Lawmakers Find Cost-Cutting Led to BP Spill

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Lawmakers Find Cost-Cutting Led to BP Spill

WASHINGTON -- Congressional investigators have turned up a "mountain" of evidence showing that severe cost-cutting at BP Plc's Prudhoe Bay oil field in Alaska led to the worst oil spill on the North Slope last March, the chairman of the subcommittee investigating the spill said on Wednesday, Reuters reported.

"My review of the mountain of circumstantial evidence can only lead me to the conclusion that severe pressure for cost-cutting did have an impact on maintenance of pipelines," said Rep. Bart Stupak, a Michigan Democrat and chairman of the House Energy Committee's subcommittee on oversight and investigations.

Stupak's panel has been investigating pipeline corrosion at BP's Prudhoe Bay field that led to a spill of at least 200,000 gallons of crude oil onto the Arctic tundra and eventually spurred the partial shutdown of the largest U.S. oil field, the report said.

He and other committee members have focused their investigation on cost-cutting at Prudhoe Bay, arguing that the cuts were similar to those that contributed to the unsafe environment at BP's Texas City, Texas, refinery where a 2005 explosion killed 15 workers and injured at least 170, according to Reuters.

Carolyn Merritt, chairman and chief executive of the U.S. Chemical Safety Board, testified "there are striking similarities" between the two incidents. "Most, if not all, of the seven root causes that BP consultants identified for the Prudhoe Bay incidents have strong echoes in Texas City," Merritt said in testimony.

In written testimony, BP America CEO Bob Malone said cost-cutting was not the problem, but that BP was working to overhaul its operations on the recommendation of independent consultants who have said that Texas City and Alaska both showed BP managers had blurred responsibilities that led to poor assessments of risks.

BP "must change the way we identify, assess, understand and communicate risk... (and) change the way we integrate what we have learned into our operations and budget decisions," Malone stated.

Government investigators have criticized BP for failing to use devices called "pigs" to clean and inspect the inside of its oil transit pipelines at Prudhoe Bay. Corrosion-monitoring efforts like smart-pigging were "reduced or put on hold because of budgetary pressures," even as BP reaped more than $106 billion in after-tax profits between 1999 and 2006, Stupak said.

In one email from October 2001 cited by Stupak, an unnamed BP employee writes that "we are under huge budgetary pressure for the last quarter of the year and therefore we have to take some rather disagreeable measures," which included shutting down some corrosion-reduction systems until year-end.

As a result of these findings, the U.S. government's pipeline regulator is "highly likely" to fine BP Plc for leaky pipelines at its Prudhoe Bay field, Reuters reported, citing an official with the U.S. Department of Transportation.

"It's highly likely," said Stacy Gerard, acting assistant administrator of the Transportation Department's Pipeline and Hazardous Materials Safety Administration. The fine would be announced in coming months and be for a "small number of probable violations," which carry the maximum fine of $100,000 per day per violation, Gerard told reporters.