Friday, August 11, 2006

House Committee Plays Dogpile on BP

MSNBC reports that the House Resources Committee will undertake an investigation of BP's decision to shut down production at its Prudhoe Bay field -- questioning whether the shutdown was a "market strategy" to manipulate the oil market.

In a scathing letter sent to Lord Browne, BP chief executive, on Friday, Joe Barton, the powerful chairman of the House energy committee, suggests the Alaska shutdown could be part of a wider strategy by BP to influence the market, particularly in light of recent allegations by US regulators that the company engaged in illegal trading in the propane gas market. The company has denied those allegations.

Mr Barton this week said he would hold a September 7 hearing to examine BP's management of severe corrosion in its oil transit lines. In his letter, Mr Barton says evidence of BP's "chronic neglect" of the pipeline, and the subsequent damage that the shutdown has imposed on American consumers and the US economy is "not excusable".                   

Although Mr Barton, a Texan who is seen traditionally as a staunch defender of the oil industry, has not indicated whether he will call on Lord Browne to testify, the seriousness of the shutdown at a time when Congress wants to be seen as responsive to high petrol prices means that either the BP chief or another senior BP executive will probably have to face Mr Barton's wrath personally.

The lawmaker is understood to be incensed particularly by the shutdown because staff at the energy committee received reassurances from BP just a few months ago that a March oil spill, the result of a corroded pipeline, was "an anomaly".

"Following on the heels of the BP refinery disaster that killed 15 people in Texas City in 2005, and the oil spill . . . this latest incident once again calls into question BP's commitment to safety, reliability, and the responsible stewardship of America's energy resources," Mr Barton said.          

BP said it would assist the committee in its inquiry. The letter represents the latest sign that pressure is growing on the company in the US capital.

Apart from Mr Barton's committee, BP is under investigation by the Department of Justice, Department of Transportation and the Environmental Protection Agency. The probes and heightened criticism by lawmakers fly in the face of attempts by BP to craft carefully its image in the US as a responsible and eco-friendly oil company, in contrast to US oil giants.

Separately, BP said it would make a decision later in the day on whether to close the western portion of the Prudhoe Bay field after the transportation department found it was not necessary.

Economics, Energy, Governance/Management, Legislation, North America, Sustainability, Toxic and Hazardous Substances, US | Permalink

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