BP’s subsidiary in Alaska has agreed to pay a $25M (£16M) civic penalty over a 2006 oil spill, it has been revealed.
The settlement - the most ever levied per barrel by national regulators - comes five years after more than 200,000 gallons of crude oil spilled from company pipelines.
Under the settlement BP Exploration Alaska Inc has also been ordered to set up a system-wide pipeline integrity management programme.
US Attorney for Alaska Karen Loeffler claimed that the settlement showed just how serious BP’s conduct over the incident was.
Assistant US Attorney Ignacia S. Moreno told reporters: “This penalty should serve as a wake-up call to all pipeline operators that they will be held accountable for the safety of their operations and their compliance with the Clean Water Act, the Clean Air Act and the pipeline safety laws.”
Loeffler told The Associated Press that BP Alaska admitted that it cut corners and failed to do what was required to adequately maintain its pipeline
BP Alaska spokesman Steve Rinehart in a short email acknowledged the settlement terms, including an independent contractor to monitor operations at the vast Prudhoe Bay field.
“We believe the terms of the agreement are fair,” he said.
A 2006 leak in a transit line, also called a feeder line, between a gathering centre and a pump station for the trans-Alaska oil pipeline in March accounted for most of the oil spilled, about 954,000 litres.
BP in August 2006 had begun inspecting pipelines with “smart pigs,” devices inserted to detect abnormalities, when a second leak occurred. The tiny second leak allowed about 4,500 litres more to spill from another transit line.
With data in hand indicating 16 “anomalies,” or other possible corrosive spots, BP shut down part of the massive Prudhoe Bay field.
The partial shutdown brought an economic chill throughout the state and led then-Governor Frank Murkowski to temporarily freeze hiring until the effects of the interruption on the state budget would be known.
Cynthia Quarterman, administrator for the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration, said BP had a year to address problems but its wilful failure to comply led to filing civil litigation against the company.
The settlement requires BP Alaska to develop a system-wide programme to manage pipeline integrity for the company’s 2,575km of pipeline on the North Slope based on PHMSA’s integrity management programme.
That cost is estimated at £38M on top of approximately £128M BP Alaska has spent already replacing feeder lines.