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The Wall Street Journal: BP’s Alaska Woes Are No Surprise For One Gadfly

EXTRACT: One indicator of the impact of the Prudhoe Bay closure: It was enough to knock BP off the pedestal as Europe’s largest oil company. That spot is now held by Royal Dutch Shell PLC, after BP’s stock-price declines erased a big chunk of BP’s market value over the past week or so.

THE ARTICLE

Charles Hamel , a Conduit
For Issues Raised by Workers,
Had Alerted EPA of Problems
By JIM CARLTON
August 12, 2006; Page B1

ALEXANDRIA, Va. — When the giant oil company BP PLC announced a week ago it would shut down its massive Prudhoe Bay oilfield in Alaska because of corrosion problems, the news surprised many. It surprised the energy markets, which sent oil prices up $2 a barrel. It surprised Wall Street, which pushed BP shares down.

But it didn’t surprise Charles Hamel.

Long before the closure of Prudhoe Bay, America’s largest oil field, 76-year-old Mr. Hamel had sounded the alarm. As one of the oil industry’s pre-eminent gadflies, Mr. Hamel last year provided information on Prudhoe Bay’s corrosion problems to the Environmental Protection Agency, prompting a criminal investigation. Mr. Hamel also spurred a Department of Transportation investigation into complaints that some safety valves weren’t working at the field last March.

One indicator of the impact of the Prudhoe Bay closure: It was enough to knock BP off the pedestal as Europe’s largest oil company. That spot is now held by Royal Dutch Shell PLC, after BP’s stock-price declines erased a big chunk of BP’s market value over the past week or so.
 
Charles Hamel’s pals include Sissy Spacek, while his enemies have spied on him.
“Chuck Hamel has provided important leads to Congress over the years, and he has served as a trusted outlet for many concerned workers,” says U.S. Rep. John Dingell, a Michigan Democrat who has long looked at Alaskan oil issues.

For almost 20 years, Mr. Hamel, close family friend of actress Sissy Spacek and also a great-grandfather, has served as the spokesman for a network of disgruntled workers in the Alaskan oil fields. Operating from a three-bedroom home overlooking the Potomac River in suburban Washington, D.C., the former oil broker is a conduit for worker complaints from 5,000 miles away. In particular, he has focused on safety issues at Prudhoe Bay — which provides 8% of U.S. crude-oil production — and the 800-mile Trans-Alaska Pipeline.

Mr. Hamel has used his proximity to the Washington power corridor to instigate numerous government investigations into oil workers’ complaints. All told, investigations prompted by Mr. Hamel have forced BP and Alyeska Pipeline Service Co., which operates the Alaska pipeline on behalf of BP and other companies, to undergo safety-related improvements estimated at more than $1 billion, government officials say.

Mr. Hamel has also gotten Alaskan state agencies, long criticized by oil workers for not scrutinizing the industry enough, to ramp up their oversight. “I kept getting calls from workers telling me about the problems up there,” Mr. Hamel says. “They didn’t have any other place to go, so I felt responsible for them.”

But Mr. Hamel’s actions have sometimes raised the ire of federal officials, regulators and others. Some federal officials gripe that Mr. Hamel creates a ruckus on issues that are far from calamitous. The officials and some regulators add that he also sometimes won’t provide specifics on where alleged problems are located, making it tougher for companies and agencies to quickly respond.

Mr. Hamel is persona non grata with the oil industry. John Browne, BP’s chief executive officer, for one, declines to answer questions on what he thinks of Mr. Hamel. “It would be so good if everyone used the process we have to tell us what’s wrong,” Lord Browne said in an interview while visiting Prudhoe Bay last week.

Mr. Hamel’s relationship with the industry wasn’t always bitter. Born and raised in Watertown, Conn., the Korean War veteran once favored oil exploration in the Arctic. In the 1960s, Mr. Hamel worked as a broker in the ocean-shipping business, connecting foreign buyers with U.S. sellers of commodities like grain. He also brokered shipments of Alaskan crude oil to the lower 48 states, a job that earned him fees as high as $100,000 a month.

In 1979, Mr. Hamel met his future nemesis, Mr. Browne, at a BP office in Cleveland. Mr. Hamel says he asked Lord Browne, who was then a lower-level BP executive, to reduce the Alaskan crude shipping fees for a client Mr. Hamel felt was being overcharged. Mr. Browne and another oil executive declined, he says. Lord Browne says he remembers meeting Mr. Hamel, but declined to elaborate further.

Mr. Hamel’s relations with the oil industry soured in the 1980s. Around 1975, he had acquired an interest in a field at Prudhoe Bay, but later sold out to Exxon Mobil Corp., which hit a gusher at the field in 1989. Mr. Hamel accused Exxon of neglecting to tell him about how large the oil deposits were, a charge Exxon denied.

His industry relationships worsened in 1979 when a supertanker he had brokered took shipments of Alaskan oil laced with water. Mr. Hamel accused Alyeska of intentionally allowing the oil to be diluted with water; Alyeska denied the assertion. The incident triggered a years-long legal dispute over the origins of the tainted oil involving the tanker owner, the oil buyer and pipeline operator Alyeska. Mr. Hamel says the high-profile case — which was never resolved — forced him out of the tanker business.

During that time oil workers started calling him, Mr. Hamel says, with stories of safety problems along the pipeline, such as leaking valves or unsafe electrical gear. Mr. Hamel pressed state and federal officials to investigate. Alyeska responded by hiring a private security firm, Wackenhut Corp., to ferret out Mr. Hamel’s sources.

In 1992, Mr. Hamel filed suit against Alyeska and Wackenhut over the spying; the parties later settled for an undisclosed amount. Alyeska also apologized in full-page newspaper ads. A congressional hearing was called to examine the spying case.

That hearing cemented Mr. Hamel’s status among disaffected worked after he refused repeated attempts by industry lawyers to disclose the names of his sources. “What he did was turn the light on, up where, before, any oil company was allowed to operate in the dark,” says Rob Brian, a former operator at Prudhoe Bay who used to be one of Mr. Hamel’s sources of information.

Since the late 1990s, Mr. Hamel has worked full-time on oil-worker complaints. That pro bono work has cost him financially, friends say. Mr. Hamel has spent so much money on phone bills, travel and other expenses related to the work that he has exhausted much of his savings, says Stan Stephens, a tour-boat captain in Valdez, Alaska, and close friend of Mr. Hamel’s. “He told me once he didn’t have enough money to go out to dinner,” says Mr. Stephens, who worked with Mr. Hamel on oil issues related to the port of Valdez. “At least now he’s finally getting the credit he deserves.”

Ms. Spacek, who says she views Mr. Hamel like an uncle, adds: “Honest, loyal, trustworthy and courageous, Chuck has time and again put himself in great personal jeopardy defending his ideals and the ideals of those who are unable to speak out for themselves.”

Mr. Hamel says he doesn’t consult for energy companies and lives mostly on loans and Social Security income. He once was a millionaire, he says, but filed for bankruptcy after he lost his tanker business and the Prudhoe Bay lease. But “when these [oil workers] come to you, how can you say no?” he says. “You can’t.”

Write to Jim Carlton at [email protected]

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