a BP pipeline on Alaska's North Slope, and the agency is working with the FBI and state agencies to determine the circumstances that led to the spill, said EPA spokesman Mark MacIntyre. The EPA's investigation is both civil and criminal in nature, MacIntyre said.

"There's a broad umbrella of investigation going on," MacIntyre told Dow Jones Tuesday.

The investigation follows a spill last month that sent more than 1,000 barrels of crude oil and water pouring over 8,400 square feet (780 square meters) of snow-covered tundra. The spill, most of which has been cleaned up, occurred after a BP pipeline burst under pressure from ice that had built up inside, according to state authorities.

The state Department of Environmental Conservation also has launched a civil investigation into the November spill to figure out what happened and whether BP violated state laws or regulations.

The Anchorage office of the Federal Bureau of Investigation didn't immediately return a phone call seeking comment.

On Monday, BP's facilities suffered another spill after a six-inch pipeline attached to an oil well broke off, releasing a mixture of crude oil, water and natural gas that covered several thousand square feet. The cause and extent of the most recent spill are still being investigated, said state Department of Environmental Conservation spokeswoman Weld Royal.

BP spokesman Steve Rinehart said the company wouldn't comment on government actions or legal issues, but that its practice is "to work cooperatively with regulatory agencies."

"BP is doing its own, thorough investigation," Rinehart said.

The London-based oil giant has been put under the microscope by federal and state authorities since the company pleaded guilty in 2007 to a misdemeanor violation of the Clean Water Act. BP paid $20 million and was placed on three years probation in connection with the decision, which stemmed from two 2006 oil spills of more than 200,000 gallons of oil caused by corroded pipes. An August 2006 spill led to a partial shutdown of the Prudhoe Bay oil field, the largest in the U.S., which BP operates for itself and other producers. The shutdown led to a brief spike in U.S. oil futures prices.

Last March, the Justice Department filed a civil lawsuit against BP for breaking federal laws during the 2006 oil spills. The complaint accuses BP of failing "to prepare and implement spill prevention" and take other measures mandated by the Clean Water Act.

In the lawsuit, filed in U.S. District Court in Anchorage, the government asked the court to order BP to pay the maximum amount allowed for civil penalties, and to order BP to take action to prevent future spills.

The State of Alaska also sued BP over the 2006 oil spills, asking for penalty fees from BP for violating environmental laws, and to be compensated for lost state revenues tied to an estimated 35 million barrels of lost oil production. The state didn't include a dollar figure in its request.

To date, BP hasn't violated the terms of its probation, said Mary Frances Barnes, BP's federal probation officer. She added that she is "waiting to see what the investigations reveal."

Copyright (c) 2009 Dow Jones & Company, Inc.


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