Press Release

State Files Suit Related to Oil Spills

March 31, 2009

March 31, 2009, Anchorage Alaska - The Alaska Department of Law today filed a civil lawsuit against BP (Exploration) Alaska, Inc. (BPXA), stemming from the 2006 crude oil pipeline spills and production shutdowns at Prudhoe Bay.

In March and August of 2006, spills occurred from oil transit lines (OTLs) in the Prudhoe Bay Unit operated by BPXA. Both were the result of internal corrosion that had not been adequately treated by BPXA for years. The March spill estimated at 212,252 gallons was the largest in the history of Alaska North Slope oil and gas production. The August spill involved more than 900 gallons.

The spills and subsequent emergency pipeline replacement work at both Prudhoe Bay and the Milne Point Unit significantly reduced oil production for more than two years. As a result, the state lost revenue it would otherwise have received in 2006 through 2008 had BPXA used sound corrosion management practices.

In the lawsuit, the state is requesting penalties for violations of environmental laws and just compensation for state revenues lost as a result of BPXA's negligent corrosion prevention practices.

Previously, BPXA settled criminal violations associated with the March 2006 spill through a plea agreement with the U.S. Justice Department in which BPXA pleaded guilty to violating the federal Clean Water Act.

As part of the plea agreement, BPXA admitted that the 2006 spills were caused by internal corrosion that had been allowed to progress unchecked to the point of failure due to the negligent corrosion monitoring and control practices that it had employed for several years prior to the two spills. This negligence included:

• The failure to "adequately inspect and clean the OTLs," as the Western Operating Area OTL had not been either smart-pigged or maintenance-pigged for more than eight years prior to the spill, and the Eastern Operating Area OTL for more than 16 years prior to the spill;
• The failure to prevent sediment from building up in the OTLs, which in turn provided a favorable environment for corrosion-causing bacteria to flourish.

On April 18, 2007, Governor Sarah Palin signed Administrative Order 234 creating the Petroleum Systems Integrity Office to ensure Alaska's oil and gas infrastructure will get the maintenance and inspection it needs to operate safely for decades to come.

• BPXA Complaint - PDF (347KB)

Contact: Steve Mulder: (907) 269-5274

# # #

Department Media Contacts: Communications Director Patty Sullivan at patty.sullivan@alaska.gov or (907) 269-6368. Information Officer Sam Curtis at sam.curtis@alaska.gov or (907) 269-6269.