Critic says Alaska regulators complicit in BP pipeline failures

Washington (Platts)--5Sep2006

Charles Hamel, a long-time critic of the way the oil industry operates in
Alaska, told a Washington press conference Tuesday that state regulators are
complicit in BP's pipeline failure on the North Slope and blamed the "cozy
relationship between BP and state regulators."

In a letter to House Energy and Commerce Committee Chairman Joe Barton,
Republican-Texas, who is holding a hearing Thursday on the corrosion problems
afflicting BP's pipelines, Hamel wrote, "Congress must surely be aware of BP's
policy to operate systems to failure."

Hamel is a retired oil broker who has become an industry gadfly and
previously provided information to the committee regarding problems on the
Trans Alaska Pipeline System. He is not scheduled to be a witness at the
hearing.

In his most recent letter, Hamel cited 2001 and 2002 documents he said
"evidenced that the Alaska Department of Environmental Conservation and BP
were complicit in concealing malfeasance in the Prudhoe Corrosion Inspection
and Control Program." With the assistance of ADEC, "BP had fed committee
investigators, the DOT, presumably criminal investigators, the media and the
public one implausible explanation after another," Hamel wrote Barton.

There was no immediate comment from the ADEC.

The Environmental Protection Agency and the Transportation Department are
conducting probes into BP's Prudhoe Bay operations, including a criminal
investigation by EPA.

"Alaska is unregulated," Hamel told reporters. "They try to cover each
other and anyone who speaks up pays a price." BP also operates and owns 48% of
the TAPS, and Hamel wrote that the committee may want to focus on the
"dangerous shortcomings" of that system.

The documents cited by Hamel include a 2001 report by an outside firm in
Anchorage, Coffman Engineers, which was retained to evaluate BP's
corrosion-monitoring program for the ADEC. The study said BP's reporting
system "makes it difficult to develop a qualitative understanding of the basis
for their corrosion strategy. No discussion of the underlying program strategy
is included other than to say, 'Our corporate goals are no accidents, no harm
to people and no damage to the environment.' "

In its response to the report, BP said the whole tone "seems extremely
negative, and is inconsistent with prior discussions with ADEC." The report
"presents many negative findings and characterizations, and very few positive
references to BP's report or its content."

A final 2002 version of the report by Coffman Engineers said BP "has
demonstrated a clear commitment to corrosion control," and has developed "a
comprehensive program of monitoring and inspection."

Harold Hollis, general manager for Coffman Engineers in Alaska said that
in light of the ongoing investigations, he is "not at liberty to make any
statements regarding either the spills or the reports."

He acknowledged the different conclusions, but told Platts that he was
"not aware of any coercion put forth to Coffman Engineers or ADEC to change
the report."

Hollis said that after the first report, or final draft, was issued,
"there were meeting held and clarifications made," that were reflected in the
second or final report.

Hamel also contends that BP "negligently employed a used 12 inch valve
from the scrap yard," that ruptured on December 4, 2004, and caused a
500-barrel spill of produced water from Z-Pad at Prudhoe Bay. He expressed
concern that BP may plan to restart production on the North Slope by diverting
oil through old gathering lines and rely on "used, unreconditioned valves."

BP submitted documentation to the ADEC in which it said the valves placed
in produced water service at Z-Pad "were inspected, repaired and tested,"
including with successful pressure testing. The valve in operation during the
time of the produced water spill "never exceeded the pressures experienced
during the hydrotest."

--Gerald Karey, gerry_karey@platts.com

For more news, request a free trial to Platts Oilgram News at
http://oilgramnews.platts.com or subscribe now at
http://www.platts.com/infostore/product_info.php?cPath=1_29&products_id=29


 

Copyright © 2005 - Platts

Please visit:  www.platts.com

Their coverage of energy matters is extensive!!.