July 2007 News Stories

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Anchorage Daily News
July 31, 2007
http://www.adn.com/money/industries/oil/story/9180551p-9097215c.html

State wants to see more BP records on 2006 shutdown
OIL: Officials may try to recoup royalty losses from shutdown.
By WESLEY LOY
wloy@adn.com
Published: July 31, 2007
Last Modified: July 31, 2007 at 10:13 AM


Subpoena
http://www.adn.com/static/images/pdf/Subpoena.pdf

State officials have hit BP with a far-reaching new demand for company records aimed at assessing the financial and production fallout from last year's jarring Prudhoe Bay oil field shutdown.

The subpoena builds on at least two prior subpoenas the state served on BP and backs up past statements by Alaska's attorney general that the state will not only punish BP for leaks from corroded Prudhoe pipelines but might seek damages for any lost oil tax or royalty revenue.

State lawyers representing the state Department of Environmental Conservation issued the six-page subpoena. It is a civil rather than a criminal subpoena.

The 25-item demand seeks a wide array of financial records, memos, letters, pipe samples and other material dating back as far as 1990.

Daren Beaudo, a BP Alaska spokesman, would not comment on specific parts of the subpoena.

"We can confirm that we have received a supplemental subpoena from DEC and are responding to the request," he said.

Chief Assistant Attorney General Steve Mulder said he couldn't say yet where the state's investigation of the Prudhoe problems is headed.

"It's too early to tell until we finish gathering the information and analyze it," he said.

But last August, in the days following the partial shutdown of Prudhoe, then-Attorney General David Marquez told state lawmakers that civil and criminal investigations were under way and that officials were "reviewing the state's legal rights, particularly the full extent to which BP and possibly other parties can be held legally responsible for losses incurred by the state."

OIL LEFT IN THE GROUND

BP operates Prudhoe, the nation's largest oil field, on behalf of itself and other owners including Exxon Mobil, Conoco Phillips and Chevron.

Two major events rattled Prudhoe and world oil markets last year.

First, a major pipeline in the sprawling oil field developed a slow leak that caused an estimated 201,000-gallon crude oil spill on the tundra in early March, the largest ever on the North Slope.

Five months later, on Aug. 6, another pipeline in Prudhoe sprang leaks and spilled some oil, prompting top BP executives to order a partial shutdown of the field. The action briefly nudged up oil prices, and Prudhoe's normal output of 400,000 barrels a day -- or almost 8 percent of U.S. production -- was cut in half.

In the ensuing weeks, before production was fully restored, several million barrels of oil that otherwise would have been produced stayed in the ground. An eighth of that oil belongs to the state -- the Prudhoe land owner -- as a royalty.

Among the state's concerns is "the time value of money," Marquez said. For example, will the state end up losing tax and royalty revenue on oil produced later, when the price might be lower? And what about interest the state might have earned on revenue from oil that should have been produced last year?

WHAT THE STATE WANTS

Aside from the state, BP has drawn scrutiny from other authorities, including congressmen and federal pipeline regulators, who rapped the British company for poor maintenance of key Prudhoe Bay pipelines.

Not least, a federal grand jury is conducting a criminal investigation.

Here's a sample of the many items state officials are seeking in their latest subpoena:

• Copies of all documents BP previously has given to Congress on the oil field leaks and shutdown.

• All communications regarding claims for damages other Prudhoe owners have made against BP.

• BP's assessment of revenue the company lost in the shutdown, as well as "any assessment of BP's potential liabilities to the state of Alaska."

• Any studies on how the shutdown might affect production over Prudhoe's remaining life, and whether it damaged the oil reservoir.

• Documents on how the oil spills and production shutdown affected North Slope crude oil prices.

E-mail Wesley Loy at wloy@adn.com or call 257-4590.
 

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Anchorage Daily News
July 30, 2007

http://www.adn.com/front/story/9174960p-9091610c.html

BP tries to regain its standing in the world of oil production
CHANGES: Shaking up culture, improving maintenance haven't been enough for lawmakers.
By STEVE QUINN
The Associated Press
Published: July 30, 2007
Last Modified: July 30, 2007 at 01:55 AM

PRUDHOE BAY -- It sits, all four miles of it, still unused, on supports about 7 feet high.

