Spinwatch - BP's oil spill in Alaska blamed on cost-cutting

BP's ceaseless efforts to promote itself as an environmentally responsible energy producer took a serious blow yesterday after a US congressional committee said "a mountain of evidence" showed the company's cost-cutting on maintenance had led to a large oil spill in Alaska. The US government said it was "highly likely" to fine BP over the leaks.

The committee was also told that the causes of the spillage - which happened at a time when BP was making huge profits - shared "striking similarities" with the problems that led to the 2005 explosion at a Houston refinery in which 15 people died.

"My review of the mountain of circumstantial evidence can only lead me to the conclusion that severe pressure for cost-cutting did have an impact on maintenance of pipelines," said the Republican Bart Stupak, chairman of the House Energy subcommittee on oversight and investigations.

The conclusions of the committee will add to the woes of BP's new CEO, Tony Hayward, who took over from Lord Browne following his resignation over a personal scandal. Mr Hayward had previously been BP's head of exploration and production.

The leak at the Prudhoe Bay field in March 2006 led to the spillage of at least 6,350 barrels of oil. BP was forced to suspend production after the company found that the leak had been caused by pipeline corrosion. It was forced to replace 16 miles of pipeline at a cost of $250m.

Robert Malone, the chairman of BP America, admitted that there "was a concerted effort to manage the costs [at the Alaska fields] in response to the continuing decline in production at Prudhoe Bay".

He sought to deny, however, that budget cuts should be blamed for the pipeline problems. He cited a report commissioned by BP which concluded that "budget increases alone would not have prevented the leaks".

But the committee did not appear convinced by Mr Malone's claims. The Democrat John Dingell read from an internal BP email that said budgetary constraints would force the end of a programme to inject corrosion inhibitor directly into the pipeline system. "BP staff were worried this would increase corrosion," he said.

Carolyn Merritt, chief executive officer of the US Chemical Safety Board, told the committee that "virtually all" of the root causes of the problems at Prudhoe Bay had "strong echoes" of those that led to the 2005 explosion in Houston. These had included cost- cutting, and a failure to invest in the plant.

Melanie Duchin, an Alaska-based campaigner with Greenpeace, said: "The bottom line with BP is that it is an oil company... No matter whether you're exploring for it, drilling it, refining it or burning it, oil is dirty."