(Updates with government witness’s testimony starting in 12th paragraph.)
Nov. 29 (Bloomberg) -- BP Plc, still facing fallout from the 2010 explosion of its Macondo well in the Gulf of Mexico, is fighting a U.S. bid to revoke its probation over a five-year-old spill in Alaska following a more recent pipeline rupture.
BP pleaded guilty in 2007 to violating the Clean Water Act by spilling 200,000 gallons of oil from its Prudhoe Bay field into water on Alaska’s North Slope in 2006. It paid a $12 million fine and $8 million for restitution and community service and was put on three years’ probation.
The U.S. government began arguing today in federal court in Anchorage that the U.K.-based company violated its probation by allowing a pipeline rupture two years ago in the same area.
Authorities last year filed a petition to revoke BP’s probation 12 days before it was to expire, claiming the company failed to take precautions and implement safeguards. Prosecutors may seek more money from the company if the judge agrees the terms of the probation were violated.
“BP’s 2006 spill was the result of a lack of maintenance and a failure to heed warning alarms indicating that the pipeline was leaking oil,” U.S lawyers said in a Nov. 14 filing. “The 2009 spill vividly demonstrates that BP has not adequately addressed the management and environmental compliance problems that have plagued it for many years.”
The spill “was an unfortunate incident, but it was not a crime,” the company said in court papers.
“It was an accident,” Steve Rinehart, a BP spokesman, said in a phone interview. “No one was hurt, and there was minimal environmental impact.”
BP didn’t violate any conditions of its probation, the company said in court filings. BP wasn’t negligent and didn’t discharge oil in the waters of the U.S., the company said.
BP spilled about 13,500 gallons of oil near Prudhoe Bay in November 2009 when a section of the company’s pipeline at its Lisburne Processing Center ruptured, “creating a two-foot hole in the pipe that allowed the contents to spill onto the tundra and surrounding wetlands,” the U.S. said.
Lisburne, a separate field, is part of BP’s greater Prudhoe Bay operation.
’Predictable and Preventable’
“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,” the government said. “Eerily similar to the 2006 spill, BP ignored alarms that warned of the pipe’s eventual rupture and leak.”
BP failed to notice that alarms connected to temperature sensors on the line were “going off” for several months prior to the rupture, Matt Goers, a government witness, testified at the hearing today.
Goers, a criminal investigation agent for the U.S. Environmental Protection Agency, was the first witness at today’s hearing. Neither side made an opening statement.
“A lack of flow” in the line began by May 2009, Goers said. This allowed the line to freeze and ultimately caused “a dynamic explosion,” Goers said.
The temperature monitors and alarm in the control room at the site went off 10 times between June 5, 2009, and November of that year, Goers said. This indicated a low temperature, a risk for freezing, and should have alerted BP employees, he said. “No action was taken.”
Goers said that during his investigation of the spill he interviewed Gregg Alexander, a BP executive, who told him he would have expected board operators who received low temperature readings to “troubleshoot the alarm cause.”
BP’s own safety procedures, laid out in a document based on lessons learned from a 2001 spill, weren’t implemented, Goers testified.
Trying to revoke probation is “very unusual” and may have been spurred by the 2010 spill in the Gulf of Mexico, said Thomas O. McGarity, an environmental-law professor at the University of Texas in Austin.
The blowout of BP’s Macondo well and the explosion that followed killed 11 workers and set off the worst offshore oil spill in U.S. history.
“It looks like they decided to get really serious,” McGarity said of the prosecutors. If probation is revoked, BP probably will face additional fines, he said.
After two spills in 2006, BP “devoted extensive resources to improving the reliability and quality of the Prudhoe Bay oil transit line system,” it said in a Nov. 14 filing.
This included enhancing the pipeline integrity management systems, upgrading and replacing pipelines and installing a new leak-detection system, it said.
The 2007 criminal plea to one misdemeanor violation of the Clean Water Act followed two Prudhoe Bay spills in 2006. One was in March, the other in August.
Prosecutors claimed that sludge built up in a corroded pipeline involved in the March spill, creating an environment for bacteria to grow and eat an almond-size hole in the line.
The company should have run devices called “pigs” through the pipeline to inspect and clean out sludge, Nelson Cohen, then U.S. attorney for Alaska, said at November 2007 hearing on BP’s criminal plea. The company hadn’t “pigged” the line in eight years before the first spill, he said.
The second spill prompted BP to shut production temporarily at half of the Prudhoe Bay oil field. The plea covered the March 2006 oil spill, Cohen said at the time.
The U.S. didn’t prosecute BP for the later, smaller spill because the company acted promptly to contain it, Cohen said.
Prosecutors said they will call a former BP compliance and ethics officer in Alaska as a witness. The employee wrote to the government alleging that “budget constraints and lack of maintenance resources” had become a problem at the Lisburne facility, prosecutors said.
The 2009 rupture wasn’t predictable, BP argued in court papers. The rupture occurred in an 18-inch common line in the Lisburne field and resulted in an unpermitted discharge of oil onto state land, BP said in its Nov. 14 filing.
This didn’t violate the federal Clean Water Act because none of the discharge polluted waters of the U.S., BP said. Alaska state law violations require a finding of criminal negligence and the company wasn’t negligent at all, much less criminally so, BP said.
The spill was “an unprecedented event,” the company said.
“Contrary to the government’s claims, the conditions that led to this spill had never previously been encountered on the North Slope,” BP said. The pipeline that ruptured “had performed flawlessly for decades,” it said.
The spill didn’t go far, barred by a roadway and by the contents of the line, which “were mostly frozen or congealed before the pipeline broke,” BP said.
An agent from EPA described the discharge as “like a very stiff Slurpee, or like a very stiff snow cone if you will,” BP said, referring to a statement at a December 2009 press briefing. “This stuff leaked down on the ground and it’s just sitting there,” the agent, Matt Carr, also said, according to BP.
The case is U.S. v. BP Exploration (Alaska) Inc., 3:07- cr-00125, U.S. District Court, District of Alaska (Anchorage).
--With assistance from Laurel Brubaker Calkins in Houston. Editors: Charles Carter, Fred Strasser
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