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Bob Malone, chairman and president of BP America, said: "BP is growing its wind power portfolio in the US and the Sherbino wind farm in Texas is the latest example of that growth. Wind power is one of America's most abundant natural resources and we believe that turning wind into electricity should be a major part of the nation's drive to increase the use of alternative energy and reduce carbon emissions."

BP Alternative Energy announced that it has started the phase one construction of its 10,000 acre site in West Texas in a joint venture with NRG Energy.

By the second half of this year Sherbino Wind Farm is on schedule to be operational, and is expected to generate enough electricity to power 225,000 homes.

Another wind project, Silver Star I Wind Farm is also expected to be on line this year.

About BP Alternative Energy/BP America

BP Alternative Energy, launched in November 2005, combines all of BP's interests in low and zero-carbon energy including wind, solar, hydrogen power with carbon capture and storage, natural gas-fired power generation, biofuels for low carbon transport and distributed energy for emerging markets. BP Alternative Energy is one of the leading wind developers in the US and has portfolios in Europe, Asia & Latin America. BP's US wind portfolio includes the opportunity to develop almost 100 projects with a potential total generating capacity of 15,000 MW.

BP is in talks with the Iraqi Government about a plan to boost oil production at the huge Rumaila field on the border with Kuwait.

Among other potential projects in Iraq, BP's interest is understood to include the Rumaila field, one of Iraq's largest, which is believed to contain about 18 billion barrels of oil.

BP undertook a study of the field for the Iraqi Government about two years ago. It already has a small Iraq team based in the Middle East and is one of a number of big oil companies discussing agreements designed to increase rapidly the country's output to 2.6 million barrels per day by the end of this year.
    
These effectively would be service contracts to provide training, expertise and equipment, for which the companies would be paid in oil. A BP spokesman said that it was too early to consider putting in expatriate staff because of the security situation.

BP,Total, Shell, ExxonMobil, Chevron and ConocoPhillips attended talks with the Iraqi Government in Amman, Jordan, last month to help to fix the terms of the contracts. Shell is interested in a gasfield in western Iraq.

BP was involved in Iraq until 1975, when the country's oil industry was nationalized.

Source: Business Times Online

The new Iraqi Sharing Oil Law is expected to pass next month - under lots of pressure from the U.S. government.

The world oil giants have been waiting for this day. All the major players - and a NEW CARTEL are lined up to attend next month's conference in Dubai. The purpose of the conference is to develop the framework for investing in, and dividing up Iraq's oil sector business.

BP, Shell, Exxon Mobile and Chevron are all geared up to do business in the one place in the world where there is a chance for large oil discoveries.  115 billion barrels of oil have been discovered in Iraq, however only 40 billion have been developed - and there are many unexplored parts that could hold more billions.

Russia has made a bold move in setting up an energy cartel to rival OPEC, and the cartel includes the country that is becoming the biggest consumer of oil - no guess as to who that is - China! And Iran has also made it clear they will have a place at the table in Dubai.  

September is the big month. The General's war progress report is due in Washington, the oil law is expected to pass, and all the major players are set to make a fortune.

The backdrop to all this is our American soldiers who are bravely fighting to stay alive and return home, the soldiers who have returned home badly injured, and the weekly death toll of Iraqi citizens. I heard somewhere that over a million Iraqi's have been killed - but no one seems to know the exact number - and it appears few even care.

Senate Democrats need big bucks to help pay for a big increase in renewable fuels production, which could spell big trouble this week for Big Oil.

Much of the tab for the new efforts would land in the lap of large, integrated oil companies like ExxonMobil, Conoco Phillips and BP.

Senate tax writers are considering a package that may offer as much as $25 billion in tax breaks and other financial incentives to encourage production of renewable fuels and additional efforts designed to reduce greenhouse gas emissions.

Big oil companies facing prospect of heavy tax hit
http://thehill.com/leading-the-news/big-oil-companies-facing-prospect-of-heavy-tax-hit-2007-06-19.html

A proposed new Iraqi oil and gas law began circulating last week among that country's top government leaders and was quickly leaked to various Internet sites - before it has even been presented to the Iraqi parliament.

Under the proposed law, Iraq's immense oil reserves would not simply be opened to foreign oil exploration, as many had expected. Amazingly, executives from those companies would actually be given seats on a new Federal Oil and Gas Council that would control all of Iraq's reserves.

In other words, Chevron, ExxonMobil, British Petroleum and the other Western oil giants could end up on the board of directors of the Iraqi Federal Oil and Gas Council, while Iraq's own national oil company would become just another competitor.

