Corp-Ethics.com - Report: Alaska well explosion may cost BP $2.5 mln fine

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Date	Issue	Title
15th Dec 2003	Other Issue	Alaska well explosion may cost BP $2.5 mln fine

Report

ANCHORAGE, Alaska, Dec 15 (Reuters) - An Alaska agency has notified BP Exploration (Alaska) Inc., a unit of BP Plc , that it intends to fine the company $2.53 million for an explosion last year that nearly killed a worker at the largest U.S. oil field.

The Alaska Oil and Gas Conservation Commission issued the fine notice on Friday after investigating the Aug. 16, 2002 incident at the BP-operated Prudhoe Bay oil field that caused severe burns and broken bones to well worker Don Shugak.

BP's actions may have broken state law, the commission concluded, and the proposed fine reflects a calculation of $5,000 a day for the period from BP's last revision of its well-inspection program.

"That was the opportunity they had to correct things," commission chairwoman Sarah Palin said on Monday.

It is the largest fine ever proposed by the agency, said Palin and commissioner Dan Seamount.

BP has 15 days to appeal the findings, they said.

The company was not immediately available to comment.

The explosion and fire resulted from a build-up of extremely high pressure in the outer annulus of one Prudhoe Bay well, the A-22 well, the commission said. The explosion occurred after pressure grew in the outer layer of a well to more than 10 times its historic level, the commission report said.

In a report summarizing its investigation, the commission faulted BP for what it characterized as lax monitoring of the well as its pressure was building. Prior to the explosion, only one worker on a 12-hour shift was responsible for monitoring three production pads, with a total of more than 100 wells.

The investigation found that monitoring reports about the pressure building in the A-22 well were sparse, and there was no information about early attempts to relieve that pressure.

The commission also faulted BP for its well-operator training. Workers lacked a clear understanding of what they were supposed to do when well pressure started to build, the report said.

There was no apparent physical problem with the well casing, the report said.

After the explosion, the Alaska Oil and Gas Conservation Commission imposed some new rules mandating monitoring of oil wells, to take the place of a self-monitoring program previously practiced by BP.

"The incident was so major we figured we better have some more oversight," Seamount said.

The new rules have been phased in to cover all the major oil fields, he said. "We're putting together annual pressure rules for just about every field in the state," he said.

BP, too, has changed its operating and management procedures to tighten up well inspections, Seamount and Palin said.

The Alaska Occupational Safety and Health Agency in January cited BP for violating the state's worker-safety law and imposed a $6,300 fine.

Copyright 2003, Reuters News Service

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