* Probe shows BP failed to adequately maintain pipelines
* Feds blame cost-cutting mentality for incidents
* Ruling ends state's litigation against spills
By Yereth Rosen
ANCHORAGE, Alaska, Nov 8 The U.S. state of
Alaska will collect $255 million related to BP Plc's
pipeline leaks and a resulting shutdown in 2006 in the Prudhoe
Bay oilfield, drawing a line under an accident that contributed
to the British company's U.S. troubles.
BP's share is $66 million since it will pay the award and
then be reimbursed by partners, including Exxon Mobil Corp
and ConocoPhillips, based on their proportionate
share of ownership, BP spokeswoman Dawn Patience said.
The payment, which is final and not subject to appeal,
includes a $245 million award from a panel of three arbitrators
and $10 million to settle civil assessments for the spills, the
state's Department of Law said on Thursday.
Also on Thursday, BP and lawyers for people and businesses
claiming damages from the 2010 Gulf of Mexico oil spill urged a
U.S. judge to approve a proposed $7.8 billion class-action
settlement. BP still faces civil and potential criminal
liability charges over that spill.
Corroded oil transit pipelines led to the Prudhoe Bay spills
in March and August of 2006 and the partial shutdown of the
field that year. A federal investigation concluded BP failed to
adequately maintain the pipelines and blamed a cost-cutting
mentality at the company for the incidents.
The arbitration panel concluded that the pipeline problems
and associated reservoir complications resulted in lost or
deferred production of more than 30 million barrels of oil and
natural-gas liquids until the end of the oilfield's life.
The $245 million payment, due Dec. 3, is for lost state
royalties and interest, said Breck Tostevin, senior assistant
Alaska attorney general. The $10 million, due Nov. 15, comprises
per-gallon environmental penalties for the spills, fines for
natural resource damages and other civil charges, he said.
The spill of March 2006, which went undetected for days, was
the North Slope's biggest oil spill on record. About 213,000
gallons leaked out of a corroded hole in the pipeline, according
to state and federal environmental officials.
The August spill was much smaller, but it triggered months
of production shut-ins to allow for cleanup, repairs and
replacement of the Prudhoe Bay transit-line system.
The state originally sought several hundreds of millions of
dollars in compensation for lost oil revenue. A state Superior
Court judge in late 2010 dismissed the state's claims for lost
oil-tax revenue but left the royalty claims intact.
BP argued that no money was owed to the state for lost
production, state officials said, but the case went to
arbitration last December.
Tostevin said the arbitrators' ruling ends the state's
litigation against BP for the 2006 spills and production upsets.
"This resolves the state's civil claims," he said.
In 2007, BP pleaded guilty to a misdemeanor environmental
crime and paid $20 million in fines to settle all federal and
state criminal investigations into the corrosion problems.