Could the Prudhoe Bay shutdown have been avoided?

Posted Aug 21st 2006 4:30PM by Michael Fowlkes
Filed under: Management, Industry, Law

With all the recent attention BP PLC (BP) has been receiving from its recent shutdown of its Prudhoe Bay oil field earlier this month, it is not surprising that company officials today have officially denied manipulating data that could have prevented the whole disaster.

In a corporate statement, BP responded to a report from The Financial Times that several BP employees reported that the company knowingly portrayed the pipeline to be in better shape than it actually was. According to the report, the company was able to create the false impression of well being by testing areas that they already knew were in good shape and avoiding other sections of the pipes. Of course the company denied all allegations. In a time of record high oil prices and surging global demand, BP wouldn't continue to pump oil though pipes they felt could have been corroding in order to avoid months of downtime and an estimated $100 million in repair costs would they?

Such allegations are particularly scary since half of the Prudhoe Bay field is still up and running. After discovering a small spill at the beginning of the month, it seemed as though the entire Prudhoe Bay field was going to be shut down, but that was not the case, and only the eastern portion of the field is now offline. In fact, when discussing the company's maintenance procedures, U.S. Transportation Secretary Maria Cino reported that she was disappointed with the procedures that she found, and said that "When we look at other operators, this problem has not been found." Kind of scary considering the volume of oil we are talking about. (The western side of the field is still producing roughly 200,000 barrels of oil per day.)

For now let's just hope that the Western portion of the field is as stable as "company data" shows it to be!

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