PDF _ RL33629 - BP Alaska North Slope Pipeline Shutdowns: Regulatory Policy Issues
18-May-2007; Paul W. Parfomak; 18 p.

Update: Previous Releases:
January 9, 2007
October 11, 2006

Abstract: 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) 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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Topics: Natural Resources, Public Lands, Risk & Reform

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