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BP exec says pipeline fixes on target BP’s American chief, Bob Malone, says Alaska North Slope pipeline replacement likely to be done by year’s end John Porretto Associated Press Writer
BP is on target to finish replacing and fixing miles of Prudhoe Bay pipelines, about two years after corrosion-induced leaks crimped the nation’s oil supply and prompted harsh criticism of the company, the chief of the oil giant’s American division said Aug. 25.
After a massive oil spill in March 2006 and the subsequent discovery of corroding pipes five months later, London-based BP said it would replace 16 miles of the 22 miles of transit pipeline it operates at Prudhoe Bay, the nation’s largest oil field.
Bob Malone, president and chairman of Houston-based BP America, said the company was on schedule to complete the project by year’s end, though he acknowledged BP still has lots of work to do in Alaska. He said BP continues to test sections of pipeline for corrosion.
“It’s not to say Alaska is fixed,” Malone said in an interview. “I’d never say that. But Alaska has the talent, they’ve got the engineers, they’ve got the corrosion focus and we’ve now got the risk-assessment process we need to prioritize.”
The 212,252-gallon oil spill in March 2006 and a smaller spill five months later ultimately caused BP to halve production at Prudhoe Bay for several weeks — an unexpected thinning of the nation’s oil supply.
Both leaks were traced to the failure of subsidiary BP Exploration (Alaska) Inc. to regularly clean and inspect two of its pipelines over the course of several years. BP ultimately agreed with federal prosecutors to pay $20 million in fines and other penalties related to the criminal case on the first spill, the largest ever on the North Slope.
Congressional reaction BP executives, Malone among them, were brought before Congress to answer to lawmakers. Some members of Congress called the mistakes unacceptable given the oil industry’s record profits and the relatively inexpensive measures that might have prevented the spills.
Malone told lawmakers then that poor maintenance led to the accidents, and that the company’s reputation had been damaged.
Since taking the helm of BP’s American arm in the summer of 2006, Malone has worked to mend BP’s image. In addition to the problems in Alaska, he’s had to deal with fallout from the 2005 Texas City refinery explosion that killed 15 people and a 2004 scheme by BP America to inflate propane prices.
He recalls testifying before Congress after the Alaska spills as one of the most unpleasant experiences of his life.
“To look at Congress and look at the American people and say that we made a huge mistake and we’re sorry ... that’s hard, that’s very hard,” Malone said.
BP bullish on Alaska BP remains bullish on prospects for its Alaska investments and is moving forward with another pipeline project it’s planning with Conoco Phillips, Malone said.
In April, BP and Houston-based Conoco announced they would jointly develop a multibillion-dollar pipeline to move North Slope natural gas to U.S. markets.
Malone said BP was moving ahead — despite the recent endorsement of a competing project from TransCanada Corp. by Alaska Gov. Sarah Palin. He noted the partners were gathering engineering and other technical information needed to submit an application for the pipeline, dubbed Denali, with the Federal Energy Regulatory Commission.
BP spokesman Ronnie Chappell said Denali representatives hoped to have commitments from potential pipeline customers by late 2010 or early 2011. If sufficient, they then would submit the application to FERC, he said.
BP Exploration (Alaska) spokesman Steve Rinehart told Petroleum News in an Aug. 25 e-mail that the cost of the transit pipeline replacement was last estimated at $260 million, but said that while a current estimate is not available, “costs have climbed since then.”
Work continues on tie-ins and associated work, Rinehart said, although all four of the main transit line segments have been built, with one of the segments in service.
—Petroleum News contributed to this story
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