October 26, 2007

BP Products North America to pay largest criminal fine ever for environmental violations

Washington, D.C. – BP Products North America Inc. has agreed to pay a total criminal fine of more than US$60 million for violations of federal environmental regulations in Texas and Alaska, and will spend approximately US$400 million on safety upgrades and improvements to prevent future chemical releases and spills. It is the largest criminal fine ever assessed against a corporation for Clean Air Act violations in the U.S., and is the first criminal prosecution of a requirement that refineries and chemical plants take steps to prevent accidental releases.

“BP committed serious environmental crimes in our two largest states, with terrible consequences for people and the environment,” says Granta Nakayama, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Today’s agreement sends a message that these types of crimes will be prosecuted.”

BP will pay US$50 million for an explosion in 2005 that killed 15 people and injured more than 170 others at its Texas City refinery, and US$12 million for spilling 200,000 gallons (757,082 litres) of crude oil onto the Alaskan tundra and onto a frozen lake in March 2006, resulting in the largest spill ever on the North Slope.

In addition to the fines, BP will serve three years of probation for the Texas City explosion and is required to complete a facility-wide study of its safety valves and renovate its flare system to prevent excess emissions, at an estimated cost of US$265 million. For the Alaska spill, it will serve three years probation, pay US$4 million each to the National Fish and Wildlife Foundation and to the state of Alaska, and replace 16 miles (25.7 km) of pipeline, at an estimated cost of US$150 million.

The Texas City explosion occurred when hydrocarbon vapour and liquid released from a stack ignited during the process of increasing octane levels in gasoline. Investigators learned that operators regularly failed to follow written standard operating procedures for ensuring the mechanical integrity of safety equipment; that the stack where the release occurred had been in poor operating condition since at least April 2003; and that alarms failed to function or were ignored.

Investigators determined that the 2006 Alaska leak was caused by a buildup of sediment in the pipe, that BP failed to properly inspect or clean the pipeline, required by law to prevent corrosion, and that the company became aware of increased corrosion in 2004.

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