BP Faces Huge Fines Related To Unreported Oil Spills in Alaska; Is ANWR Next?

By Jason Leopold

While the hacks working for mainstream news organizations were busy chasing
the story about the Runaway Bride late last month, a real scandal was just
beginning to unfold as Congress inched closer to approving a controversial
measure to open up a couple thousand acres of the Artic National Wildlife
Refuge to oil exploration.

It was then, unbeknownst to the federal lawmakers who debated the merits of
drilling in ANWR, that the Alaska Department of Environmental Conservation
started to lay the groundwork to pursue civil charges against UK oil and gas
behemoth BP and the corporation’s drilling contractor for failing to report
massive oil spills at its Prudhoe Bay operation, just 60 miles west from the
pristine wilderness area that would be ravaged by the very same company in
its bid to drill for oil should ANWR truly be opened to further development.

BP has racked up some hefty fines over the years due to a number of mishaps
at its Prudhoe Bay operations. In 2001, the Alaska Oil and Gas Conservation
Commission found high failure rates on some Prudhoe wellhead safety valves.
The company was put on federal criminal probation after one of its
contractors dumped thousands of gallons of toxic material underground at
BP’s Endicott oil field in the 1990s. BP pleaded guilty to the charges in
2000 and paid a $6.5 million fine, and agreed to set up a nationwide
environmental management program that has cost more than $20 million.

The latest charges against BP stem from claims made recently by BP
whistleblowers who exposed their company’s severe safety and maintenance
problems that have caused at least a half-dozen oil spills at Prudhoe
Bay-North America’s biggest oil field-and other areas on Alaska’s North
Slope, which the whistleblowers say could boil over and spread to ANWR if
the area is opened up to further oil and gas exploration.

Despite those dire warnings, neither Congress nor the Senate plans to
investigate the whistleblowers claims or plan to hold hearings about
drilling in ANWR, according to aides for Sen. Pete Domenici, R-N.M, chair of
the Senate Energy and Natural Resources Committee. Even more troubling is
the fact that the federal Environmental Protection Agency still refuses to
investigate the whistleblowers claims of frequent oil spills and BP’s
alleged attempts to cover it up.

No one at the EPA returned calls for comment.

Chuck Hamel, a highly regarded activist who is credited with exposing dozens
of oil spills and the subsequent cover-ups related to BP’s shoddy operations
at Prudhoe Bay, sent a letter to Domenici April 15 saying the senator was
duped by oil executives and state officials during a recent visit to
Alaska’s North Slope.

"You obviously are unaware of the cheating by some producers and drilling
companies," Hamel said in the letter to Domenici, an arch proponent of
drilling in ANWR. "Your official Senate tour" of Alaska in March "was masked
by the orchestrated ’dog and pony show’ provided you at the new Alpine
Field, away from the real world of the Slope’s dangerously unregulated
operations."

Alaska environmental officials are expected to meet with BP Alaska’s top
brass sometime this month to discuss either levying a hefty fine on BP or
forcing the company to make changes to its internal regulations because BP
and its drilling contractor Nabors Alaska Drilling failed to immediately
report oil spills in July 2003 and December 2004.

BP operates the 24 year-old Prudhoe Bay oil field on behalf of
ConocoPhillips and ExxonMobil and is responsible for maintaining the safety
and maintenance of the drilling operations on the North Slope.

Hamel filed a formal complaint in January with the EPA, claiming he had
pictures showing a gusher spewing a brown substance in July 2003 and
December 2004. An investigation by Alaska’s Department of Environmental
Conservation determined that as much as 294 gallons of drilling mud, a
substance that contains traces of crude oil, was spilled on two separate
occasions when gas was sucked into wells, causing sprays of drilling muds
and oil that shot up as high as 85 feet into the air.

Because both spills exceeded 55 gallons, BP and Nabors were obligated under
a 2003 compliance agreement that BP signed with Alaska to immediately report
the spills. But they didn’t, said Leslie Pearson, the agency’s spill
prevention and emergency response manager.

BP spokesman Daren Beaudo said the spill wasn’t that big of a deal.

"In this case, the drilling rig operators did not feel this type of event
qualified for reporting," Beaudo told the Anchorage Daily News in March.
Beaudo said BP’s own investigation indicated that the spills did not cause
any harm to the environment, aside from some specks on the snow.

President Bush has said that the oil and gas industry can open up ANWR
without damaging the environment or displacing wildlife. But the native
Gwich’in Nation, whose 7,000 members have lived in Alaska for more than
20,000 years, say President Bush is wrong.

"Existing oil development has displaced caribou, polluted the air and water
and created havoc with the traditional lifestyles of the people," said
Jonathon Solomon, chairman of the Gwich’in Steering Committee, in a May 7
interview with the Financial Times. "No one can tell us that opening the
Arctic Refuge to development can be done in an environmentally sensitive way
with a small footprint. It cannot be done."

Jason Leopold’s explosive memoir, Off the Record, was days away from being
printed when his publisher, Rowman & Littlefield, abruptly canceled the book
after receiving a complaint from an attorney representing Steve Maviglio,
the former press secretary to California Gov. Gray Davis, over the way he
was portrayed in the publisher’s press release about the book. Leopold has
since signed with a new publisher who will publish his memoir in early 2006
under a new title: NEWS JUNKIE. Visit Leopold’s website at

www.jasonleopold.com