And depending on who's talking, this new section of transit pipeline on Prudhoe Bay -- the nation's largest producing oil field -- is either a daily reminder of past maintenance neglect or it represents a decades-long commitment to the future of North Slope oil production.

It's been a year since the pipeline shutdown and few have forgotten the event that sent oil prices inching toward $80 per barrel, stirred fears of escalating gas prices, and sent companies searching for other supply sources.

Some nerves remain frayed with state and federal lawmakers still questioning how BP failed to adequately address concerns raised by its own employees, arguing that BP placed profits ahead of safety and proper care.

The company says it understands the criticisms remain fresh but argues progress is strong with new accountability practices in place and a $250 million pipeline upgrade on schedule for completion next year.

"We are the operator and we take accountability for what happened," said Tony Brock, BP Exploration Alaska Inc.'s technical director.

"We'd like to be seen as a company in North America that is trusted and respected," he said. "I would say we've got a long way to go before we can make that request, so we will establish that over time."

BP has a 26 percent stake in the field it shares largely with Conoco Phillips and Exxon Mobil Corp., which hold 36 percent interest each.

Federal and state lawmakers, watchdog groups and Wall Street say they are pleased with progress, but still seek answers to what truly led to the leaks and a 10-week long partial shutdown that began Aug. 6, 2006.

On that day, BP began reducing Prudhoe Bay operations after discovering its second leak in six months, ultimately cutting the field's daily production by about half. At the time, it was producing more than 400,000 barrels of oil per day, or about 8 percent of the nation's production.

By mid October the company had returned to the level before the shutdown. By then about 13 million barrels of oil had been kept from the market. It also contributed to a 12.5 percent drop in average daily production for the entire North Slope that includes Prudhoe Bay.

Daily average in the state's fiscal year, ending June 30, fell from 844,000 to 738,000 barrels. Fields, however, are already in natural decline and production was also affected by poor weather at the Valdez Marine Terminal where tanks are loaded.

Since last year's shutdown, Brock says, changes to BP's management structure have removed bureaucratic layers and helped the integrity of the company's operations. This means getting to problems faster before they become serious, and enhanced communication with front-line employees.

David Totemoff, a 30-year employee who was in Prudhoe Bay when the first barrel of oil was being shipped in the summer of 1977, said the work environment has changed from last year when public criticism wore thin with some of the proud work force.

"What we see now is a way better positive deal for all of the people working here," he said "We've had lots of ups and downs, but it's easier to ask questions and raise issues.

"Last year was tough because I didn't know how to take some of the stuff that was said, knowing all the work we do up here."

Additionally, BP chose to replace 16 miles of the transit line rather than continually doing patchwork.

So far, eight miles have been built but none of it will be used until the entire line is complete. For now, bypass lines serve as temporary conduits to the field's gathering centers where oil, natural gas and water are separated before being shipped on an 800-mile trans-Alaskan pipeline to the Valdez Marine Terminal.

"I think by putting in new facilities, this is a good statement what we are doing is, we are going to be here producing oil for another 50 years," said James Fausett, a 25-year employee who serves as BP's area manager for Prudhoe Bay.

Upgrades and management changes are half the battle for BP.

Federal and state lawmakers still are dogging the company, and that scrutiny could spill over to the company's partners, Exxon Mobil and Conoco Phillips.

In recent committee hearings, legislators in Alaska and Washington, D.C., have questioned whether cost-cutting measures were a higher priority than maintenance and safety.

"I'm very, very unhappy; in fact, I'm downright mad," said state Rep. Carl Gatto, a Palmer Republican who co-chairs the state House Resources Committee. "Is this neglect? Absolutely. Does it go all the way to criminal? I have trouble with that, but I don't have trouble saying it's egregious."