Read the rest of this article at the New York Daily News

Also, check this article from the UK which is about the reconstruction of Iraq

President Bush wanted the 'right' people in charge of the reconstruction of Iraq. Unfortunately for the country, that meant loyalty to the president rather than expertise - including a 24-year-old estate agent put in charge of the stock exchange, writes Rajiv Chandrasekaran in the second exclusive extract from his new book - Read this article at Guardian UK

The world's largest oil companies are talking more than ever about taking action on global warming, but their actual investments in alternative energy still pale alongside their multi-billion dollar budgets for conventional energy. 

At the Cambridge Energy Research Associates conference, executives at the world's largest oil companies acknowledged that global warming is a problem but insisted that their main - and in some cases only - business would continue to be the production of hydrocarbons. 

The appearance Tuesday by Exxon Mobil Chief Executive Rex Tillerson made it clear that while the company is talking more than ever about the importance of cutting greenhouse gases, it continues to view alternative energy as a bad investment choice. Tillerson didn't preclude future alternative energy investments, but he said ExxonMobil would be "very selective" about its choices. 

"We are a petroleum and petrochemical company. We have been for more than 100 years," Tillerson said. "That's what we know how to do." 

Wait a minute, I just posted an interview Exxon Mobile Execs did with an European media outlet, and Exxon says in the interview that its position on climate change is "misunderstood" - Perhaps the European's are more open to climate change than the Houston oil audience - CT 

Chevron Corp also believes that its main business will be oil production and refining, despite the rise of ethanol and other biofuels. "The world is going to need every molecule of energy it can find," said Mike Wirth, Chevron's executive vice president for refining and marketing. 

Jeers From Some Quarters 

ExxonMobil and Chevron have a higher profile at this year's conference than peers like BP and Royal Dutch Shell. While the two European giants have been more aggressive with alternative energy investments, the vast majority of their spending also remains in conventional oil and gas. 

Big Oil's embrace of the environmental debate has drawn jeers from some quarters. "Big Oil CEO's are meeting in Houston this week to develop a message on making their energy look better - greener and more committed to energy efficiency," said the California-based Foundation for Taxpayer and Consumer Rights, headlined "Big Oil's Hot Air in Houston." "But their underlying business strategy hasn't changed a bit." 

Industry experts say part of the problem for the oil companies is commercial technologies to cut oil-based greenhouse gas emissions don't exist. The other option is cars that would consume much less gasoline or run solely on electricity - a step that would leave the oil industry out in the cold. 

Beyond technological hurdles, the companies say they also face regulatory difficulties. Without an overarching federal policy controlling the development of ethanol and other biofuels, each state will develop its own regulations, making it difficult for businesses with a nation-wide presence to comply.

Lobbying For Access 

That's left the industry continuing to lobby for greater access to U.S. domestic oil and gas resources as a means of bolstering energy security and reducing U.S. dependence on Middle East oil. Senior executives in the industry have pointed to long-term investment in boosting production capacity elsewhere around the world, a point Big Oil elite like Exxon and Chevron are raising in high-profile advertisements that in some cases also highlight their work on global warming. 

Source: Matthew Dalton; Dow Jones Newswires

Illinois Gov. Blagojevich is expected to join California Gov. Arnold Schwarzenegger on the West Coast today to announce a multimillion-dollar research partnership with petroleum giant BP, the University of California-Berkeley and the University of Illinois at Urbana-Champaign.

Last summer, BP announced it would help create the Energy Biosciences Institute, a research lab that would explore alternative fuels, which would be attached to a school. Officials will announce today that the two colleges have been chosen, a source said.

Source: Chicago Sun Times

Emma Woods, co-director of Foreign Policy In Focus at the Institute for Policy Studies, took a trip to Africa and this is her report on how the major oil companies have reaped riches, and produced negative social, economical and environment costs to the continent. I've done many posts on the state of the African oil industry, and violence towards the major oil companies. Woods personal observations provide many answers . . . CT 

It is almost impossible to imagine, as we sit in a well lit, fully functioning gas station on Main Street, USA, that a community blessed with oil riches under its soil could look as impoverished as Yenagoa in the Nigerian state of Bayelsa.

