Alaska Digest

Posted: Monday, May 14, 2007

BP denies budget pressures led to cuts

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FAIRBANKS - Oil giant BP PLC wants to take back statements in a recent internal report that said "budget pressure" led company managers to discontinue corrosion prevention programs at Prudhoe Bay.

Congressional leaders are questioning the company's reasons for removing the language from the March report as they gear up for testimony from Bob Malone, Chairman and President of BP America Inc.

Malone is set to appear Wednesday before a House subcommittee amid congressional concern that cost-cutting led to a large oil spill last March and a partial shutdown of Prudhoe Bay in August.

The report examined the causes of the leaks, including how management decisions contributed to the incidents. One conclusion was that BP decided to save money by cutting the use of devices called "smart pigs" that detect weaknesses in pipelines.

The incriminating documents and e-mails suggesting cost-cutting at BP surfaced earlier this month, according to the Fairbanks Daily News-Miner. BP officials had previously denied any role cost-cutting might have played in the leak or the partial shutdown.

"Your own report clearly contradicts this assertion," U.S. Rep. John Dingell, D-Mich., who chairs the House Energy and Commerce Committee, and Rep. Bart Stupak, D-Mich., chairman of the subcommittee on oversight and investigations, wrote in a letter to Malone on Friday.

Corrections officials downsize prison plan

ANCHORAGE - A giant state-run prison in the Mat-Su Borough would be half as large as originally planned and prisons around the state would be expanded instead under new proposals by the state Department of Corrections.

The revised prison expansion plan means delays and will probably require the Legislature to approve more money for construction next year, Corrections Commissioner Joe Schmidt said.

Schmidt said keeping inmates closer to their communities in Alaska could help prisoners rehabilitate at higher rates. Under the plan, new prison beds would be added to regional facilities in Bethel, Fairbanks, Anchorage and Seward, he said.

The original 2,250-bed facility, approved under the administration of former Gov. Frank Murkowski, had already been projected to cost $330 million. The corrections department has not yet worked out cost figures for the new plan, Schmidt said.

The smaller prison would be built on the same Point MacKenzie site where the borough has already started preliminary work, Schmidt said.

"We know it's a good site to build on, and the community has accepted it," he said.

Schmidt said the new plan, which includes hundreds of new jail beds at regional centers, would still allow the state to bring home some 900 inmates now housed in a private prison in Arizona.

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