BP Exploration, Inc. Multimedia Settlement

BP Exploration (Alaska) Inc. has pleaded guilty to one felony count related to the illegal disposal of hazardous waste on Alaska's North Slope, and it agreed to spend $22 million to resolve the criminal case and related civil claims.

BP Exploration (Alaska Inc., or "BPXA," admitted in U.S. District Court in Anchorage that it failed to immediately notify authorities of a release of hazardous substances to the environment, and it agreed to pay a maximum criminal fine of $500,000. As a part of the plea agreement, BPXA also admitted that it failed to provide adequate oversight, audits and funding to ensure proper environmental management on Endicott Island, Alaska. Under the plea agreement, the U.S. subsidiary of BP Amoco p.l.c. -- the third largest oil company in the world -- will establish an environmental management system (EMS) at all of the BP Amoco's facilities in the United States and the Gulf of Mexico that re engaged in exploration, drilling or production of oil. The EMS will be the first of its kin in the oil industry to result from a federal prosecution.

BPXA also agreed to a civil settlement involving related environmental claims. The settlement, filed in federal court in Anchorage, requires BPXA to pay $6.5 million in civil penalties to resolve allegations that the company illegally disposed of hazardous waste and also violated federal drinking water laws.

The criminal plea and civil claims stem from the injection of hazardous wastes on Endicott Island over a three-year period beginning in 1993. The manmade, gravel island northeast of Prudhoe Bay was built for the purposes of extracting and processing oil reserves under the Beaufort Sea. Endicott Island is operated by BPXA, which contracts with Doyon Drilling, Inc., to drill oil-producing wells there. From 1993 to 1995 Doyon Drilling employees illegally discharged waste oil and hazardous substances by injecting them down the outer rim, or annuli, of the oil wells. Failure to report the illegal injections by BPXA as soon as it learned of the conduct was violation of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). The illegally injected wastes included paint thinner and toxic solvents containing lead and chemicals such as benzene, toluene and methylene chloride, constituting illegal disposal under the Resource Conservation and Recovery Act (RCRA).

In April 1998, Doyon Drilling pleaded guilty to 15 counts of violating the Oil Pollution Act. Doyon agreed to pay a $1 million fine and spend $2 million to develop an environmental compliance program and Environmental training program for its employees. The Doyon employees were convicted in 1998, and one was sentenced to a year in jail.

Both the civil settlement and the plea agreement needed to be approved by the court before they became final.