BP faces criminal inquiry in Alaska
PRUDHOE BAY DISASTER: The probe into the spill of 1.2 million liters of crude oil could lead to company officials facing criminal charges, prison terms and fines
THE GUARDIAN , LONDON
Saturday, Jun 10, 2006,Page 10
The reputation of oil giant BP -- and its share price -- took a beating on Thursday when it admitted it was facing a criminal inquiry into a massive oil spill in Alaska.
BP received a subpoena on April 26 from a US federal grand jury in Alaska but only revealed the investigation -- which could lead to prison sentences -- after an internal e-mail was leaked to journalists.
Shares in Britain's biggest company slumped 3 percent in early trading on Thursday on the back of the latest safety problem, which threatens to undermine its carefully crafted image as an environmentally responsible operator.
Revelations about the investigation into the spill of 1.2 million liters of crude into the Prudhoe Bay area follows a fire and 15 deaths at its Texas City refinery and a rig capsizing in the Gulf of Mexico.
There is already another US grand jury investigation into the refinery blast, which injured an estimated 500 staff, and the company has already been fined US$21 million for 300 violations uncovered by the UD Department of Labor.
Environmentalists called the Alaskan spill in March -- the largest ever in the North Slope region -- a "catastrophe."
BP blamed it on internal corrosion creating a 65mm hole.
A BP spokesman said in London on Thursday: "We are fully cooperating with the investigation and we are carrying out our own investigation into what caused the corrosion. We believe that our actions were at all times proper."
Initial news of the subpoena came after Steve Marshall, BP's head of exploration in Alaska, sent an e-mail to staff saying he had been asked for "a variety of documents and data from BP Alaska concerning the transit line and certain other operational areas."
Marshall urged his staff to treat the matter as confidential and added: "I believe that the information we provide will show that the actions of BP Alaska were, at all times, proper."
The pipeline problems were relatively small compared with Alaska's worst oil spill on March 24, 1989 when the Exxon Valdez tanker ran aground in Prince William Sound, near Anchorage.
About 2,092km of coastline were contaminated by the spill, killing hundreds of thousands of fish, seabirds, otters, seals and whales.
Exxon has always had a troubled relationship with environmental activists but BP has worked hard to cultivate a different one, emphasizing actions to help tackle climate change and promising to go "beyond petroleum."
Allegations of poor safety or maintenance systems are particularly sensitive issues for oil companies at a time when they are making record profits and facing criticism from politicians.
Problems in Alaska will not help oil companies such as BP in their attempts to fight off the threat of higher taxes in the state.
Nor will it help the oil company, led by the chief executive, Lord Browne, win a contract for a ?20 billion (US$37 billion) planned gas link in Alaska.
Fadel Gheit, an analyst with the New York brokerage firm Oppenheimer & Co, said the wave of problems threatened to damage the good standing that BP had developed in the US.
"A company this size with operations all over the world is always vulnerable to things going wrong but a lot seems to have gone wrong in this case and its [good] public image is being eroded," Gheit said.
"BP has sowed seeds of goodwill by bringing in a respected politicians like James Baker at Texas City and has been bombarding the public with green messages through advertising," he said.
"Without this, things could have been much worse but it needs to stop shooting itself in the
foot," he said.
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