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WASHINGTON (AP) – Federal regulators warned BP PLC on Tuesday that it must supply detailed and credible evidence that a temporary fix to resume oil production on Alaska’s North Slope can be done without environmental risk.

BP must show it “can manage corrosion going forward,” Thomas Barrett, chief of the Transportation Department’s pipeline safety agency, told a Senate hearing at which oil company executives said they hope to present such a plan, possibly this week.

“We must be assured that even a temporary limited restart can be operated safely before it can proceed,” said Barrett, who took over the DOT pipeline agency this year.

Robert Malone, president of BP America Inc., a subsidiary of BP PLC, said the company planned to request within days that it be allowed to reopen the pipeline’s western leg so more thorough tests – using a “pig” device – can be run through it to ascertain if the line again can be used to send oil south.

“If the (remaining) inspection results show that the line has integrity … we expect to make that request this week,” said Malone. The segment where a leak occurred – and where tests have shown extensive internal corrosion – would be bypassed with oil diverted to a nearby line.

Malone said he could not speculate on when oil will again flow through the system under the temporary arrangement. A shutdown of the western leg has kept 200,000 barrel of Prudhoe Bay oil from going south since early August.

BP plans to build 16 miles of new line next year to replace the temporary system they now are trying to cobble together.

Barrett said BP failed to “fundamentally understand” the need for maintenance of its Alaska North Slope pipeline, leading to two oil leaks this year and the discovery of extensive corrosion.

Singling out BP for criticism, Barrett said, “We do not see conditions like this replicated on other lines on the North Slope and other lines in the national pipeline system.”

BP’s top executives, appearing before the Senate Energy and Natural Resources Committee, apologized for its pipeline failure and promised to do better in the future. Nevertheless, they came under harsh criticism from senators across the political spectrum.

Sen. Mary Landrieu, D-La., a staunch supporter of the oil industry that plays a prominent role in her state, suggested that in light of the BP incident new legislation might be needed to require proper maintenance of the country’s oil infrastructure.

“This is a black eye on BP,” Sen. Pete Domenici, R-N.M., the committee chairman, told the oil company’s executives.

Malone, chairman of BP America Inc., said he was committed to make changes. “BP has fallen short of the high standards we hold for ourselves, and the expectations that others have for us,” he said.

The London-based oil company, which over the years has sought to portray itself as having an environmental conscience, struggled to explain why it had ignored basic maintenance at its Prudhoe Bay line.

BP has betrayed the trust many Alaskans had in the oil industry’s assurances that North Slope production would be conducted safely and in a way that protects the environment, Sen. Lisa Murkowski, R-Alaska, told Malone.

“Is there more on the radar screen that we don’t know about?” she asked.

Malone said he had ordered a thorough review of all practices “to see if there are issues we have missed.”

The pipeline problems have cut production at Prudhoe Bay in half to just under 200,000 barrels a day, and overall supplies from Alaska’s North Slope to about 630,000 barrels a day.

Most Alaska oil goes to West Coast refineries. Those refineries have found other sources of oil that have made up for the Alaska shortfall, according to the Energy Information Administration.

“We have not seen any significant impact on crude runs in California or Washington refineries,” Howard Gruenspecht, EIA deputy director, told the senators. Also, crude oil and gasoline prices have been falling steadily, he noted.

Some senators said the North Slope corrosion is only one problem facing BP.

Sens. Dianne Feinstein, D-Calif., and Ron Wyden, D-Ore., noted recent reports that the Justice Department was looking into allegations of price manipulation by BP traders on West Coast oil and gas markets in 2002 and 2003, and the company has been accused of manipulating propane prices.

Malone acknowledged the investigations and said, “We have been cooperating fully.” He said the internal review so far has found no evidence of improper oil and gas trades and that three people involved in the propane issued had been fired.



On the Net:

BP Alaska: http://alaska.bp.com/

Pipeline and Hazardous Materials Safety Administration http://www.phmsa.dot.gov/

AP-ES-09-12-06 1622EDT

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