Alaska Regulators OK'd BP Decision Not to Test Prudhoe Pipe in '02

HOUSTON Oct 23, 2006 (Dow Jones Newswires)

Alaskan environmental regulators allowed BP PLC (BP) to forgo testing of pipelines at its Prudhoe Bay oil field in 2002, four years before a line suffered a major spill.

In August 2002, the Alaskan Department of Environmental Conservation withdrew requirements that the London-based energy major perform "pigging" of pipeline operations in both the eastern and western halves of the company's production operations.

"Pigging" is a pipeline industry term that refers to the use of a cylindrical droid launched into the pipe to accomplish maintenance tasks ranging from sediment removal to inspection for leaks.

The regulatory agency agreed to remove the pigging requirement after reviewing BP's letters and meeting with representatives from the oil giant.

"We also agree that the following tasks can be eliminated: Pigging the EPA pipeline from FS-1 launcher to Skid 50; Pigging the WOA pipeline segments if necessary," the agency said in an August 14, 2002, letter to BP.

The agency's withdrawal of these regulations came in a letter issued five days after the company said it did not need to pig the line, as there was only "minimal" sediment buildup.

In early August 2006, BP shut down half of oil output from Prudhoe Bay, the largest producing field in the U.S., after discovering severe pipeline corrosion and a small leak. Not only did the move lead to a temporary spike in oil prices, it brought increased scrutiny upon BP's operations in Alaska and around the world.

A July 2002 document resolving a dispute between the Alaska Department of Environmental Conservation and BP required the company to improve pipeline leak detection and pay a fine of $150,000. In the consent decree, the agency called for BP to use "smart pigs" - which are loaded with sensors - to detect leaks in the line. The decree required BP to determine sediment levels in the line and to test a portion of the transit pipelines in the eastern and western parts of the oil field if necessary.

In August 2002, BP informed the agency that it wouldn't pig the line and would eliminate that task from the list.

"The lack of appreciable sediment buildup... has eliminated the immediate operational need to conduct pigging operations," the company said in a report to the agency.

The agency responded by saying that pigging the previously mandated section of the eastern pipeline was unnecessary and that the western pipeline also didn't need to be tested.

In the letter, BP didn't dispute the other conditions imposed by the agency to improve leak detection on the pipeline.

Despite the agency's monitoring, the pipeline had a major leak of more than 6,000 barrels in March 2006 due to corrosion.

BP earlier this month ramped up production on the eastern half of Prudhoe Bay, bringing total output to about 400,000 barrels a day.

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