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Oil & Gas Journal: BP employee intimidation allegations arise in House Alaska oil line hearing

Nick Snow
Washington Correspondent

WASHINGTON, Sept. 7 — Employees in BP Exploration Alaska Inc.’s corrosion and inspection chemicals group may not have reported potential problems in the company’s North Slope oil gathering lines because they felt harassed and intimidated, members of a US House subcommittee said Sept. 7.

“We are now learning that there were a number of troubling personnel problems in BP’s corrosion-management program on the North Slope over the past several years,” said Bart Stupak (D-Mich.), chief minority member of the House Energy and Commerce Committee’s Oversight and Investigations Subcommittee.

“Though not fully understood, these problems apparently created a ‘chilling’ atmosphere in workers’ ability to report health and safety issues, and perhaps had at least some impact on the effectiveness of BP’s corrosion-control efforts,” he said.

Stupak said the full committee received a report dated Oct. 20, 2004, that was commissioned by BP and created by law firm Vinson & Elkins LLP which “found that the very program that BP relied upon to detect corrosion in both the [western operating area] and [eastern operating area] lines—the Corrosion Inspection and Chemicals Group (CIC) —was fraught with workplace intimidation and harassment from senior management.”

Rep. Joe Barton (R-Tex.), who chairs the full committee, said this was the most troubling of several allegations of decisions and conduct apparently leading to a leak in the BP Prudhoe Bay gathering system’s western operating area late last winter and a complete shutdown of its eastern operating area on Aug. 6.

“We have learned that some employees were afraid to come forward because they’re concerned about retaliation. I want to make it clear that if this is the case, anyone who makes such threats and any executive who condones such behavior will face the strongest possible consequences,” he said.

Inquiries sought

BP Exploration Alaska Pres. Steve Marshall said he first became aware of harassment allegations in the CIC group in 2003 from an employee safety committee and an outside source. He ordered an independent review, which confirmed that such an atmosphere existed and recommended that Richard Woollam, who headed the group, undergo sensitivity training.

Marshall said he requested a second inquiry—the one handled by Vinson & Elkins—a year later after follow-ups indicated that Woollam’s direct relationships with his employees had improved but that an atmosphere of intimidation remained. When the second inquiry recommended that Woollam be placed in a nonsupervisory job, Marshall said he asked for Woollam’s transfer from Alaska.

“I don’t tolerate a chilled atmosphere or harassment. We take steps to do everything we can to stop this, not only with our BP supervisors but with supervisors of our contractors,” Marshall said.

BP America Inc. reassigned Woollam to its Houston offices in 2004. “He has been put on leave but is still on the payroll. Our attorneys have spoken to him and to his attorneys,” said Robert A. Malone, BP America’s chairman and president who also was a witness at the hearing.

Woollam was subpoenaed at the last minute to testify at the hearing. He appeared but was excused after he exercised his US constitutional right under the Fifth Amendment to refuse to testify on the grounds of possible self-incrimination.

“When I arrived in Alaska in 2001, we had a poor relationship with our work force. I worked hard to change that. We have done a lot, but we still have a long way to go,” said Marshall.

He said he has investigated “literally thousands” of allegations since he became BP Exploration Alaska’s president in 2001 and has tried to act promptly when the information has been specific and proven.

Three experts hired

The two BP executives said the company has been working hard to correct problems with the North Slope gathering lines. Malone said BP America has retained three corrosion experts to independently review and issue recommendations for improving corrosion inspection, monitoring, and prevention programs at Prudhoe Bay and other BP-operated Alaska oil fields.

Malone said he asked former US District Court Judge Stanley Sporkin to independently review all employee allegations that have been raised on the North Slope since BP bought Atlantic Richfield Co. in 2000. Sporkin agreed to be an independent ombudsman for BP America, Malone said.

The company plans to spend a net $550 million in the next 2 years to improve its integrity management programs in Alaska, he added.

Committee members were not initially impressed. “You apparently have done a 180° turn and are doing now what you should have done years ago, only under closer congressional, regulatory, and public scrutiny,” said Barton.

“Your former corrosion manager took the Fifth Amendment, and that’s his right. But I find it hard to imagine that no executive farther up the chain of command was aware of what was going on,” he continued.

Others questioned BP’s reliance on ultrasonic testing instead of smart pigs to test the integrity of the gathering system.

“How can BP say it has a good integrity-management program for its pipelines when it does not know the true conditions of the pipes and the volumes of solids they contain since, in one case, 1992?” Stupak asked.

He was referring to the eastern operating area, which BP Alaska began to operate following the Arco acquisition in 2000. Stupak said a pressure drop on the line to 80 psi in 2006 from 800 psi in 1992 was only one symptom of corrosion problems.

Marshall responded that BP instituted ultrasonic testing, which it already was using in the western operating area, when it took over the eastern area. It conducts such tests four times per year—twice the industry average—to detect corrosion and pitting at specific spots, he said.

“We looked at the data from 1998 [the last year BP ran a smart pig through the western operating area] and confirmed that the line was in good shape. We did see indications in 2004 that corrosion might be growing, increased the number and frequency of our ultrasound tests, and scheduled a smart-pig run for later this year. Unfortunately, it was not run before the first leak occurred,” he said.

Smart-pig runs

Discussions of running smart pigs through both operating areas began soon after the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration issued its first corrective action order on Mar. 2, according to Marshall.

After speaking with a former Arco engineer who told him that the 1992 smart-pig test of the EOA loosened sediment that clogged strainers at Pump Station 1 of the Trans-Alaska Pipeline System (TAPS), he said, BP Alaska officials built a crossover and worked with Alyeska Pipeline Service Co. and PHMSA to prevent such problems.

But the smart-pig runs have faced other delays, partly because the US Justice Department wanted part of the western operating area preserved with the corrosion intact for a criminal inquiry, Marshall said.

Some committee members were incredulous that BP did not use smart pigs to check its gathering lines at all when Alyeska Chief Executive Kevin Hostler testified that his company runs pigs through TAPS every 2 weeks.

PHMSA on Aug. 31 issued proposals to expand its oil pipeline regulations to low-pressure systems in high-impact areas. Some committee members complained during the morning session that the proposals are inadequate.

Rep. Diana Degette (D-Colo.) said she was concerned that regulatory initiatives in the George W. Bush administration often are simply reactions to problems such as pipeline leaks and supply disruptions.

“Finally, this Congress is not without blame either, she added. “The Pipeline Safety Act reauthorization has languished here for months.”

Contact Nick Snow at [email protected]

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