Shareholders sue BP over Prudhoe Bay maintenance

Company knew about corrosion, failed to act, investors claim

Posted: Wednesday, August 16, 2006

ANCHORAGE - Senior executives at BP face a lawsuit filed by shareholders who claim the oil giant's poor maintenance practices at Prudhoe Bay led to the partial shutdown of the nation's largest oil field.

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The suit alleges that BP has known for years about the severe pipeline corrosion that led to last week's shutdown, but took no substantial steps to properly monitor and repair the transit lines that ferry oil straight into the 800-mile trans-Alaska pipeline.

The closure has more than halved the field's daily 400,000-barrel output. Oil from Prudhoe Bay makes up about 8 percent of domestic oil supply.

Chief Executive John Browne and more than a dozen other top BP executives were named as defendants in the suit filed on Monday in New York District Court.

The suit, which seeks unspecified monetary damages, was brought by investor Sue Pincus on behalf of BP shareholders "to remedy the severe harm caused to the company by its senior officers' and directors' mismanagement and neglect."

BP spokesman Daren Beaudo said Tuesday that the company does not comment on pending litigation.

A call late Tuesday to Jules Brody, the plaintiffs' attorney in New York, was not immediately returned.

A March spill from pipelines operated by BP was the largest ever on the North Slope. The spill was estimated to be up to 267,000 gallons. Further testing, as well as a smaller spill in July, prompted the company to call for the shutdown.

BP estimates the costs for repairing leaks and corrosion along 16 miles of pipeline will reach about $170 million. The British company has not disclosed how costs will be shared by the field's other owners, ConocoPhillips Co. and Exxon Mobil Corp.

The British oil giant is also facing federal scrutiny. A congressional committee has scheduled a Sept. 7 hearing to examine BP's management practices on the field near the edge of the Arctic Ocean.



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