Last month I wrote about the possibility that BP p.l.c ADR (BP) may have knowingly turned a blind eye to conditions in its Prudhoe Bay pipelines that could have prevented the whole mess from occurring in the first place. At the time, these reports were mainly coming from employees, but now accusations have resumed and things aren't looking to great for the oil mogul.Today the country's top regulator for pipelines backed up these accusations, saying that the company failed to take steps common in the industry to repair corrosion that they were warned about in their pipelines. I must admit that I am not too surprised with this recent news. I have written a lot of BP and the more I have read about the company the more I have become weary of just what exactly has been going on up in Alaska.
The company was hit with a couple pretty nasty statements today from lawmakers on both sides of the aisle:
- Rep. Joe Barton, R-Texas (chairman of the full regulatory committee): "BP's policies are as rusty as its pipelines." And he further went on to raise the question of whether or not BP should be allowed to continue to run the Prudhoe Bay pipeline
- Rep. Gary Welden, R-Ore. : was quoted as saying that BP actually stood for "broken pipeline."
- Rep. Diana DeGette, D-Colo.: "I applaud BP for trying to move beyond petroleum, but maybe it should start by sticking to the basics and begin to focus on rudimentary pipe maintenance."
While many BP officials are still standing by their story that the company did everything in the power to prevent the recent shutdown, a former BP executive has opted to plea the fifth amendment in the ongoing legal investigation in the accident. Richard Wollam, former head of pipeline-corrosion monitoring, today decided to invoke the fifth while being examined regarding a massive oil spill earlier in this year along the same Prudhoe Bay pipeline. The spill, which came back in March, was the largest ever leak in the region, and should have been a warning sign that things were just not right in the region.
One bright point to recent hearings has been the frank honesty out of recently elected chairman and president of BP America, Robert A. Malone. Malone has been serving in his current position since July and his response to recent events did come as a breath of fresh air and honesty in an otherwise muddy situation. According to Malone, "We have fallen short of the high standards we hold for ourselves, and the expectations that others have for us," and added that "the problem has not been in workers raising concerns - sometimes it's been our responsiveness." Maybe Malone will have what it takes to get BP back on track.
It is hard to say at this point what the future holds in store for BP's interests in the Prudhoe Bay field. As hearings go on we will continue to watch the situation and look for more details to come out in the open.
Today on Wall Street shares of BP have fallen 1.3% to $66.03 down $0.90.
Following is a 6 month chart for the stock:
(courtesy of thinkorswim)
Michael Fowlkes has worked as a stock trader for 7 years and spent the last 2 years working as an analyst and portfolio manager for an online investment advisory service.
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