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BP Officials Testify on Pipeline Leakage

September 7, 2006 at 6:35 PM EDT

STEVE MARSHALL, President, BP Exploration Alaska: These spills occurred on my watch. And, as president, I’m in charge of the overall business in Alaska. And the buck stops with me.

KWAME HOLMAN: Facing both congressional and criminal investigations, British Petroleum executives took the blame today for the North Slope of Alaska’s largest oil spill and the partial shutdown last month of their massive Prudhoe Bay oil field, the country’s largest.

BOB MALONE, Chairman & President, BP America: BP America’s recent operating failures are unacceptable. They have fallen short of what you and the American people expect from BP, and they have fallen short of what we expect of ourselves.

KWAME HOLMAN: BP’s problems began in March, when more than 200,000 gallons of oil leaked from a pipeline crossing the Alaskan tundra. Subsequent inspections found a smaller leak and significant corrosion.

BP Responded by closing 16 miles of pipelines in August, halting more than half of its 400,000 barrels of daily oil production, which counts for 8 percent of U.S. domestic oil output. Today, company executives took a pounding before members of the House Energy Committee, as they were accused of neglecting routine inspection of their pipelines.

REP. GREG WALDEN (R), Oregon: BP’s current marketing slogan is beyond petroleum. Unfortunately, it could also stand for broken pipelines.

REP. EDWARD MARKEY (D), Massachusetts: Today, we are finding that BP stands for a company with bloated profits that failed to fix bad pipelines.

KWAME HOLMAN: The BP executives acknowledged that a larger portion of the $22 billion profit BP made last year should have been devoted to pipeline safety.

BP Alaska president Steve Marshall said they’re making the necessary corrections today.

STEVE MARSHALL: Both spills have been fully cleaned up. We have received a number, several comments from external sources about the quality of that cleanup. And we believe, at this point, there will be no lasting damage to the environment.

Events leading to pipeline shutdown

KWAME HOLMAN: The committee members were far more concerned about the events that led to BP's shutdown, not the decisions they made as a result.

Michigan Democrat John Dingell asked why the pipelines weren't checked regularly for corrosion, a process that involves sending a cleaning device, called a pig, through the line.

REP. JOHN DINGELL (D), Michigan: You didn't do anything at all about increasing the number of times that you ran a pig through the line, or check to see whether the change in the quality of the oil going through the line was going to impair the capabilities of the line to resist corrosion.

Don't you have some responsibility to do a little better job of running pig through to find out what's going on?

STEVE MARSHALL: We did schedule a maintenance pig and cleaning pig run in 2005. It is my regret that that was too late.

KWAME HOLMAN: The man in charge of monitoring the level of pipeline corrosion and recommending those pig runs was Richard Woollam. He was placed on indefinite leave by British Petroleum yesterday, and invoked the Fifth Amendment today.

RICHARD WOOLLAM, Adviser For Corrosion, BP North America: I, respectfully, will not answer questions, based upon my right, under the Fifth Amendment of the United States of the Constitution.

KWAME HOLMAN: Woollam's refusal to testify angered several committee members. Democrat Ed Markey of Massachusetts cited a report claiming that Woollam's management style created an environment that discouraged employees from recommending pig runs, for fear of losing their jobs.

REP. EDWARD MARKEY: "The corrosion inspection and chemicals manager is brutal, and screams and shouts at contractors."

Mr. Marshall, given the chilled atmosphere experienced by the employees and apparent abrasive personality of its manager, would you think that this was a favorable atmosphere to recommend that BP explore other types of corrosion-detection technology, such as more frequent runs of smart pigs, which can be costly?

STEVE MARSHALL: I'm aware, certainly, of the conclusions of the report. I agree with the conclusions of the report, in terms of the abrasive nature, the intimidation. And we have taken steps to change that.

KWAME HOLMAN: BP executives told lawmakers, the company has hired a former federal judge to serve as its ombudsman and field complaints from workers about their operations.

But Committee Chairman Joe Barton said, more than minor changes were needed.

REP. JOE BARTON (R), Texas: If a company, one of the world's most successful oil companies, can't do simple basic maintenance needed to keep the Prudhoe Bay operating safely, without interruption, maybe it shouldn't operate the pipeline. Maybe we should find a way to get a different operator, through the private market sale of this pipeline, and let somebody else do it.

KWAME HOLMAN: No specific legislation is expected to come out of the congressional probe, but several more House and Senate hearings are expected in the coming weeks.