August 9, 2006

Alaska launches BP probe

By Yereth Rosen

ANCHORAGE, Alaska (Reuters) - Alaska Governor Frank
Murkowski suggested on Wednesday that BP Plc misled the state
with satisfactory maintenance reports and launched an
investigation into the oil giant's handling of its pipeline

Pipeline corrosion forced BP to halt production at its
Prudhoe Bay field and the company is studying whether it needs
to shut down the entire 400,000 barrels-per-day field, which
accounts for 8 percent of U.S. output.

The Republican governor said Alaska's attorney general is
looking into possible enforcement actions, including a demand
for lost tax revenues while the field is shut down.

After "numerous" satisfactory maintenance reports to the
state in the past that oil-field pipeline corrosion was being
adequately controlled, BP abruptly decided to shut down Prudhoe
Bay without consulting the state, Murkowski said.

"We will hold British Petroleum accountable for past and
future field management decisions," Murkowski told a joint
session of the legislature in Juneau.

"One has to ask themselves, what did BP learn last Saturday
or Sunday or whatever that it did not know previously that
would cause BP to take such a precipitous action?"

Alaska is expected to lose $6.4 million a day in tax
revenues during the Prudhoe Bay shutdown and Murkowski
instituted a hiring freeze for all state government jobs until
there is more information about the duration of the shutdown.

The governor urged a quick resumption of production.

"BP must get the entire Prudhoe Bay field back up and
running as soon as is safely possible," he said.

In response to Murkowski's speech, BP spokesman Dave
MacDowell said, "We want to be the gold standard of safety,
operations and integrity."

Alaska House Speaker John Harris said lawmakers plan a
series of hearings into pipeline corrosion starting next week.

Those hearings should include information from oil-field
whistle-blowers who have warned in the past about corrosion,
and possible shortcomings in state oversight, said Harris, a
Republican from Valdez.

"If employees are telling you that there are problems and
you don't listen to them, maybe there's negligence on BP's
part," said Harris. "We could have been a little derelict
ourselves, either not funding enough industry inspectors or

Minority Democrats want a more intense investigation with
the power to subpoena BP officials.

"If you don't have subpoena powers, you're just taking the
answers that they give you at the table," said state Sen.
Hollis French, an Anchorage Democrat.