BP to Pay $25 Million as Penalty for Alaskan Oil Pipeline Spill in 2006

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On May 3, BP Exploration Alaska, Inc. made an agreement to pay $25 million as a penalty to Alaska.  This penalty came to BP as a result of spilling more than 5,000 barrels of crude oil from its pipelines on Alaska’s North Slope in 2006. About $20 million of the fee that BP is required to pay will go to Oil Spill Liability Trust Fund, and the remaining amount will be put into the US Treasury.

The cause of the spill was corrosion of BP’s pipeline.  The Alaskan government filed suit against BP in Anchorage federal court in March 2009 for inadequate maintenance.

  

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Representation for BP was given by Randal Buckendorf, chief counsel, as well as outside counsel Carol Dinkins, who is from Vinsen & Elkins Houston office.

According to Ignacia Moreno, assistant attorney general for the Justice Department’s Environment and Natural Resources Division, “This penalty should serve as a wake-up call to all pipeline operators that they will be held accountable for the safety of their operations…”

It has already cost BP $200 million to replace the leaky pipelines, and according to the settlement yesterday, it is now required to develop a program that is system-wide to manage the integrity of its 1,600 miles of pipeline on the North Slope of Alaska, which will cost about $60 million more.

Since the spill in 2006, BP also paid a criminal fine of $20 million after pleading guilty in 2007 to a misdemeanor violation of the Clean Water Act.