(May 11, 2007)

Investigators questions BP

By Chris Baltimore
From Reuters

WASHINGTON (Reuters) - U.S. congressional investigators this week asked BP Plc to explain why it plans to delete a key finding from a consultant's report that detailed "budget pressure" as a contributor to the biggest oil spill on the Alaska North Slope last year.

BP wants to remove a finding in a March 2007 report by consultants Booz Allen Hamilton that concludes cost pressures led BP to cancel planned internal inspections of the corroded pipeline that leaked at least 200,000 gallons of crude oil last March, Democratic lawmakers said in a May 10 letter to BP.

Robert Malone, chairman and president of BP America Inc., is expected to testify before the committee on May 16 about the massive spill that eventually spurred the partial shutdown of the largest oil field in the United States in August 2006.

BP officials met with committee staff on May 9, where they detailed the "substantial correction" to the report, the letter said.

Government investigators have criticized BP for failing to use devices called "pigs" to clean and inspect the inside of its oil transit pipelines at Prudhoe Bay.

"Budget pressure eventually led to de-scoping some projects and deferring others," said the Booz Allen report, commissioned by BP management. "For example, the plan to run a smart pig ... was dropped in 2004 and 2005," the report said, cited in the committee letter.

Sources familiar with the full report told Reuters this week the document blamed cost cutting at BP following two mergers for decimating internal controls over operations.

BP has maintained that budget pressure was not to blame for its decision not to pig the pipeline but "your own report clearly contradicts this assertion," Energy Committee chairman John Dingell said in a letter also signed by Rep. Bart Stupak, head of the investigations subcommittee that is probing the spill.

BP spokesman Ronnie Chappell declined to comment on the letter ahead of the hearing, and said the company was cooperating with congressional investigators.

The committee also released a February 2003 e-mail from a BP employee that sought funds to perform maintenance on the line years before it failed, but the request for $2.5 million in funds was rejected by ConocoPhillips and Exxon Mobil Corp., who both own a portion of the field along with operator BP.

"This document suggests that BP planned to pig the very lines that ultimately failed," the committee said. "Committee staff is not satisfied with BP's explanation of the (funding request's) content or rejection."

(Additional reporting by Robert Campbell in New York)

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