WASHINGTON—BP's top U.S. executive acknowledged Wednesday that company budget pressures "put our employees in a difficult place," but he stopped short of saying that cost-cutting contributed to the largest oil spill ever on Alaska's North Slope.
Pipeline corrosion and leaks caused two accidents last year that spilled more than 200,000 gallons of oil in the Prudhoe Bay oilfield.
"We recognize there were extreme budget pressures at Prudhoe Bay," BP America chairman Robert Malone told lawmakers investigating the oil spill.
Asked by Rep. Bart Stupak, D-Mich., whether that pressure could have contributed to a culture that compromised pipeline maintenance, Malone said, "It not only could have, we believe it did."
But Malone, in a long-delayed appearance before an oversight panel of the House Energy and Commerce Committee, blamed faulty "risk assessment processes," not budget pressures, for the two accidents.
"In the absence of better risk assessment processes, budget pressures alone would not have prevented the leaks," Malone said, citing the conclusion of a recently completed report by consultant Booz Allen Hamilton, which was commissioned by BP.
Nevertheless, Malone and a panel of federal and state regulators acknowledged that a pattern of cost-cutting measures was intended to save BP money on safety, corrosion-inhibiting chemicals and inspections.
Carolyn Merritt, chairwoman of the U.S. Chemical Safety Board, an independent federal agency that investigates chemical accidents, said she found "striking similarities" between the causes of the Prudhoe Bay spills and a 2005 explosion at a BP Texas City, Texas, refinery that killed 15 workers.
"Virtually all of the seven root causes identified for the Prudhoe Bay incidents have strong echoes in Texas City," she said. "Our report describes what BP itself called a `checkbook mentality.' Budgets were not large enough to control known risks, but spending was nonetheless limited to the budgets provided."
The committee Wednesday confronted Malone with internal BP documents describing worker frustration over budget constraints in recent years.
Chairman John Dingell, D-Mich., and other committee Democrats emphasized that much of the apparent cost-cutting took place in the years leading up to the accident, when BP made more than $106 billion in profits.
Malone emphasized that the budget pressures facing BP derived from a 75 percent reduction in oil production in Prudhoe Bay since 1990, as well as from the comparatively low oil prices during much of the 1990s and early 2000s.
But in a largely conciliatory presentation intended to show Congress that BP has turned a page, Malone acknowledged many of the management failings that critics have leveled at the company, particularly those that occurred before he took over in July—four months after the first of the North Slope spills.
"It is disturbing to me if even one person in our organization thought of options placing budget considerations over the safety and integrity of our operations," he said. "It is clear that budgets impacted our culture, and that we stopped being curious."
He acknowledged that the public's faith in BP has been tested over the past two years by the Alaska oil leaks and the Texas refinery explosion, experiences that, he said, "have changed BP and all of us who work for the company."
"Please know we get it," he told the lawmakers. "We know what's wrong, and we have a plan for fixing it. We just need time to make these changes."
But Malone's promise to cooperate with investigators was challenged by committee leaders upset by the deletion of a passage in the Booz Allen Hamilton report that suggests a link between the leaks and BP's cost-cutting.
The 29-word passage cites "budget pressure" as a reason for putting off a corrosion monitoring technique known as running pigs—inspection devices that slide through pipes. The reference was dropped after BP complained that the incident didn't involve the transit lines that leaked.
Stupak, who chairs the oversight panel, suggested a "whitewash." Malone called it a correction.
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(c) 2007, McClatchy-Tribune Information Services.
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