Gatto said he has requested more information from BP, Exxon and Conoco Phillips about the decisions made behind the lax maintenance practices that led to the leaks.

He and other lawmakers also are struggling to decide whether BP should be allowed to deduct a portion of the $250 million new pipeline costs under the state's new petroleum tax laws. A bill to prohibit deductions on repairs to poorly maintained facilities is currently stuck in an Alaska House committee.

Failure thus far to pass the measure has bill backers, including Republican Gov. Sarah Palin, and critics questioning the appearance of a longtime cozy relationship with oil companies.

For now, the state is assembling a team of inspectors and engineers dedicated strictly to oversight; it also has set aside $5 million to inspect all of the state's oil and gas facilities over the next several years.

"I won't kid you; we've got a lot of work to do, in my opinion, to determine the focus and what some of the oversight gaps and risks of those gaps are," said Marty Rutherford, the state's deputy commissioner for the department of natural resources. "It's an important message for the nation to be comfortable with what we are doing."

Wall Street wants assurances that the North Slope, as well as BP's other North American operations, are not going to grab more headlines, as happened briefly in late May when a water pipeline leaked, causing another partial, yet smaller, shutdown.

Ron Oster, analyst with A.G. Edwards, says it's too early to judge whether BP has emerged from some of its troubles, which also include problems at two North American refineries and startup problems in a Gulf of Mexico deepwater project.

On Tuesday, BP's chief executive, Tony Hayward, acknowledged that BP still was struggling to recover from these incidents when the company reported a 1.5 percent quarterly earnings boost that came largely from a refinery sale to offset production declines.

Time will tell, Oster said.

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KTUU.com
July 27, 2007

http://www.ktuu.com/Global/story.asp?S=6853039

The final leg of the pipeline journey
by Mike Ross
Friday, July 27, 2007

VIDEO
javascript:playVideo('1623029',%20'How%20Exxon%20Valdez%20changed%20the%20pipeline',%20'v',%

The Pipeline at 30: Beyond Prudhoe

VALDEZ, Alaska -- The end of the line for the trans-Alaska pipeline is in Valdez and is also the scene of one of the nation's worst environmental tragedies in history -- the Exxon-Valdez Oil Spill.    

But as the pipeline marks its 30th anniversary, the company that runs the pipeline, and environmentalists, say much has been done to make sure it never happens again.

The marine terminal is just a couple of miles across the harbor. It takes about two weeks for oil to travel from Prudhoe Bay to Valdez. The oil is then stored in giant tanks until it's loaded onto ships for the trip to refineries in the Lower 48.

Since our last report, we drove along the final 250 miles of the pipeline route. South of Delta Junction, the pipeline reaches the foothills of the Alaska Range, then crosses the swift waters of Castner Creek, where the pipe survived a 7.9-magnitude earthquake in 2002.

The final big barrier the pipeline builders faced is Thomson Pass in the Chugach Mountains.   

It's an area so steep, workers and equipment had to be hung by cables to build the pipeline here.

It sits perched among the mountains and the mist of Valdez, the end of the line. Like everything else in this system, its dimensions are Alaska-sized.

Eighteen tanks will hold the entire volume of  the 800 miles of pipeline from Prudhoe Bay to the Valdez terminal.

That's more than 9 million barrels of oil in this 1,000 acre facility that cost $1.4 billion to build.    

The marine terminal operates 24 hours a day, 365 days a year. During the past 30 years, more than 15 billion barrels of oil have passed through this port.

Ship escort and Response Vessel Operations Manager David Lawrence said the port has handled a lot of traffic.

"At our peak flow rate, we were having as much as 70 tankers a month coming in and taking this crude oil to different ports around the United States," Lawrence said.

But there is one tanker voyage that is forever etched into the memories of the people who work and live here. The Exxon Valdez ran aground on Bligh Reef shortly after midnight on Mar. 24, 1989 and 11 million gallons of crude oil spilled into Prince William Sound.

It was an environmental disaster without equal. Lawrence was here when it happened.

"Disbelief at first was kind of the emotion, and just a sense of despair. It was tragic for not only employees but to the community," Lawrence said.