Yenagoa is the site of one of Nigeria 's first oil wells, built in pre-independence 1956. Yet as in many communities in Nigeria’s oil rich Delta region, most people of Yenagoa live in mud huts. Some reside only a few feet away from the oil wells. But they lack electricity and indoor toilets. They have no hospitals, no running water, no schools. And there is unemployment too. Oil companies like Royal Dutch Shell, BP, Chevron, and Exxon Mobil bring in foreign workers for even the most menial jobs.

I recently took a trip to Yenagoa as part of a tour of three African countries--Nigeria, Chad, and Liberia - that may well fuel future U.S. energy needs.

Historically, the United States has gotten two-thirds of its oil from other countries. Most U.S. oil imports come from Saudi Arabia, Venezuela, Mexico, and Canada.

Increasingly, as the United States, China, and other nations expand their thirst for oil, and instability deepens in the Middle East, Sub-Saharan Africa is becoming a more attractive source for crude. The U.S. National Intelligence Council estimates that Africa could supply 25% of U.S. oil by 2015.

The three countries I visited could well play a role in meeting that goal. Each is at different stages of oil production. In Nigeria, oil exploration dates back to 1956. In Chad, extraction started just three years ago. In Liberia, where I spent much of my childhood, the potential of oil off its expansive coastline holds hope for the future.

In each of these countries, a complex web of geo-political actors, from oil company executives and government officials to military agents, makes decisions that impact the lives in the communities that produce the oil that flows straight to consumers in the United States.

Nigerian Injustice

The residents of Yenagoa lack jobs and basic social services. What they do have in abundance is environmental damage from decades of oil spills, compounded by the constant burning of gas flares necessary to extract the crude. Farmland is rendered useless while rivers and waterways, once well populated with marine life, are now barren.

One local chief explained that he received from Shell oil 150 Naira ($1.15) for each acre of land used by the company. I was astonished when he went on to say, “150 Naira, once every four years.” With oil prices at historic highs, how could the compensation to communities long suffering the health impacts of oil spills and gas flares be such a pittance?

Military and security personnel blanket the area around Yenagoa to protect oil interests. The communities are under siege.

In Odi, a community adjacent to a well built in 1958, villagers are demanding basic services like clean running water, electricity, and schools. The response from security agents has been severe. Our delegation watched in horror as one young man after another came forward to show fresh wounds from five days earlier. They told us that uniformed military men had grabbed 15 youths as they walked home from an adjacent village in the middle of the afternoon. The young men were beaten, tortured, and imprisoned, as a warning to others in the village. For almost a week, the youths languished in a prison miles away. Their crime? Clamoring for basic rights.

As oil companies celebrate record profits and the price of oil hovers close to $65 per barrel, African communities ostensibly blessed with the curse of oil languish in squalor. In fact, with no useable farmland or waterways, many in Nigeria say that they are worse off than their grandparents were before the discovery of oil.

Hope in Chad?

Recognizing the plight of their neighbors in Nigeria, communities in Chad’s oil producing areas worked hard, even before the onset of oil production in 2003, to minimize environmental damage and maximize the benefits to communities from which the oil flows.

The 650-mile Chad-Cameroon pipeline (Africa’s biggest investment project) links landlocked Chad to world export markets through Cameroon’s port city of Douala. It was funded through loans and other support from the World Bank. Heroic measures initiated by activist, civil society, human rights, and religious community leaders led to a forward-looking revenue management law to manage the flow of oil revenues in a transparent way, ensuring resources for future generations.

However, the Chadian government has subverted its own revenue management law. It has diverted spending away from the original priorities of agriculture, health, and education and toward “security.” As a result, money that only now is beginning to flow from oil production is spent on weapons and other military equipment, instead of poverty reduction and the interests of future generations.

The oil wells in Chad are newer, so its oil-producing areas haven’t yet experienced the damage caused by decades of oil spills. However, gas flaring, with its related health and environmental damage, is an integral part of the production cycle. When the wind blows, the smell of the burning gas blankets villages miles away.

In a community near Doba, with gas flares as a backdrop, villagers told us about increased death and dying in the past few years from respiratory ailments and contaminated water supplies.

Meanwhile, in Chad’s fertile agricultural zone, mangoes, cotton, gum Arabic and cattle are abundant. Yet there is not one factory transforming the raw produce into goods for domestic or international markets.

In spite of these challenges, Chadians maintain that their vigilance will minimize negative social and environmental impacts of oil and secure poverty reduction. Chad could easily feed itself and its neighbors if productive capacity were built in the agricultural sector. Oil revenue directed at building an education system, providing healthcare, as well as basic electricity, running water, and roads, could go a long way toward improving the condition of people’s lives.

