May 03, 2011 --- Vol. 17, No. 39May 2011

BP to pay $25 million penalty for North Slope oil spill

Federal agencies said today that BP Exploration (Alaska) will pay $25 million in civil penalties and implement a system-wide pipeline integrity management program for spilling more than 5,000 barrels of crude oil on the North Slope in March 2006. A second spill, in August 2006, resulted in some 24 barrels of crude oil spilled.

Assistant Attorney General Ignacia Moreno of the U.S. Department of Justice Environment and Natural Resources Division said a consent decree has been lodged in Anchorage requiring BP to adopt a comprehensive inspection and maintenance system for its 1,600-mile pipeline system. She said that work is expected to cost $60 million, in addition to the close to $200 million the company has already spent on replacing its pipelines.

The federal agencies involved said the $25 million penalty is the largest per-barrel penalty to date for an oil spill.

Cynthia Giles, assistant administrator for the U.S. Environmental Protection Agency’s Office of Enforcement and Compliance Assurance, called the spills “the result of gross negligence” and said an independent monitor will confirm that BP is complying.

“Companies like BP Alaska must understand that they can no longer afford to ignore, neglect or postpone the proper monitoring and maintenance of their pipelines,” said Moreno.

U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration Administrator Cynthia Quarterman called the penalty “a stern reminder to pipeline operators to follow orders issued by PHMSA or risk a federal civil lawsuit and steep fines.”

She said PHMSA issued a correction action order to BP Alaska, but the company did not fully comply with the terms of the corrective action, and PHMSA then referred the case to the Department of Justice.

BP said in a statement that it has reached an agreement with the U.S. Department of Justice to settle the federal civil suit arising from the Prudhoe Bay oil transit leaks in March and August of 2006. The company said it did not admit any liability and said there was no per-barrel penalty assessed in the agreement.

See more in May 8 issue, available online at 11 a.m. Friday, May 6, at

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