Almost two decades later, the oil spill still haunts Prince William Sound. Stan Stephens keeps oil found as far away as Elenor Island that was spilled in the Exxon Valdez accident 18 years ago.

Stephens runs a popular glacier and nature cruise in Valdez and has also been a crusader in preventing future spills. He still sees the Exxon Valdez oil that continues to pollute the shoreline even today.

"You know, this is really sickening when you look at it," Stephens said.

The oily sheen on Valdez' shores makes Stephens angry and that much more determined.

"The point is, we can't do this to Prince William Sound again. We have to make sure that we prevent any other accidents, because 18 years later, we still have oil doing damage," Stephens said.

Alyeska Pipeline Service Co. says it's learned from the tragic mistakes of the Exxon Valdez.

The first line of defense is a fleet of super tugboats that now escort tankers all the way through the sound and can stop the huge ships if they lose power or control.

Strategic Planning Manager Bruce Painter said there is one main goal.

"Prevention is really the key. If we can work proactively to keep the tanker from running aground and keep the oil in the hull, it's a lot easier than having to respond to a spill after the fact. Once the oil is in the water, our job is a lot tougher," Painter said.

But if the unthinkable happens again, Alyeska says it's much better prepared now to respond. A 400-foot barge full of oil spill cleanup equipment stands at the ready just across from the terminal.

Ship Escort and Response Vessel System Manager Mike Meadors said if a spill does occur, they're ready.

"We have over 35 different skimming systems that have a capacity of several hundred thousand barrels an hour to be able to pick up any spilled oil," Meadors said.

Four other oil spill response barges are pre-positioned around Prince William Sound. The crews of an armada of fishing vessels have been trained to join the clean-up on short notice as well.   

Stephens said while there's still room for improvement, he's generally pleased.

"Probably the biggest thing is the opening of communication between the oil industry and the citizens, and I think that's really helped a lot," Stephens said.

The Exxon Valdez Spill was the pipeline's darkest hour, but the people who work the line also see it as a critical turning point in their attitudes and actions to protect the environment in the future.

"We also feel a debt and a responsibility to the people of Prince William Sound to protect their way of life and to protect their homes. So we take the role very seriously," Meadors said.    

Alyeska says there's been a common misconception through the years that the pipeline was only designed to last 20 or 30 years. The company says that was actually the original time estimate for the life of the Prudhoe Bay oilfield, not the pipeline.

Thirty years later, the oil continues to flow from Prudhoe Bay and the operators of the pipeline say they believe that with proper maintenance and care, the pipeline could last indefinitely and help Alaska's economy for decades to come.

At opposite ends of Alaska, there are two monuments that mark milestones in the pipeline's and the state's history. In the far north sits the discovery well, where oil was first found at Prudhoe Bay, and in Valdez, a tribute stands to the workers who built the pipeline.                                                          

It bears their motto: "We didn't know it couldn't be done."    

Those words define the people who built an 800-mile modern miracle that, in turn, built the Alaska we have today.     

Contact Mike Ross at mross@ktuu.com

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Financial Times
July 24, 2007

http://www.ft.com/cms/s/e534b02e-39b8-11dc-9d73-0000779fd2ac.html

Production fall hits BP profits
By Peter Marsh
Published: July 24 2007 09:11 |
Last updated: July 24 2007 09:11

BP on Tuesday reported a 13 per cent fall in second-quarter profits, on the back of a decline in oil production and operational problems at the company’s US refineries.

The decline in profits  to $5.3bn from $6.1bn in the equivalent period in 2006  underlines the energy giant’s failure to take advantage of rampant oil and gas demand at the time when the global economy is strong.

BP said that oil and gas production in the three months to the end of June was 3.8bn barrels of oil equivalent a day (boe/d), down 5 per cent on the equivalent time last year.

It said the amount of oil being processed at its refineries in the second quarter fell to 2.1bn barrels a day, down 7 per cent on the comparable three months in 2006.

