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BP Alaska North Slope Pipeline Shutdowns:
Regulatory Policy Issues
Summary
On August 6, 2006, BP Exploration (Alaska), Inc. (BP) announced the
shutdown of the Prudhoe Bay area oil field on the North Slope of Alaska to conduct
major repairs following the discovery of severe corrosion and a small spill from a
Prudhoe Bay oil pipeline. The loss of North Slope oil production initially was
expected to cut overall U.S. oil supplies by approximately 2.6%. Corrective
measures, however, allowed BP to restore nearly 100% of is Prudhoe Bay area
supplies by early December, 2006, while longer term repairs were underway.
The unexpected discovery of severe corrosion problems in BP's pipelines and
the sudden loss of Prudhoe Bay oil supplies have drawn intense media attention and
strong criticism from Congress. Congressional Committees have held hearings to
examine BP's maintenance problems and the adequacy of federal pipeline safety
regulation administered by the Department of Transportation (DOT). The Pipeline
Safety Improvement Act of 2006 (P.L. 109-468) mandates the promulgation of new
regulations covering the types of pipelines used by BP on the North Slope, among
other provisions.
BP executives have admitted to the inadequacy of the company's maintenance
program for its North Slope pipeline operations. Likewise, federal policy makers and
pipeline safety regulators have acknowledged that "low-stress" hazardous liquids
pipelines like BP's North Slope pipelines should be under stricter federal oversight.
The federal Office of Pipeline Safety (OPS) expects must promulgate new
regulations covering such pipelines by December 31, 2007. In the meantime, the
agency has responded to BP's problems under its current regulations. The OPS's
Corrective Action Orders since March, 2006 have revealed the extensive corrosion
problems in BP's North Slope pipelines, have likely prevented additional oil spills,
and have facilitated BP's restoration efforts.
As BP's activities continue, Congress may consider ensuring that Prudhoe Bay
area pipeline restoration and OPS rulemaking remain on schedule. Congress may
review the specific requirements of the OPS's proposed low-stress pipeline
regulations to ensure they appropriately balance safety benefits and implementation
costs. Congress may also act to ensure that the OPS strictly enforces all its pipeline
safety regulations so that incremental problems in particular systems do not
accumulate and lead to major supply disruptions. In addition to these issues,
Congress may opt to assess how U.S. pipeline safety regulation fits within the
nation's overall strategy to ensure the reliability of critical energy infrastructure.
Most observers would argue that federal efforts to protect pipelines either from
accidents or security risks should be consistent in their consideration of pipeline
criticality to the nation's energy supplies. Reviewing how the federal government,
industry, and private groups work together to achieve common goals in pipeline
safety could be an oversight challenge for Congress.
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Perfomak, Paul W. BP Alaska North Slope Pipeline Shutdowns: Regulatory Policy Issues, report, January 9, 2007; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc817235/m1/2/?q=%22law%22: accessed May 21, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.