BP faces revoked criminal probation in Alaska

Reuters News
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Posted: Nov 29, 2011 6:53 PM
BP faces revoked criminal probation in Alaska

By Yereth Rosen

ANCHORAGE, Alaska (Reuters) - Federal prosecutors on Tuesday said BP Plc broke pledges to improve operations after causing the worst pipeline spill on Alaska's North Slope five years ago and should be subject to additional punishment for its negligence.

Prosecutors are seeking to revoke the criminal probation imposed on BP in a 2007 settlement agreement, claiming the oil company violated probationary terms by continuing its pattern of sloppy management, ultimately resulting in another pipeline spill in 2009.

The prosecutors spoke at a court hearing in Anchorage, which is expected to last at least the remainder of this week.

BP has been trying to rebuild its image after taking the bulk of the blame for the largest U.S. offshore oil spill last year in the Gulf of Mexico.

In 2007, BP pleaded guilty to a Clean Water Act charge stemming from its 2006 spill of 212,000 gallons of crude oil from a corroded pipeline at Prudhoe Bay in Alaska, the nation's largest oil field.

The spill was the biggest on record at the North Slope oil fields. To settle the case, BP paid $20 million in fines and restitution and pledged to undertake a series of operational improvements over its three-year probation period.

But a late-November 2009 pipeline rupture at the BP-operated Lisburne field, next to Prudhoe Bay, showed that the criminal punishment imposed in 2007 was not harsh enough, prosecutors believe, according to a pre-hearing brief, filed earlier this month.

That two-foot (0.6m) -long rupture resulted from high pressures that built up when BP allowed the contents of the pipeline to freeze, ignoring warnings evident for months and the recommendation of its own experts, prosecutors have alleged.

Several ice plugs, including one estimated to be 1,500 feet long, accumulated in the line, according to Alaska environmental regulators.

"This rupture was the result of a predictable and preventable freezing of produced water within the pipeline that caused the pipe to over-pressurize and burst. Eerily similar to the 2006 spill, BP ignored alarms that warned of the pipe's eventual rupture and leak," government prosecutors said in a brief filed on November 14.

BP argues that, at least since its 2006 Prudhoe Bay woes, it has exercised reasonable care on the North Slope fields it operates, and that the Lisburne pipeline rupture was an unexpected and "unprecedented" event.

The company said in a pre-hearing brief that the spill was unfortunate, but not a crime.

"This was an accident, it was not foreseen," said BP spokesman Steve Rinehart, during a break in the court hearing on Tuesday. "The environmental damage was minor."

The Lisburne pipeline rupture poured 45,828 gallons of an oil-produced water mix onto the tundra.

Prosecutors and BP are at odds over the amount of damage and environmental threat posed by the spill.

Prosecutors argue that the spill of that material, which included about 13,500 gallons of crude oil, amounted to a new Clean Water Act violation because it fell on permafrost, which is classified as wetlands, holding groundwater that flows into rivers, lakes and the ocean.

BP argues that the oil-produced water mix did not reach any federally controlled waters, so there was no such legal violation.

The revocation-of-probation hearing -- essentially a miniature trial -- is expected to last at least three more days. Both sides plan to call expert witnesses. Among those testifying for the government will be a former BP environmental-compliance officer who is expected to speak about BP's operational shortcomings. BP witnesses will include a former program manager for the U.S. Army Corps of Engineers, the agency that oversees federal wetlands.

U.S. District Court Judge Ralph Beistline, who approved the 2007 criminal settlement, will preside over the hearing and decide whether BP violated its probation and whether sentencing terms should be reopened.

"He can go back and start over on that case," said Assistant U.S. Attorney Andrea Steward, lead prosecutor in the probation-revocation effort. That could mean additional time in criminal probation as well as additional fines.

How long it will take for Beistline to render a decision is unknown, Steward said.

(Editing by Bill Rigby; editing by Sofina Mirza-Reid)