The lower refining volumes were linked to stalled production at some of its refineries in the US mid-west, even though output at its Texas City refinery, the scene of a disastrous explosion in 2005, had started to come back on track.

In an indication of the production and processing difficulties, net cash from operating activities fell steeply in the quarter to $6.1bn, from $9.1bn.

The lower profits and production marred the first set of financial results from Tony Hayward, BP’s new chief executive. Mr Hayward took the top job in May after a long period of management turmoil led to the enforced departure of Lord Browne as chief executive.

The earnings decline to $5.3bn was at the level of clean net profits, which strips out non-operating items.

The company’s replacement cost profit  which included an earnings contribution from non-operating items of $741m  came to $6.1bn, flat compared with the equivalent period a year earlier.

BP is paying a dividend of 10.825 cents a share, up from 9.825 cents a share a year ago. Earnings per share at the level of replacement costs rose marginally to 31.67 cents (30.28 cents)

For the first half, BP’s replacement cost profit was $10.5bn, 8 per cent down on the $11.4bn announced in the first six months of 2006.

Higher costs as well as lower volumes led to a 12 per cent decrease in the replacement cost profit for the exploration and production side of the business in the second quarter, which fell to $6.9bn from the equivalent time a year ago.

However, replacement costs profits for refining and marketing increased 48 per cent over the same period to $2.7bn.

This result was helped by a $767m non-operating gain from asset disposals as well as higher refining margins linked to high demand for many types of petroleum products including petrol.

The company maintained its forecast that oil and gas production for the year would at 3.8bn-3.9bn boe/d, in line with the second quarter.

Shares in BP were 0.6 per cent higher at 605p in early London trading.

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http://www.ft.com/cms/s/490a52aa-3943-11dc-ab48-0000779fd2ac.html

Hayward set for his first BP challenge
By Ed Crooks in London
Published: July 23 2007 22:35 |
Last updated: July 23 2007 22:35

Tuesday’s half-year results for BP, presented by Tony Hayward for the first time since he took over as chief executive in May, are expected to be a stark reminder of the challenge the? company faces.

Analysts think profits for the second quarter will be about $5bn, roughly $1.5bn behind those of BP’s great rival Royal Dutch Shell, which reports on Thursday.

The company still has many strengths. It has good assets in places such as Angola and Azerbaijan and with the resolution of the dispute over the Kovykta gas field in eastern Siberia, it appears to have stabilised its position in Russia, albeit at the cost of losing control of the field at a knock-down price. The potentially significant exploration deal signed with Libya has raised hopes about BP’s future.

Mr Hayward has arrived with substantial goodwill from investors hoping for a new? start. Initial reviews have been largely favourable, particularly for his talk about focusing on “safe and reliable operations”.

But he faces a daunting challenge in his bid to turn the company round. In the view of some analysts, what he will need to do is overturn the entire structure and culture of BP.

Neil McMahon, an analyst at Sanford Bernstein, put it this way: “The key, in our opinion, to a recovery story is a change to the organisational structure of the company.”

The roots of today’s BP go back to former chairman and chief executive Sir Robert Horton’s ‘Project 1990’ restructuring plan, with its emphasis on cutting back the corporate centre and giving more autonomy to individual business units.

Lord Browne’s BP was characterised by a combination of strict financial controls imposed from the centre and a high degree of managerial independence in operational terms.

Business unit leaders  the ‘Buls’  were put in charge of an operation such as an oil field or group of fields, with staff numbers ranging from a few hundred to a few thousand, set demanding financial objectives and told to get on with it.

As one former executive puts it: “The business unit leader was pretty much a medieval lord, as far as the running? of? his? fiefdom went.”

The contrast with ExxonMobil, the acknowledged global leader in the industry for safety and engineering excellence, could not be sharper.

Exxon is organised on functional lines, so that the global exploration operation, for example, is a single division, helping spread best practice and new technology rapidly around the company.

Rex Tillerson, the chairman, said recently: ‘Wherever you travel in the ExxonMobil world, you will hear consistent strategies and approaches, consistent expectations for the high standards for safety and operational performance.’

