Statement of Congressman John D. Dingell, Ranking Member
Committee on Energy and Commerce

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS HEARING ON
“BP’S PIPELINE SPILLS AT PRUDHOE BAY:
WHAT WENT WRONG?”

September 7, 2006

Mr. Chairman, while I commend you for holding this hearing I am disappointed in our reasons for being here today. We face many challenging energy issues ranging from high prices for oil and natural gas to the continued development of renewable fuels and the nagging problem of nuclear waste. That we find ourselves conducting oversight of an oil company that seems to be having trouble managing its core business, in this day and age, is most discouraging. Nevertheless, the events relating to BP's performance over the last six months necessitate this hearing and I hope we will learn what went wrong and what will be done to ensure it does not happen again.

I want to welcome our witnesses here today, particularly Mr. Robert Malone, President of BP North America. Mr. Malone is no stranger to this Committee during difficult times. He has been straightforward and honest in his previous appearances and has kept his commitments made to the Committee. His challenge today is quite difficult and I hope that his participation will assist this Committee to get to the bottom of what went wrong here.

On March 2, 2006, a BP worker discovered a leak in an oil transit line in the western operating area of Prudhoe Bay, Alaska. This previously unregulated pipeline had been leaking for approximately five days prior to the discovery and had spilled approximately 270,000 gallons of crude oil onto the arctic tundra, making it the worst spill in the history of the North Slope. On March 15, the Department of Transportation (DOT) placed this line and other low-stress BP lines under its jurisdiction, and required BP to thoroughly inspect the lines, clean them, and analyze their condition using a "smart pig."

After extensive testing and the discovery of two additional leaks, BP reached the conclusion that the status of its transit lines was indeterminate and decided to proceed with an orderly shutdown of Prudhoe Bay. World oil markets reacted to the possibility of 8 percent of U.S. domestic production going offline by bidding up the price of crude to just over $76 per barrel.

For an oil company of BP’s size and reputation to allow two of its most critical transit lines, in America’s largest producing oil field, to reach such a sorry state of affairs is staggering. What went wrong? Did cost-cutting prove to be the undoing of standard maintenance? Did management turn a blind eye to problems on the line that at best it should have known about or at worst knew about and decided to ignore? We need answers.

The one bit of good news here is that the Department of Transportation has taken action since the initial spill last March. The Department has been reasonably aggressive in its enforcement of the initial corrective action order and subsequent amendments, and responsive to the letters that I have sent asking questions about this matter.

There are, however, two things that trouble me. First, the lines that failed were exempt from regulation by DOT itself, despite the long-standing concerns of Congress that low-stress pipelines could pose significant risk. For a field that produces nearly 8 percent of our domestic production to have its two main lines left unregulated is simply unacceptable and needlessly risky. As we go forward, the Federal Government must take a fresh look at critical energy infrastructure, regardless of its present regulatory status.

Second, last Friday DOT published a proposed rule to regulate low-stress pipelines. At first glance the rule appears inadequate and applies a less rigorous standard to these lines than recent events would warrant. Furthermore, the rule leaves some 4,300 miles of low-stress lines without any regulation at all – not even the bare minimum requirement to manage for corrosion and report spills.

The proposed rule is eerily reminiscent of the industry’s preferred proposal and leads me to conclude that my increasing confidence in the performance of the Pipeline and Hazardous Materials Safety Administration on pipeline safety may have been misplaced. I intend to work with my Committee colleagues on the upcoming pipeline safety reauthorization to correct these deficiencies.

Again Mr. Chairman, thank you for holding this important hearing.

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(Contact: Jodi Seth, 202-225-3641)