Throughout the country, in spite of a recent coup attempt and the elections in April that the majority of people boycotted, Chadians remain hopeful. From the capital city to the Southern oil fields, everyone seemed confident that future generations will experience a better life.

Liberian Alternatives

Liberia, the third country I visited, has recently emerged from 25 years of war. People there are hopeful too, despite the 85% unemployment rate and the complete lack of functioning schools or healthcare.

Liberians hope that concessions now being granted for off-shore oil exploration will lead down the road to a new source of revenue. Liberia’s National Oil Company negotiated two contracts with the Nigeria-based Oranto Petroleum Limited and British-based Broadway Consolidated PLC. With exploration already underway, few in Liberia think that leaving the resource untouched is a viable option.

The key question is, whether and how Liberia can escape the oil curse that so clearly has hurt Nigeria, Angola, and other countries in Africa’s richly endowed Gulf of Guinea region.

One possibility is for countries like Liberia to consider alternative models for oil development. What, for example, can Liberia learn from Venezuela’s example of 61% national control of oil revenue and management? Or from Norway’s use of oil revenue to diversify the economy while advancing social services?

Like many Africans, I fear that oil companies look to Africa for its resource wealth without seeing the people. Resource-rich communities are dehumanized and the color-line is ever present as the greatest profits flow steadily to wealthy white men who already control enormous wealth and power.

The price of oil nearly tripled since President George W. Bush took office in 2001, yet the majority of the people who live in the countries from which the fuel flows still experience grinding poverty. Taken together, the $10 billion quarterly profits of Exxon Mobil, Chevron, BP, or Shell and the $1.15 per acre compensation paid (every four years) to some farmers in oil producing zones, show just how unfair the global oil industry has become.

The next time you pull up to the pump, stop a moment and remember that the thick black crude is extracted from the earth’s crust at great social, political, and environmental cost. Then do whatever it is in your power to demand dignity and proper compensation for those whose land or sea may be cursed with the blessing of this natural resource.

New America Media, News Feature, Emira Woods, Oct 08, 2006 - Emira Woods is co-director of Foreign Policy In Focus at the Institute for Policy Studies.

Oil prices rose on Monday after BP said output from a massive Gulf of Mexico platform damaged by last year's Hurricane Dennis would not be restored until mid-2008, at the earliest.

BP's Thunder Horse platform, which can produce up to 250,000 barrels per day (bpd) of oil and 200 million cubic feet a day of natural gas, had been expected to be running by early next year. But the London-based company said new sub sea equipment failed during a test and it will need to be rebuilt.

In other BP news . . .

BP Exploration Alaska has secured one more regulatory approval for the company's plan to restart the shut-in eastern side of the Prudhoe Bay field. 

BP is developing a bypass pipeline link that would carry oil from the eastern side of the Prudhoe field through pipelines that now carry oil from the Endicott and Lisburne fields, bypassing corrosion-damaged pipelines.

The company still needs the approval of federal pipeline regulators to put the plan into action. BP said previously it hopes to have the Prudhoe Bay eastern side producing through the bypass pipeline system by the end of October, but federal regulators must give the OK.

Prudhoe is now producing about 250,000 b/d from the western side of the field.

Even after the spill, the position went unfilled. "There is an urgent need to recruit and rapidly induct a successor for the vacant senior corrosion engineer position," said an internal BP audit that was written June 7, three months after a pipeline leak caused the largest-ever oil spill on Alaska's North Slope.
 
A BP spokesman in Anchorage said the position remains unfilled, but the company has "qualified people doing pieces of that job." He also said that BP plans to double the size of its Prudhoe Bay corrosion team.

The House panel launched a probe of BP after the company last month revealed massive corrosion that forced it to curtail production from Prudhoe Bay, the largest producing U.S. oil field.

The audit document written by a group led by John Baxter, BP's chief engineer, also said, "corrosion and inspection knowledge and understanding seems to vary" among the company's Prudhoe Bay team, and that there was "apparent confusion among site operations personnel" about the capabilities of pipeline inspection techniques.

Source: The Washington Post

Previous postings on BP Alaska Pipeline Shutdown

From an Associated Press report yesterday, BP said it takes full responsibility for the lack of upkeep that led to the severe corrosion and shutdown. Bob Malone, Chairman & President of BP America just told CNN this week that "bacteria" was the cause of the shutdown.

We've done several postings on this topic, and here's the latest . . . CT

Federal regulators ordered BP PLC to conduct more rigorous tests of oil pipelines Thursday as the company said it might keep nearly half of the nation's largest oil field open despite leaks and severe corrosion.

