Issue Briefing Paper: BP Safety Record – Prudhoe Bay, Alaska

Flathead Basin Commission

Kalispell, MT 59901

406.752.0081

fbc@mt.gov

www.flatheadbasincommission.org

Prudhoe Bay Incident

On March 2, 2006, the largest oil spill to occur on the tundra of Alaska’s North Slope deposited up to 267,000 gallons of thick crude oil over two acres in the sprawling Prudhoe Bay production facilities. The spill went undiscovered for five days before an oilfield worker detected the acrid scent of hydrocarbons while driving through the area.

The leak occurred in a section of pipe built in the late 1970's, in the earliest days of oil production at Prudhoe Bay. The larger pipeline, which carries North Slope oil across the state, was completed in 1977. The current spill was among the worst in the pipeline's history, and the first of such a magnitude likely to be blamed on the decay of the aging system.

The Alaska DOT, which regulates the pipelines, ordered BP to immediately drain 17,000 barrels of oil from the segment of corroded pipe and to fix the leak. Following the March spill, the Department of Transportation ordered BP to inspect the remaining transit lines to see if there were more signs of serious corrosion. Tests in June on one of those lines also revealed corrosion, prompting BP to close a two-mile stretch pending replacement of that line as well. To date, BP has been forced to replace 16 miles of pipeline at an expense of roughly $250 million.

The market impact of the pipeline shutdown, according to oil analysts, will not be significant and did not adversely affect domestic supply. Much more of an issue is the increased scrutiny being paid to BP by environmental groups and the federal government.

Several investigations have been launched into alleged cost cutting measures which may be directly responsible for the pipeline break at Prudhoe Bay. A U.S. Congressional committee on oversight and investigations said "a mountain of evidence" showed the company's cost-cutting on maintenance had led to a large oil spill in Alaska. The US government said it was "highly likely" to fine BP over the leaks. The committee was also told that the causes of the spillage - which happened at a time when BP was making huge profits - shared "striking similarities" with the problems that led to the 2005 explosion at a Houston refinery in which 15 people died. "My review of the mountain of circumstantial evidence can only lead me to the conclusion that severe pressure for cost-cutting did have an impact on maintenance of pipelines," said the Congressman Bart Stupak (R), chairman of the House Energy subcommittee on oversight and investigations.

The leak at the Prudhoe Bay field in March 2006 led to the spillage of at least 6,350 barrels, or nearly 270,000 gallons of oil. After finding out the leak was caused by corrosion in the pipelines BP was forced to suspend production until corrective actions could be taken.