Senior management also takes a hands-on approach.

BP’s much less centralised approach to operational decision-making had many strengths: it encouraged entrepreneurialism and initiative; it smoothed the rapid integration of the companies that BP acquired in its four-year spree from 1998-2001, and it helped drive down costs to deliver outstanding financial performance. But it also had its weaknesses.

As Robin West of consultancy PFC Energy puts it: ‘BP was very well configured for the low oil price environment: it could outsource and slash costs very effectively. But getting resources into the right projects is a different challenge altogether. As chief executive of an oil company, the main challenge now is to get projects executed and completed on time and on budget.’

Decentralised operations have inhibited BP’s ability to share best practice around the? group, which can be vital when investing in challenging and high-value projects, such as the notoriously troubled Thunder Horse platform in the Gulf of Mexico.

They have also hindered the board from knowing exactly what was going on on the ground.

‘There is a sense that the centre doesn’t want to hear bad news,’ the former executive says.

The incentives for the Buls to conceal problems and the lack of effective ways for top management to check what they were being told, have been blamed for slip-ups such as BP’s embarrassing failure to hit its production targets in 2002.

In the worst case, top management’s lack of detailed operational knowledge led to lapses in safety. An internal BP probe into the 2005 Texas City explosion found that John Manzoni, the then-head of refining and marketing, who left BP in May, should have carried out a “much deeper dive” into the true state of the refinery after “clear warning signals” from previous accidents.

Attempts at BP to pool the knowledge of its staff worldwide have had a mixed record. ‘Peer assist’, which brings together experts to advise on an operational problem, is said to have slipped into the doldrums after the Amoco and Arco mergers at the end of the 1990s.? Great Operator Teams, another plan to spread best practice, had a patchy effect.

Mr Hayward, who is an avowed admirer of the standards set by Exxon, does not want to replicate its centralised structure. But he does want to strengthen BP’s global functions. The creation under Lord Browne of a global safety function, headed by John Mogford, is likely to be a model.

Strengthening the global functional units should also help curb BP’s costs. In the past few years, when the emphasis has been on expansion rather than contraction in the industry and cost inflation has been rampant, BP’s structure has failed to control costs effectively.

Allowing so much operational independence to the business units has encouraged them to develop their own activities, often chasing up blind alleys or duplicating initiatives.

‘Instead of cutting money, they have now got to spend it,’ Mr McMahon says, ‘and each unit is trying to reinvent the wheel.’

Taking on BP’s barons will not be easy, however. Trying to strengthen global functions without adopting Exxon-style centralisation risks foundering, the way that earlier efforts have failed and creating additional costs. The outcome is likely to be decisive in determining whether Mr Hayward’s tenure is seen as a success or a failure.
 

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Anchorage Daily News
July 10, 2007

http://www.adn.com/money/industries/oil/story/9120055p-9036365c.html

BP says Exxon might seek spill payments from other producers
DAMAGES: The lead lawyer for the plaintiffs calls the ploy unrealistic.
By WESLEY LOY
wloy@adn.com
Published: July 10, 2007
Last Modified: July 10, 2007 at 03:16 AM

Exxon Mobil Corp. might try to force other oil companies to pay part of the court costs and damages arising from the 1989 Valdez oil spill, and if it does the company can expect a fight, one of Exxon's rivals said in a recent financial disclosure.

London-based BP said Exxon "has indicated that it may file a claim for contributions" against Alyeska Pipeline Service Co., an energy company consortium that runs the 800-mile trans-Alaska oil pipeline and tanker port at Valdez.

In the early days of the spill -- which occurred when an Exxon tanker ran aground in Prince William Sound -- Alyeska handled the cleanup until Exxon took over.

Five companies currently own Alyeska, with BP holding the biggest share at 47 percent. Conoco Phillips holds 28 percent and Exxon 20 percent.

If Exxon does seek to spread costs and damages, "BP will defend the claims vigorously," BP said in a March filing with the U.S. Securities and Exchange Commission.

