BP still trying to settle suits over 2006 Alaska spill

Even as the disaster unfolds in the Gulf of Mexico, lawyers for BP and federal regulators are working to settle a civil suit the government brought in connection with the 2006 pipeline spills in Alaska’s Prudhoe Bay oilfield. In papers BP and government lawyers jointly filed in US District Court in Anchorage recently, the two sides said they had “conducted extensive settlement discussions including…exchanging several drafts of various settlement constructs.” Judge John Sedwick granted a motion to extend deadlines related to expert witness disclosure and discovery until near the end of the year.

The US Justice Department sued BP in 2009 on behalf of the EPA and other federal regulators, seeking millions of dollars in fines for water and air pollution violations, as well as failure to meet deadlines in a corrective action order from the Pipeline and Hazardous Materials Safety Administration. BP’s lawyers deniy many of the federal claims, and say some of the deadlines in the order were impossible to meet.

The suit stems from the 212,252-gallon oil spill—the largest ever on the North Slope—in March 2006, and a smaller spill the following August. The second spill forced a partial shutdown of BP’s Prudhoe Bay fields, that briefly rattled world oil markets. It also sparked congressional and regulatory criticism of BP’s upkeep of corroded transit lines that funnel crude into the Trans-Alaska Pipeline.

BP’s Alaska subsidiary in late 2007 was sentenced to three years probation and ordered to pay $20 million in penalties after the company pleaded guilty to a federal environmental misdemeanor. The plea deal ended criminal prosecution of BP, for both the federal and state governments.

But BP is still defending the civil suit, as well as a civil case filed by Alaska. The state suit, pending in Superior Court in Anchorage, seeks some $1 billion in fines as well as lost oil revenues resulting from production slowdowns caused by the leaks and subsequent pipeline repairs. The state cites a production shortfall of at least 35 million barrels of oil and natural gas liquids from the Prudhoe Bay and Milne Point fields as a result of the spills. The state accuses BP of knowingly neglecting corroded pipelines in the interest of cutting costs, with the suit citing “outrageous” or “reckless” conduct. (Anchorage Daily News, May 23)

See our last posts on Gulf oil spill and the struggle for Alaska.

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  1. Arctic Sea drilling plans move ahead
    Talk about chutzpah! From the New York Times, May 19:

    Arctic Drilling Proposal Advanced Amid Concern
    A proposal to drill for oil in the Arctic Ocean as early as this summer received initial permits from the Minerals Management Service office in Alaska at the same time federal auditors were questioning the office about its environmental review process.

    The approvals also came after many of the agency’s most experienced scientists had left, frustrated that their concerns over environmental threats from drilling had been ignored.

    Minerals Management has faced intense scrutiny in the weeks since the oil spill in the Gulf of Mexico. An article in The New York Times reported that it failed to get some environmental permits to approve drilling in the gulf and ignored objections from scientists to keep those projects on schedule.

    Similar concerns are being raised about the agency’s handling of a plan by Shell Oil to begin exploratory drilling in the Arctic’s Beaufort and Chukchi Seas.

    The Shell plan has stirred controversy for many years among environmentalists and advocates of the endangered bowhead whale, which is legally hunted in the area for subsistence by Alaska Natives.

    Opponents have argued that an oil spill would be virtually impossible to contain, given the region’s remoteness, its severe weather and ice and limited onshore support.

    This has implications not only for Alaska but the entire Arctic region. That this is moving ahead even amid the Gulf of Mexico disaster is the clearest evidence of petro-oligarchical rule.

  2. File under “outrageous chutzpah”…
    OK, this one just sent the chutzpah-meter into tilt. From the New York Times, June 23:

    BP Is Pursuing Alaska Drilling Some Call Risky
    The future of BP’s offshore oil operations in the Gulf of Mexico has been thrown into doubt by the recent drilling disaster and court wrangling over a moratorium.

    But about three miles off the coast of Alaska, BP is moving ahead with a controversial and potentially record-setting project to drill two miles under the sea and then six to eight miles horizontally to reach what is believed to be a 100-million-barrel reservoir of oil under federal waters.

    All other new projects in the Arctic have been halted by the Obama administration’s moratorium on offshore drilling, including more traditional projects like Shell Oil’s plans to drill three wells in the Chukchi Sea and two in the Beaufort.

    But BP’s project, called Liberty, has been exempted as regulators have granted it status as an “onshore” project even though it is about three miles off the coast in the Beaufort Sea. The reason: it sits on an artificial island—a 31-acre pile of gravel in about 22 feet of water—built by BP.

    See our last post on the offshore drilling controversy.