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BP to face criminal probe over US oil spill
By Sheila McNulty in Houston
Financial Times

Updated: 9:10 p.m. ET June 7, 2006

BP is facing a criminal grand jury investigation into the biggest oil spill ever on US soil – a corroded transit line that leaked up to 270,000 gallons of crude in Prudhoe Bay, Alaska, triggering investigations by federal and state agencies.

If the investigation goes against BP the company will face prosecution which – in the worst case scenario – could result in prison terms, significant fines and tighter restrictions around BP's operations.

The Financial Times on Wednesday obtained an e-mail from Steve Marshall, president of BP Alaska, telling staff the UK company had received on April 26 a subpoena from a federal grand jury in Alaska. The grand jury, he said, had asked for "a variety of documents and data from BP Alaska concerning the transit line and certain other operational areas.'' He urged them to treat the matter as confidential.

The investigation is not only highly unusual for a major oil company but embarrassing for BP and could result in legal proceedings against the company and individuals. The company has denied claims it failed to maintain the transit line, saying it had "manageable corrosion rates" in the pipeline.

Mr Marshall said BP was fully committed to cooperating and told staff they may be contacted to assist in helping BP answer the subpoena, also urging them to cooperate.

Daren Beaudo, BP spokesman, confirmed the message, noting that Mr Marshall had said: "I believe that the information we provide will show that the actions of BP Alaska were, at all times, proper.''

The grand jury investigation comes as BP's US operations are under heightened scrutiny following a string of accidents and regulatory violations – most notably the March spill in Alaska and an explosion last year at its Texas City refinery that killed 15 people and injured an estimated 500.

BP is already facing a grand jury probe in Texas for that accident – at the company's biggest refinery – meaning it could face legal retributions from two of its biggest US operations.

Ronnie Chappell, BP's Texas spokesman, declined to comment on the investigation of the Texas refinery, at which the US Department of Labor uncovered more than 300 violations, leading to a settlement to improve processes and pay a maximum allowable $21m fine.

The grand jury probe in Alaska was provoked by Chuck Hamel, an advocate for oil workers in Alaska, who approached federal criminal investigators last year with concerns of former BP personnel over malfeasance in the company's Corrosion Inspection and Control Division.

These workers warned of a spill of the kind that took place in March at Prudhoe Bay, the US's largest oil field, which Mr Hamel said meant investigators were not surprised when it happened.

Mr Hamel said on Wednesday he was pleased "for the courageous whistleblowers that justice will finally prevail".

Their win is Mr Marshall's loss, for in an internal e-mail in 2003, he warned staff: "Beginning now, we will focus on safety as we have never focused on it before, as if our lives and our future in Alaska depended on it. Because they do.''
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