BP Was Told of Pipeline Worries in '04

Caribou lingered near oil pipelines at Prudhoe Bay, Alaska, last week, before production was cut because of corrosion.
Caribou lingered near oil pipelines at Prudhoe Bay, Alaska, last week, before production was cut because of corrosion. (By Al Grillo -- Associated Press)

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By Mathew Carr
Bloomberg News
Thursday, August 10, 2006

BP PLC was told by employees and contractors in a February 2004 survey that its Prudhoe Bay pipeline network probably was not being adequately monitored for corrosion, according to a company report.

"If we find pipe that we know is rotten, they have to replace it," an unidentified employee was quoted as saying in the report, posted on BP's Web site. "My concern, however, is that they are not taking a look at every piece of pipe that they need to be."

Production from Prudhoe Bay, Alaska, the largest oilfield in the United States, was shut down Sunday after the company found severe corrosion and a leak in the pipeline. Prudhoe Bay produces 400,000 barrels a day, 8 percent of U.S. output.

BP America President Robert A. Malone said in a television appearance yesterday that the company may be able to keep half the oil field pumping. The corrosion appears to be less severe on pipes on the western side of the field and its engineers are assessing whether those lines can be kept in service. The eastern half has been shut down, the company said.

The Alaska unit used the 2004 survey, prepared by research company McDowell Group Inc., "to help formulate plans for future activities," said Toby Odone, a London-based spokesman for BP.

Cost cuts created "anxiety in the workforce, and that impacts safety," a contractor and supplier said in the report. "Contractors, suppliers and the conservation community were concerned about BP's purported drive to support the highest standards, yet push for reduced costs in its operations."

The company "has been cutting corners" since about 1999, said Charles Hamel, a former oil broker who lobbies government regulators on behalf of Alaskan oil workers. BP "shareholders were not well served by" the company's cost-cutting, he said in an interview this week.

BP plans to spend $71 million this year in Alaska on corrosion monitoring, prevention and repair, Odone said. That's 15 percent more than last year, he said.

Owners of the Prudhoe Bay field include Exxon Mobil Corp., ConocoPhillips and Chevron Corp.

© 2006 The Washington Post Company

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