The statement seems to raise the specter of continuing legal warfare -- and possibly more delay in payment of punitive damages -- in the epic civil case in which thousands of commercial fishermen and others are seeking billions of dollars from Exxon.

The case is awaiting word from the U.S. Supreme Court on whether justices will review it, as Exxon lawyers have requested. As it stands now, the 9th U.S. Circuit Court of Appeals in San Francisco has ordered Exxon to pay $2.5 billion plus interest.

Spokesmen for Texas-based Exxon did not respond Monday to a request for comment on BP's financial disclosure.

An Anchorage lawyer for the fishermen and other plaintiffs said he doesn't think the BP statement means much.

The lawyer, David Oesting, called it "boilerplate" language included in BP's financial disclosure as an overly cautious warning to shareholders of possible claims from Exxon.

In any event, Oesting said, he sees no chance such claims from Exxon could cause further delay in payments to his clients once the Supreme Court either rejects the case or upholds the lower court ruling.

The reason, he said, is because claims against Alyeska were settled in 1993, and Exxon did not appeal for the right to seek contributions from other Alyeska owners.

In Oesting's view, Exxon isn't likely to do so now, and BP is being too cautious in suggesting it in a financial disclosure.

"Somebody at BP isn't doing their homework," he said.

Daren Beaudo, an Anchorage spokesman for BP, said he couldn't say much beyond what was disclosed to the SEC.

"It is pretty clear to me that this is a speculative issue but one where we felt it necessary to make a declaratory statement as part of this routine SEC filing," he said.

A class that now includes about 33,000 commercial fishermen, cannery workers, landowners, Natives, local governments and businesses originally won a $5 billion punitive damages jury verdict against Exxon in 1994 for the 11million-gallon oil spill. They've been trying ever since to preserve and collect the judgment as Exxon has appealed through the courts.

Oesting said Monday he's heard nothing from the Supreme Court, which is the final arena for the case. He has said it's possible the high court could decide perhaps by November whether to take the case.

E-mail Wesley Loy at wloy@adn.com or call 257-4590.

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http://www.adn.com/money/industries/oil/story/9120090p-9036386c.html

BP holds onto pay for past execs
OIL: Browne and Manzoni face lawsuit over accidents; ability to pay worries plaintiffs.
The Associated Press
Published: July 10, 2007
Last Modified: July 10, 2007 at 01:00 AM

LONDON -- BP said Monday it has temporarily frozen severance payments worth around $4 million owed to former chief executive John Browne and former refining chief John Manzoni.

Shareholders sought the freeze as part of a U.S. lawsuit seeking damages for alleged mismanagement by executives.

According to the lawsuit filed last October in state Superior Court in Anchorage, shareholders were concerned they would not be able to recover money from Browne and Manzoni.

They are seeking unspecified damages from 39 current and former BP executives and directors after a series of blunders at the company, including a spill at the Prudhoe Bay pipeline last year and a deadly Texas refinery explosion in 2005.

BP said it had voluntarily decided to withhold payments worth more than $3 million to Browne and payments of almost $1 million to Manzoni for 60 days while the court case is resolved. The freeze does not relate to the pair's pension packages.

Browne stepped down in May, when he was replaced by exploration and production head Tony Hayward. Manzoni left his position as refining head at the same time but is still a managing director with the company until September.

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http://www.adn.com/money/story/9120895p-9037189c.html

More information brings NPR-A drilling closer
Teshekpuk: Cumulative impacts of the neighboring development are reviewed
The Associated Press
Published: July 10, 2007
Last Modified: July 10, 2007 at 03:27 AM

FAIRBANKS - The Bureau of Land Management could go ahead with plans to allow drilling in a sensitive area near Teshekpuk Lake on the North Slope, an agency spokeswoman said.

The BLM added to its environmental impact assessment of drilling in the area and that information is now being reviewed, spokeswoman Sharon Wilson said.

The results of the review should be completed soon, she added. The review is the latest development in the fight between federal land managers in favor of oil and gas drilling and environmental and Native groups wanting to keep the area closed because of its importance to migratory birds and caribou.