The Department of Transportation ordered four daily surveys of all pipelines as BP announced it might not have to shut down its entire Prudhoe Bay operations. BP said it would comply with the order.

The eastern side of the field was closed Tuesday after a small spill, but about 140,000 barrels of oil continued to flow Thursday from the western side, said Craig Wiggs, a performance unit leader for BP. Before the company started shutting down operations, the field produced 400,000 barrels a day.

If the western side kept flowing, that would mean the company would be able to maintain the daily 140,000-barrel capacity - and possibly ramp up to 185,000 barrels - while work continues on the eastern side.

But in order to keep that oil flowing, BP must strip insulation from the pipes and conduct ultrasonic testing, the department's Pipeline and Hazardous Materials Safety Administration said.

The test will give a picture of the pipe's health that is similar to a sonogram, typically used to view a fetus in the womb. The company also will be required to use heat-seeking infrared equipment to detect leaks and must visually inspect by foot, car or plane all 22 miles of transit lines.

The company must also pass inspections before restarting its eastern operation.

The crude-oil and oil-product tanker market is quickly tightening as oil companies rush to supply the U.S. West Coast, a region that has traditionally relied on Alaska's pipeline for supplies. West coast refineries are now looking to Latin America, the Middle East and the Gulf of Mexico for their supply.

BP officials say they should know by Friday whether they can keep half of the oil production at the Alaska field on line. But analysts, brokers and shipping companies say that it's too soon to tell what sort of market will develop if a production shutdown at the oil field lingers for months.

"Rates are going up" for both crude and product transport, said Paul Durham, chief financial officer of Tsakos Energy Navigation Ltd. (TNP), an Athens-based shipping firm. "How long it will last is another question." Tsakos is sending three tankers from the Gulf of Mexico to the West Coast, Durham said.

A VLCC (shown at left) is the largest type of crude-oil tanker and can transport about 2 million barrels of oil, and West Coast demand for VLCC's began sooner than expected, said Morten Arntzen, chief executive of New York-based Overseas Shipholding Group Inc. (OSG).

On Tuesday, the tanker firm contracted to send five of its VLCC's- a tenth of its worldwide fleet - from the U.S. Gulf to West Coast refineries.

A spokesman declined to say who chartered the tankers. Arntzen told analysts Tuesday that the timing of the shipments, so soon after the Alaska Prudhoe Bay shutdown, were "noteworthy."

A shipping broker said BP is still trying to work additional crude capacity into its normal shipments to the West Coast. "We're expecting more activity, but it's still early," the broker said.

The broker also said there have been some signs of increased shipping to the West Coast, including higher demand for Panamax, or mid-sized tankers originating in the Caribbean.

International crude shipments could face a major realignment if the BP outage stretches for months and West Coast crude inventories start to run low.
 
The tanker market may be waiting for a release of crude from the U.S. Strategic Petroleum Reserve, which is not connected to the West Coast by pipeline, he said.

Tankers would then need to load the SPR crude at U.S. ports along the Gulf of Mexico, then travel via the Panama Canal to the West Coast, which is a 21-day trip.

Source: Dow Jones Newswire

Read Previous Postings on BP Alaska Pipeline:

March 16, 2006 - Alaska Oil Spill North Slope

March 20, 2006 - Alaska Oil Spill Update

April 6, 2006 - Alaska Plans Action Against BP for Oil Spill

July 25, 2006 - U.S. Orders BP to Empty Alaska Pipeline

August 6, 2006 - BP Shuts Down Alaska Oil Field

August 7, 2006 - Oil Prices Rise on Alaska Shutdown

ConocoPhillips declared force majeure on all oil shipments from Alaska, which frees the company from any liability in missed deliveries.

Oil shipments from Conoco are projected to drop by an unknown amount to West Coast refineries.

BP has declined to declare force majeure since it bought over 3.5 million barrels of crude to supply its refineries on the West Coast.

The closure is expected to hit drivers and refineries on the West Coast hard since nearly all of Alaskan crude is used there.

With limited pipeline capacity into or out of the area, gasoline and diesel prices are likely to rise to new heights, according to a report by credit-rating agency Standard & Poor's.

California, thanks to the most stringent environmental standards in the country, is likely to see even higher prices in the weeks to come.

In an interview with Soledad OBrien on CNN today, Bob Malone, Chairman & President, BP America stated that BP spends $200 million dollars a year on maintenance!

