UPDATE 1-BP faces revoked criminal probation in Alaska

Tue Nov 29, 2011 11:43pm GMT
 

* Hearing starts on circumstances of 2009 spill
    * BP's probation for earlier spill may be revoked
    * No schedule set for judge's decision

    By Yereth Rosen
    ANCHORAGE, Alaska, Nov 29 (Reuters) - U.S. federal
prosecutors on Tuesday said BP Plc broke pledges to
improve operations after causing the worst pipeline spill on
Alaska's North Slope five years ago and should be subject to
additional punishment for its negligence.
    Prosecutors are seeking to revoke the criminal probation
imposed on BP in a 2007 settlement agreement, claiming the oil
company violated probationary terms by continuing its pattern
of sloppy management, ultimately resulting in another pipeline
spill in 2009.
    The prosecutors spoke at a court hearing in Anchorage,
which is expected to last at least the remainder of this week.
    BP has been trying to rebuild its image after taking the
bulk of the blame for the largest U.S. offshore oil spill last
year in the Gulf of Mexico.
    In 2007, BP pleaded guilty to a Clean Water Act charge
stemming from its 2006 spill of 212,000 gallons of crude oil
from a corroded pipeline at Prudhoe Bay in Alaska, the nation's
largest oil field.
    The spill was the biggest on record at the North Slope oil
fields. To settle the case, BP paid $20 million in fines and
restitution and pledged to undertake a series of operational
improvements over its three-year probation period.
    But a late-November 2009 pipeline rupture at the
BP-operated Lisburne field, next to Prudhoe Bay, showed that
the criminal punishment imposed in 2007 was not harsh enough,
prosecutors believe, according to a pre-hearing brief, filed
earlier this month.
    That two-foot (0.6m) -long rupture resulted from high
pressures that built up when BP allowed the contents of the
pipeline to freeze, ignoring warnings evident for months and
the recommendation of its own experts, prosecutors have
alleged.
    Several ice plugs, including one estimated to be 1,500 feet
long, accumulated in the line, according to Alaska
environmental regulators.
    "This rupture was the result of a predictable and
preventable freezing of produced water within the pipeline that
caused the pipe to over-pressurize and burst. Eerily similar to
the 2006 spill, BP ignored alarms that warned of the pipe's
eventual rupture and leak," government prosecutors said in a
brief filed on Nov. 14.
    BP argues that, at least since its 2006 Prudhoe Bay woes,
it has exercised reasonable care on the North Slope fields it
operates, and that the Lisburne pipeline rupture was an
unexpected and "unprecedented" event.
    The company said in a pre-hearing brief that the spill was
unfortunate, but not a crime.
    "This was an accident, it was not foreseen," said BP
spokesman Steve Rinehart, during a break in the court hearing
on Tuesday. "The environmental damage was minor."
    The Lisburne pipeline rupture poured 45,828 gallons of an
oil-produced water mix onto the tundra.
    Prosecutors and BP are at odds over the amount of damage
and environmental threat posed by the spill.
    Prosecutors argue that the spill of that material, which
included about 13,500 gallons of crude oil, amounted to a new
Clean Water Act violation because it fell on permafrost, which
is classified as wetlands, holding groundwater that flows into
rivers, lakes and the ocean.
    BP argues that the oil-produced water mix did not reach any
federally controlled waters, so there was no such legal
violation.
    The revocation-of-probation hearing -- essentially a
miniature trial -- is expected to last at least three more
days. Both sides plan to call expert witnesses. Among those
testifying for the government will be a former BP
environmental-compliance officer who is expected to speak about
BP's operational shortcomings. BP witnesses will include a
former program manager for the U.S. Army Corps of Engineers,
the agency that oversees federal wetlands.
    U.S. District Court Judge Ralph Beistline, who approved the
2007 criminal settlement, will preside over the hearing and
decide whether BP violated its probation and whether sentencing
terms should be reopened.
    "He can go back and start over on that case," said
Assistant U.S. Attorney Andrea Steward, lead prosecutor in the
probation-revocation effort. That could mean additional time in
criminal probation as well as additional fines.
    How long it will take for Beistline to render a decision is
unknown, Steward said.

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