Monday, May 3, 2010

Much Ado about British Petroleum

Now that BP has hit page one in a way that they rather not have, I've taken a look at what they've been up to over the past few years.

Here's a partial list of their trespasses. I realize that they aren't the only oil company that is guilty of environmental infractions, but they provide an interesting sampling of what can go wrong when you drill for, produce and refine hydrocarbons.

1.) Mississippi Canyon Spill (1998): In 1998, Hurricane Georges interrupted production from BP's Mississippi Canyon production platform 109. When production was resumed, oil did not reach the shore-based facilities and 3700 barrels of oil was spilled from an underwater pipeline. Oops!

Read more here.

2.) Endicott Hazardous Waste (1999): In 1999, BP pled guilty to the illegal dumping of hazardous waste on Endicott Island located in the Beaufort Sea off Alaska, an artificial island purpose-built for petroleum production facilities. BP and their contract drilling company Doyon Drilling were found to have injected waste substances including paint thinner, benzene and toluene into the subsurface. BP paid a criminal fine of $500,000 and an additional $22 million to resolve the associated criminal and civil cases. BP also admitted that it failed to adequately oversee environmental management on Endicott Island. As part of the agreement, BP was to establish a $15 million nationwide environmental management system at all of its facilities in the United States and Gulf of Mexico. I'd love to know where the paint thinner came from!

Read more here.

FYI, the EPA website is a goldmine of environmental infractions that will send chills down the spine of any endangered or non-endangered species!

3.) Toledo Refinery (1999): In 1999, BP was ordered by the EPA to monitor and correct the flaring of gases at its Toledo Refinery. BP emitted excessive quantities of sulphur dioxide by flaring hydrogen sulphide (rotten egg gas) which oxidized to sulphur dioxide. The company was found to have not notified nearby emergency response personnel when they were emitting pollutants from their refinery. The company was forced to pay $1.75 million to settle the environmental charges and a civil penalty of $1.4 million. In addition, they were to spend $350,000 to assist local governments set up emergency response systems.

Read more here.

4.) BP Texas City Refinery (2005): The Texas City Refinery is the third largest oil refinery in the United States. In March 2005, an explosion at this refinery killed 15 people and injured more than 170, the worst U.S. industrial accident since 1990. An inquiry and analysis found that BP neglected measures that would have enhanced the operational safety of the refinery. It was pointed out that budget cuts (in an attempt to save money and maximize profits) were responsible for deferred maintenance and replacement of obsolete or old equipment. In February 2009, BP agreed to spend $161 million on pollution controls and monitoring to resolve emissions issues at its Texas City refinery. In addition, BP agreed to pay a $12 million civil penalty and $6 million to reduce pollution in Texas City for Clean Air Act non-compliance. BP also estimates that it has paid compensation of over $1.6 billion to those injured and killed in the accident. In 2009, the Occupational Health and Safety Administration also fined BP $87 million for failing to correct safety issues revealed after the 2005 explosion. As well, BP paid a $50 million fine for breaches of Federal environmental regulations.

Read more here and here.

5.) Prudhoe Bay Oil Spill (2006): In 2006, an oil spill was confirmed at 5050 barrels of crude oil over nearly 2 acres from a dime-sized leak in a pipeline caused by corrosion. After the initial leak was discovered, BP examined the rest of its pipelines in the area and found that 16 miles of pipe was corroded and would have to be replaced. BP admitted that the pipeline had not been inspected internally since the early 1990s despite concerns raised by their own field employees. When the additional corrosion was discovered, BP suspended 200,000 barrels per day of production from its Prudhoe Bay field which ultimately cost BP hundreds of millions of dollars in lost revenue. BP plead guilty to a misdemeanor and was fined US$20 million.

Read more here.

6.) Prudhoe Bay Oil Spill Incidents (2009): A suspected weld failure caused a mixture of oil and water to spray over a 12,000 square foot area. One month earlier, a 46,000 gallon oil and water spill from a pipeline took place nearby. Fortunately, the pipeline was out of service when the leak occurred or the results could have been far worse.

Read more here.

7.) Delta National Wildlife Refuge (2010): In April 2010, an 18,000 gallon spill of crude oil damaged the Delta National Wildlife Refuge in Louisiana. The pipeline belonged to Cypress Pipe Line Company, a joint venture between BP and Chevron. Located at the mouth of the Mississippi River, the Delta National Wildlife Refuge serves as the wintering ground for hundreds of thousands of migrating waterfowl.

Read more here.

8.) Other Refinery Violations: The EPA forced BP to pay a civil penalty of $9.5 million to the Federal government and an additional $500,000 to the State of Indiana for Clean Air violations at eight of its refineries in an attempt to force BP to comply with Federal emission standards. As well, BP was to install pollution control technology and enhance emissions monitoring at its facilities to ensure that they met federal standards.

Read more here.

Interesting reading, isn't it? And kind of scary too.

While these fines and penalties seem large to most of us, let's put them into perspective. BP's net income in 2009 was $16.578 billion and $21.157 billion in 2008. In the first quarter of 2010 alone, their net income was $6.079 billion (all in USD). You can readily see that tiny, little fines of $20 million here and there make a very tiny, little dent on their bottom line, in fact, about 0.1% to be exact. In comparison, that's far less per dollar of net income than a traffic fine is to the average Canadian.

As I suggested in Sunday's posting, we need to ensure that our pro-oil company government does not make it easier (and by extension environmentally riskier) for operators to drill in ecologically sensitive areas like the Beaufort Sea. We also need to make sure that infractions are punished with fines that are commensurate with the huge profits that are being made by major oil companies.

We also need to ensure that Environment Minister Jim Prentice is held accountable for this quote from the Globe and Mail:

"We have amongst the most robust offshore drilling policies anywhere in the world that applies in Canadian waters," Prentice said, adding that no exploratory wells are authorized in the outer Beaufort Sea now.

"The National Energy Board is, in any event, reviewing its relief well policy. They obviously will be attentive to how this develops."

Let's hope so.

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