The anchor was quite surprised, as well as I when he stated that figure. Malone then went on to say BP uses the latest technology in their pipeline maintenance - and they even x-ray the pipeline. 

When the anchor asked why BP did not heed employees and subcontractor warnings about possible pipeline problems, the BP Chairman fumbled, and Soledad OBrien then read the internal BP memo to him from employees and contractors alike who warned of environmental damage because of maintenance issues. 

After hearing the internal memo read to him, he stated that the warning had been investigated, and basically found nothing out of the ordinary. When the CNN anchor asked about the BP employees and contractors jobs being put in jeopardy because they raised the issue, Malone denied this happened.

When she asked Malone about the Governor of Alaska having to enact a hiring freeze due to lost income from the Alaska pipeline shutdown, and wanting BP to reimburse the state of Alaska, Malone completely side stepped that issue with polished "corporate talk" of BP's commitment to the environment, etc.

Finally getting down to the current shutdown issue, Malone explained that a micro biological growth was discovered in the pipeline, and this bacteria was what prompted the shutdown.

So, now we've heard it from the horses mouth, BACTERIA, not rust or corrosion of the pipeline, as previously reported. 

Guess those high tech x-ray machines couldn't see those tiny bacteria.

BP started shutting down the Prudhoe Bay oil field on Sunday after discovering severe corrosion, along with a small spill from a transit pipeline.

Prudhoe Bay represents half of Alaska's oil production and about 8% of U.S. production. 

It will take about two days to completely shut down the oil field, and once this is completed it will reduce oil field production by 400,000 barrels per day. 

"We regret that it is necessary to take this action and we apologize to the nation and the State of Alaska for the adverse impacts it will cause," BP America Chairman and President Bob Malone said in a prepared statement.

BP says the spill has been contained and clean up efforts are under way. State and federal officials have been informed of the decision.

Exxon Mobil earned $10.36 billion in the April-June period, the second largest quarterly profit ever recorded by a publicly traded U.S. company.

Exxon Mobil's report comes as many drivers in the U.S. are paying $3 for a gallon of gas — increasing the likelihood of further political backlash in Washington, D.C.

But the company isn't alone. Royal Dutch Shell said earlier today that second-quarter earnings jumped 40% to $7.32 billion as high oil prices offset production difficulties in Nigeria and the Gulf of Mexico.

Other oil companies reported big numbers for the quarter this week as well. BP reported its quarterly profit rose 30% to $7.3 billion and ConocoPhillips said its earnings rose 65% to $5.18 billion. Chevron will round the field of five majors when it reports its second-quarter performance Friday.

BP is facing legal action in the US over charges that it tried to manipulate propane prices in 2004.

Regulators allege its BP Products North America subsidy artificially forced up prices by buying up huge propane stocks only to withhold them from the market.

BP has denied the civil charges and said it intended to defend itself, and added that staff had been dismissed. On Wednesday, a former BP trader, Dennis Abbott, pleaded guilty to manipulating the propane market.

The charges against BP come as US consumers face increased petrol and heating oil costs caused by a surge in global commodity prices.

The Commodity Futures Trading Commission (CFTC), which regulates the market, said the propane had been needed to fuel homes in rural areas.

Particularly in the north-eastern and mid-western regions of the US, propane is by far the main source of domestic heating - and constitutes a growing slice of household budgets.

Investigators allege that during February 2004 propane prices jumped more than 40% to about 90 cents a gallon, a price that "would not otherwise have been reached under normal pressures of supply and demand".

They claim that BP managed to ramp up the price by buying stocks of propane until it controlled almost 90% of the domestic market.

"Cornering a commodity market is more than a threat to market integrity," said Gregory Mocek, the CFTC's enforcement director. "It is an illegal activity that could have repercussions for commercial market participants as well as retail consumers around this country," he added.

The CFTC estimated that about seven million people were using propane for heating and cooking in 2003.

Ronnie Chappell, a BP spokesman, said "market manipulation did not occur". But he added that following an internal investigation, the firm found that several employees failed "to adhere to BP policies governing trading activities" and had been dismissed.

"We have also taken steps to strengthen the supervision of our trading activities," he added.

The CFTC alleges that the market manipulation was carried out "with the knowledge, advice and consent of senior management" at BP Products North America.

Mr Abbott pleaded guilty to charges that he tried to "manipulate and corner the propane market".

The 34-year-old from Houston has agreed to cooperate with authorities in their investigation and faces up to five years in jail and a fine of up to $250,000.