Processing Magazine

Alaska Prepares to Sue BP

March 3, 2008
The Associated Press is reporting that the state of Alaska intends to sue BP PLC for losses incurred by oil spills, pipeline leaks and shutdowns on the North Slope two years ago.

No lawsuit has been filed yet, but the state Department of Law has requested $4.7 million from lawmakers to pay for preparation work and possible litigation this year.

Officials didn''t specify how much it would seek from BP, but they estimated the state''s losses from the leaks and aftermath at several hundred million dollars.

The House Finance Committee added the money to its operating budget; the House is expected to vote on that budget early next week.

The state, which relies on oil taxes and royalties for nearly 90 percent of its revenue, has been investigating BP for months.

If approved, the appropriation would be used for "counsel, document management, experts and litigation costs," according to the request made by the Office of Management and Budget on behalf of Gov. Sarah Palin.

The Finance Committee''s vice chairman, Republican Rep. Bill Stoltze, introduced the budget amendment.

The Department of Law placed the urgent call for the money, saying the statute of limitations for the lawsuit expires in September.

The budgetary request stems from a pair of 2006 spills, including a 201,000-gallon crude spill in March 2006 at Prudhoe Bay, the nation''s largest oil field.

A smaller spill five months later ultimately prompted BP to halve production for several weeks.

Both leaks were traced to the company''s failure to regularly clean and inspect two of its pipelines over the course of several years, leading to corrosion.

The company last year pleaded guilty to a federal environmental crime related to one spill and agreed to a $20 million fine.

BP is currently replacing 16 miles of feeder pipeline, which could cost up to $260 million.