The land in question covers roughly 400,000 acres and lies to the north and east of Teshekpuk Lake. It sits within the 4.6 million-acre northeast planning area of the National Petroleum Reserve-Alaska.

The U.S. Geological Survey estimates the entire NPR-A contains between 6 billion and 13 billion barrels of oil, putting it roughly on par with the Arctic National Wildlife Refuge to the east.

Last year, the BLM approved a plan opening the sensitive area around Teshekpuk Lake to limited oil and gas drilling.

The plan restricted the number of leases in the area, the overall acreage developed and the time of year when work could be done. Leases were included in an NPR-A lease sale scheduled for later that year.

But shortly before the sale, a federal judge sided with environmental groups and blocked the sale of leases in the northeast planning area. The judge claimed the BLM had not sufficiently accounted for cumulative impacts associated with development in the neighboring northwest planning area.

In November, the bureau announced it would develop a Supplemental Environmental Impact Statement to address cumulative impacts. Wilson said the supplemental was originally expected out in June and will be released soon.

“We’re just adding new information, revising information based on new information, and then addressing the concerns of the court,” she said. Among other things, the new document will take into account a recent assessment of public health concerns.
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Anchorage Daily News
July 6, 2007

http://www.adn.com/money/industries/oil/pipeline/story/9109523p-9025805c.html

State eyes safety issues at BP plant
PRUDHOE BAY: Critics say natural gas facility is far over capacity.
By STEVE QUINN
The Associated Press
Published: July 6, 2007
Last Modified: July 6, 2007 at 02:50 AM

JUNEAU -- State labor department officials on Thursday said they are reviewing congressional concerns about alleged safety risks at a natural gas processing facility operated by BP in Prudhoe Bay.

Among the allegations is that the facility is holding nearly double its safe capacity, putting workers' lives at risk.

State officials have said the London-based company plans to back up claims it made to Alaska Occupational Safety and Health officials that there is no imminent danger to the plant's work force or any other area workers. It was not immediately known when these comments were made.

"Our policy is to cooperate fully," said BP spokesman Steve Rinehart. "If the labor department wants information, we'll provide that to them."

The Alaska Department of Labor and Workforce Development responded Thursday to a fax sent last week by U.S. Rep. George Miller, D-Calif., outlining several concerns about workplace safety.

In his letter, Miller said his concerns stemmed from allegations brought by "employee representatives."

Alaska Labor Commissioner Click Bishop was not available for comment Thursday, nor did he address any specific concerns raised by Miller in the department's response.

But in the written statement, Bishop offered a sweeping comment, saying the department, "is committed to workplace safety and health for all workers across Alaska -- it is our highest priority."

According to Miller's letter, the facility and compressor plant were designed to contain no more than 5 billion cubic feet of compressed gas, but inventories have reached 9.2 billion cubic feet, "potentially putting 1,000 lives at risk in the event of a major catastrophe."

But Rinehart said no more than 50 people work at those facilities, which sit in a vast open section of the Prudhoe Bay operations.

Miller said in his letter to the state that BP and federal work force agencies also were notified of his concerns.

"We are going to answer in full detail to the congressman and do it promptly," Rinehart said. "I can't tell you when we will have an answer, but we don't intend on keeping the congressman waiting long."

Miller is chairman of the House Education and Labor Committee, which in March held a hearing on the 2005 explosion at BP's Texas City plant that killed 15 people and injured 170.

More than 200,000 gallons of oil leaked at Alaska's Prudhoe Bay field in March 2006 due to corrosion. Five months later, after another leak, BP partially shut down the nation's largest oil field, which it operates on behalf of itself, Conoco Phillips and Exxon Mobil.

BP has pledged to replace 16 miles of corroded pipeline by the end of next year at a cost of about $250 million.

The state's Department of Labor on Thursday also said it has also been reviewing fire suppression systems at a gathering center where oil, natural gas and water are separated.

This review began June 5, long before Miller's letter was sent, and is not complete, the department said.

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