BP Alaska Still Risks Environmental Disaster

Less than a year after a corroded pipeline ruptured causing the largest oil spill in Alaskan history, BP (British Petroleum) has continued to implement severe cost-cutting measures at its North Slope facilities, making it vulnerable to another environmental disaster, a leading critic of the company has charged.

In a four-page letter sent earlier this month to Congressman John Dingell, chairman of the House Energy and Commerce Committee, Chuck Hamel, an oil industry watchdog, alleges that he has obtained hard evidence from BP whistle-blowers that the oil behemoth substituted water for corrosion-inhibiting chemicals in Prudhoe Bay pipelines, and instructed its employees to allow its equipment to break down before replacing it. Hamel said BP is trying to save money at the same time the company has earned record profits on oil production

BP was forced to shut down half of Prudhoe Bay's production last winter after wellheads were found leaking oil onto the tundra. Hamel further alleges that BP suffered huge production losses in December due to a leak at a Prudhoe Bay tank that went unreported, a claim that the company has vehemently denied.

Additionally, BP oilfield workers have said that critical shortages of operators at Prudhoe Bay gas collection facilities are putting employees' lives in danger. The employees told Hamel that they raised their concerns with BP executives more than five months ago and the issue has yet to be addressed. BP said last week that it hired four additional employees for its Prudhoe Bay gas operation. The new employees start work in April, a company spokesman said. Furthermore, BP hired former Federal Judge Stanley Sporkin to be its employee advocate.

The new claims leveled against BP by Hamel come on the heels of a widening federal criminal probe into BP's corporate practices and an upcoming report by the US Chemical Safety Board that states the London-based corporation's cost-cutting measures were directly linked to a Texas City refinery blast that killed 15 of the company's employees.

Carolyn Merritt, chairman of the US Chemical Safety Board, told the London Observer last month that budget cuts implemented by BP "had an impact on safety and that impact on safety had a causal relationship with [the refinery explosion that] happened on March 23 [2005]."

"The message that was communicated was that cost-cutting and maximizing profits was the most important thing," Merritt told the Observer. "We have an iron-clad case for the impact of cost cutting on safety. We will be making those conclusions in our report," she added, which is due March 20.

The US Environmental Protection Agency confirmed that it has recently joined a federal investigation launched in October by the US attorney in Houston. The Texas City explosion, cited as one of the worst industrial accidents in US history, resulted in more than 1,700 lawsuits, a record $21 million fine by the US Occupational Safety and Health Administration, and a finding by the US Chemical Safety Board that BP endangered workers lives by cutting costs. BP has so far settled 1,200 claims, including all of the wrongful death lawsuits. The company has earmarked $1.6 billion to pay plaintiffs.

BP has long been criticized for poorly managing the North Slope's aging pipelines, safety valves and other critical components of its oil production infrastructure. The company has made minor improvements to its valves and fire detection systems and hired additional employees, but has neglected to maintain a level of safety at its facilities on the North Slope.

Hamel, a former oil broker, based in Alexandria, Virginia, is credited with exposing dozens of oil spills and the subsequent cover-ups related to BP's shoddy operations at Prudhoe Bay. The early warning alarms he sounded about the issues at BP's North Slope facilities has led to increased regulatory oversight costing Alaska's oil industry tens of millions of dollars.

Back in the 1980s, Hamel was the first person to expose weak pollution laws at the Valdez tanker port as well as electrical and maintenance problems with the trans-Alaska oil pipeline.

Last March, the worst spill in the history of oil development in Alaska's North Slope forced the closing of five oil-processing centers in the region.

Alaskan state officials said that as much as 260,000 gallons of crude oil leaking out of a pipeline in an oil field jointly owned by Exxon Mobil, BP, and Conoco-Phillips blanketed two acres of frozen tundra near Prudhoe Bay - just a short distance from where President Bush has proposed opening up the Arctic National Wildlife Refuge to drilling.

The oil spill in March 2006 went undetected for about five days before a BP oilfield worker noticed the scent of hydrocarbons while driving through the area, which led him to believe there was a spill from one of the facilities.

That spill was blamed on a corroded transit pipeline, according to BP officials.

Documents highlighting BP's nearly decade-long neglect of its Prudhoe Bay pipelines, its internal safety regulations, and the company's alleged cover-up of past oil spills that resulted from severely corroded pipelines are archived on ANWRnews.com, a little known web site maintained by Hamel.

The BP documents, which include emails, photographs, videos, and letters sent to BP executives and Democratic and Republican lawmakers, and even President Bush, as well as internal reports, all of which were early warnings about problems plaguing BP's Prudhoe Bay operations, were written by more than 100 company whistle-blowers and date back as far as 1999.

"We were concerned about BP's cost cutting-efforts undermining our ability to respond to emergencies, and reducing the reliability of critical safety systems," states a letter sent to Hamel signed by dozens of BP's Prudhoe Bay employees on April 13, 2001. "We were concerned about the lack of preventative maintenance on our equipment. We had suffered a major fire, which burned a well pad module to the ground, and nearly cost one of our operators his life."

Hamel immediately took up the BP whistle-blowers' cause and in mid-2001 wrote a letter to BP president Lord John Browne raising the issue of safety and maintenance problems at the Prudhoe Bay facilities.

"Courageous 'Concerned Individuals' contacted me for assistance in reaching you," Hamel's April 11, 2001, letter to Browne says. "They have not succeeded in being heard in the past two years in London, Juneau or Washington. I am again a reluctant conduit. They hope that you will take whatever action appropriate to effect corrective action which would protect the environment, the facilities, and their safety."

Hamel sent a copy of the letter to President Bush. While Browne promised to look into the issues plaguing Prudhoe Bay, the situation there worsened, oil spills became routine, and pipelines continued to rupture.

Additional whistle-blowers came forward to expose the flaws at BP's North Slope operations, in some cases warning company executives and lawmakers that an Exxon Valdez-type disaster was bound to happen if BP did not invest additional funds in upgrading its corroded pipelines and non-operational safety valves.

"The situation will continue to deteriorate for the workers' safety and the environment until one of two things happen: Either there will be a major environmental catastrophe at Prudhoe Bay, similar to the Exxon Valdez, or there will be a change in environmental and employee safety oversight in Alaska before that disaster occurs," according to a March 4, 2002, copy of BP employee William Burkett's testimony before a Senate Committee chaired by Sen. Joseph Lieberman (D-Conn.) and Sen. Bob Graham, (D-Fla.).

Hamel's charges against BP have since been proven accurate. Following last year's massive oil spill, Richard Wollam, the former head of pipeline-corrosion monitoring for the BP's Alaskan operations, refused to testify under oath before a House subcommittee probing allegations that BP neglected to conduct routine maintenance that included cleaning clogged pipelines at Prudhoe Bay.

Other BP executives apologized to lawmakers and vowed to address operational lapses on the North Slope that led to the oil spill. But according to Hamel, and some of the company's longtime employees, BP hasn't changed its ways.

Jason Leopold is a former Los Angeles bureau chief for Dow Jones Newswire. He has written over 2,000 stories on the California energy crisis and received the Dow Jones Journalist of the Year Award in 2001 for his coverage on the issue as well as a Project Censored award in 2004. Leopold also reported extensively on Enron's downfall and was the first journalist to land an interview with former Enron president Jeffrey Skilling following Enron's bankruptcy filing in December 2001. Leopold has appeared on CNBC and National Public Radio as an expert on energy policy and has also been the keynote speaker at more than two dozen energy industry conferences around the country.

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