NEWS BULLETIN

June 15, 2010 --- Vol. 16, No. 53June 2010

Judge tosses one claim but allows others in state’s lawsuit against BP

An Alaska judge has thrown out one piece of the state’s lawsuit against BP stemming from the Prudhoe Bay oil pipeline leaks of 2006.

However, Superior Court Judge Peter Michalski of Anchorage declined to dismiss two other claims the state lodged against BP in the civil suit filed March 31, 2009.

As part of his ruling, Michalski declined BP’s request to defer part of the case to the Alaska Oil and Gas Conservation Commission.

Overall, the judge’s ruling seems to leave largely intact the state’s suit against BP.

The state is seeking $1 billion or more in damages for corrosion-related pipeline spills in the Prudhoe Bay field, which BP operates.

Lawyers for the state argue BP was negligent in maintaining transit lines carrying sales-grade crude. The state is seeking to collect back taxes and royalties lost because of production shut-ins related to the spills and pipeline repairs.

BP, in a motion filed on May 26, 2009, asked the judge to toss out three of the nine counts in the state’s lawsuit. The motion also asked that part of the case be deferred for an AOGCC review of how much oil “waste” resulted from the spills.

Lawyers for the two sides presented oral arguments on the BP motion four days before Christmas, and Michalski’s seven-page ruling signed June 11 is the result.

In a victory for BP, Michalski partially dismissed one count in which the state claimed “negligence with respect to corrosion monitoring and control practices,” costing the state revenue. While not ruling as to whether BP was negligent, the judge held the state couldn’t seek to hold BP liable under both tort law and, in a separate count, for breach of contract — the contract being state oil and gas leases and unit agreements.

Editor’s note: See story in June 20 issue, available to subscribers online at noon, Friday, June 18, at www.PetroleumNews.com.


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