Federal prosecutors seek to revoke BP's probation for 2006 spill

The Anchorage Daily NewsNovember 16, 2011 

BP, the biggest oil field operator on Alaska's North Slope, has failed to fix pervasive management and environmental safety problems and is a repeat environmental offender, federal prosecutors said in a new court filing this week.

The federal government is seeking to revoke BP's probation on a criminal misdemeanor conviction from 2007 that arose from a huge spill in 2006. A hearing on the probation issue is set to begin Nov. 29.

BP found itself back in court after a subsequent spill in November 2009 on a pipeline near BP's Lisburne Production Center.

Prosecutors say the 2009 pipeline rupture and oil spill amounts to a new crime that violates the terms of BP's 2007 probation. The 2009 spill was "completely predictable and absolutely preventable," prosecutors say.

But BP says what happened in 2009 was unprecedented during its time operating such lines on the North Slope and that its probation should end.

"The Lisburne spill was an unfortunate incident, but it was not a crime," BP said in its court filing.

The matter is before U.S. District Judge Ralph Beistline, who must decide whether BP violated its probation by breaking either state or federal environmental law.

"The 2009 spill vividly demonstrates that BP has not adequately addressed the management and environmental compliance problems that have plagued it for many years, and that continue to result in operational, process safety, and equipment failures," prosecutors say in the new filing. "BP's choices have been reckless, and further violations of state and federal law are the result."

Neither the state nor federal governments have brought new criminal charges against BP for the 2009 spill. That's not required for a probation violation; instead Beistline simply must be "reasonably satisfied" that the oil company broke the law, the federal prosecutors say.

If the judge finds a violation, he could extend the corporation's probation, or reopen the 2007 criminal case and resentence BP, said assistant U.S. Attorney Aunnie Steward. In that event, prosecutors say they will seek new fines and an additional period of probation, she said.

TROUBLES IN ALASKA

Prosecutors say BP's problems run deep.

"BP's history of environmental crimes in Alaska begins more than a decade ago," the new filing says.

In 2000, BP pleaded guilty to a felony for failing to immediately report illegal dumping of hazardous waste by a contractor at its Endicott oil field in Alaska's Beaufort Sea.

Six years later, in March 2006, BP was again under investigation after the biggest oil spill ever on the North Slope. Some 200,000 gallons leaked from a severely corroded Prudhoe Bay transit pipeline. BP pleaded guilty to a federal misdemeanor.

BP was put on three years of probation and had to pay $20 million in fines and penalties for the misdemeanor, plus $25 million to settle a civil lawsuit brought by the federal government. A separate state lawsuit over that spill is set for trial in the spring.

Meanwhile, outside of Alaska, BP remains under criminal investigation for the 2010 Deepwater Horizon explosion in the Gulf of Mexico that killed 11 people and led to a massive oil spill.

A RUPTURED PIPE

BP was still on probation when the Lisburne spill occurred in November 2009.

Excess pressure from expanding ice in a pipeline blew a 2-foot hole in the pipe. About 13,500 gallons of slushy oil spilled onto the tundra.

BP should have known there was a problem, prosecutors say. An alarm had signaled unusually low temperatures for six months before the spill. And in 2001, BP experienced a similar spill, involving a frozen line that ruptured. But BP failed to follow through on lessons learned from the 2001 spill and didn't put in place safety improvements at Lisburne, prosecutors said.

BP says the 18-inch pipeline was in good shape before the rupture and had worked fine for 24 years.

It was paired with a second, larger pipeline to deliver oil -- along with water and gas -- from wells to a processing center, where the three substances were separated. Oil, water and gas could flow down either or both of the lines.

BP says it's not certain why oil stopped flowing sometime in May or June 2009 through the 18-inch pipeline. But some residual oil, water and gas remained. As the water froze and the oil turned semi-solid, gas trapped in the line increased in pressure.

Because oil was still moving through the bigger pipeline, BP says it didn't notice the no-flow situation until Nov. 14, 2009.

Operators were evaluating what to do when the pipe burst.

That's not negligent, BP says in the filing by attorney Jeff Feldman. Sometimes, BP says, the best course of action with a frozen pipe is simply to wait until it thaws naturally in the Arctic summer.

No one figured that a pipeline "that had performed flawlessly for decades was at risk of stoppage, freezing, and ultimately rupturing," BP says.

THE CASE

Prosecutors say their main witness will be Matt Goers, the resident agent in charge for the Environmental Protection Agency's criminal division. He also was the lead agent on the 2007 case.

The government says the judge also will hear from a former BP employee, Phil Dziubinski, who served as BP's compliance and ethics officer after the 2006 spill until 2010.

Dziubinski has raised serious concerns about BP's management culture and operations, prosecutors said, repeating in their filing what he wrote in an April 2010 letter to prosecutors, BP's probation officer and others.

Budget constraints shortchanged maintenance and led to problems at the Lisburne Production Center, Dziubinski told the feds.

Dziubinski compared the cost challenges at Lisburne to those at BP's Texas City refinery, where BP was accused of neglecting worker safety and environmental safeguards to save money before a 2005 explosion that killed 15 people.

The 2009 spill is evidence "BP management lacks the capability to manage the integrity of the North Slope production facilities," Dziubinski concluded.

BP says that characterization is wrong.

"We don't think this event indicates mismanagement at all," Steve Rinehart, BP spokesman in Alaska, said in an interview. "We think that we were operating this facility properly and the pipeline itself was in demonstrated, good mechanical condition."

BP maintains high standards in Alaska, he said.

After the 2006 spill, BP spent more than $500 million upgrading and replacing pipelines and putting in place a new leak detection system.

The spill was cleaned up and the area resodded with native plants, BP says.

The probation hearing is expected to take at least four days and involve a number of BP employees testifying for the company.

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