BP’s Safety Drive Faces Rough Road

THE WALL STREET JOURNAL

FEBRUARY 1, 2011

By GUY CHAZAN

A BP operation in the Beaufort Sea off Alaska’s North Slope. Associated Press

Bob Dudley, the new chief executive of BP PLC, has vowed to change the safety culture of the accident-prone oil giant in the wake of the deadly explosion and spill at one of its wells in the Gulf of Mexico last year. But the story of a little-known BP safety official on the desolate North Slope of Alaska offers some cautions about just how difficult a job that will be.

The day after the Gulf well blew out last April, killing 11 rig workers, Phil Dziubinski was suspended from his job and escorted out of his office in Alaska. The company said he was let go as part of a broad management overhaul. In a five-month skirmish, two government agencies rejected Mr. Dziubinski’s claims that he was fired as retribution for warning of safety risks. His back-and-forth with the British oil giant, though, sheds light on what Mr. Dudley is up against.

Mr. Dudley has created a new global safety division at BP, a company that also suffered a 15-fatality refinery explosion in Texas five years before the lethal Gulf accident. He has given the division power to intervene in or shut down any operation seen as too hazardous.

The safety issue goes to the heart of BP’s corporate culture, say some critics, who contend that compared with its Big Oil rivals, the company has historically been focused more on deal-making and less on safety and operational excellence. “Other companies were less aggressive on growth and more focused on their safety-management systems,” says John Hofmeister, a former president of Shell Oil Co. “Changing the culture is hard.”

One area where safety concerns have loomed large is Alaska’s North Slope, home to BP-operated Prudhoe Bay, the largest oil field in North America. Workers at the field, which opened in 1977, have long complained of aging infrastructure and a lengthy backlog of

In addition, as thousands of Alaska oil workers retired in recent years, overtime has piled up, and some workers have complained of fatigue. This is an issue Mr. Dziubinski repeatedly raised with his bosses, once referring to it in an email as an “imminent safety risk.” BP technicians on the North Slope work 14 days straight and it isn’t uncommon for them to put in shifts lasting 16 or 18 hours, sometimes on successive days.

BP says it has taken steps to reduce Alaskan workers’ maximum hours and won’t operate any facilities unless it is sure it can do so safety.

As Mr. Dudley tackles the BP safety culture, he will be under pressure, not least from U.S. authorities, to show improvements. A U.S. presidential commission’s report last month on the Gulf disaster said decision-making processes by BP and its contractors “did not adequately ensure that personnel fully considered the risks created by time- and money-saving decisions.” BP says the report supports its own view that the accident was “the result of multiple causes, involving multiple companies.”

BP “is working with regulators and the industry to ensure that the lessons learned from [the Gulf well] lead to improvements in operations and contractor services in deep-water drilling,” the company said. Even before the report, BP said, it was taking steps such as changing its pay structure to better reward safety performance and risk management. BP reports fourth-quarter financial results on Tuesday.

Mr. Dziubinski became BP’s ethics and compliance leader for Alaska operations in mid-2006, shortly after the company suffered a 4,000-barrel oil spill on the North Slope. That happened a year after the refinery explosion in Texas City, Texas, an accident that led a federal agency called the Chemical Safety Board to suggest BP managers didn’t listen enough to what workers were telling them.

“Reporting bad news was not encouraged,” the report said, “and often Texas City managers did not effectively investigate incidents or take appropriate corrective action.”

Promising change, BP in 2006 appointed an ombudsman, retired federal judge Stanley Sporkin, to receive and act on concerns raised by workers throughout the company. For BP Alaska, the company set up a program to allow employees and contractors to raise issues without fear of retribution, placing Mr. Dziubinski, a veteran safety official, in charge.

At first, workers were skeptical. “I thought, ‘Here’s another supervisor from Anchorage…I’m going to have to be on guard with this guy,'” says Marc Kovac, a steward of United Steelworkers’ Alaska Local 4959.

Suspicions faded, and employees soon began turning to Mr. Dziubinski with their grievances. Mark McCarty, a technician who sat on a BP health, safety and environment committee, says, “Phil was a bulldog in terms of making sure our concerns were addressed.”

In 2006, BP decided to survey its Alaska workers. It had done this several years earlier and heard concerns about equipment such as fire- and gas-detection systems in need of upgrading, and complaints that cuts in staffing and training had made operations less safe. So BP re-interviewed several hundred workers to see if these issues had been addressed.

The review team, consisting of Mr. Dziubinski, three other managers and a few workers, found progress on some things, like pipeline inspections, but concluded that other matters, such as staffing levels and upgrades to fire- and gas-detection systems, still “need work.”

BP’s plan was to share the detailed survey results with the work force, according to the USW. Instead, BP decided not to. It declined to say why or discuss the issue.

At a meeting in March 2007, Mr. Dziubinski disagreed with a supervisor’s assessment that the company was on track to fix all safety issues. Mr. Dziubinski said that several problems flagged by workers in the past still hadn’t been addressed, and that BP was taking too long to deal with workers’ current concerns.

“We tend not to listen to the workers,” Mr. Dziubinski said, according to notes of the meeting taken by the USW’s Mr. Kovac, who was there.

Mr. Dziubinski also was frustrated that BP had decided against releasing the report, according to Mr. Kovac. “That was the beginning of the decline of Phil’s relationship with upper management,” he says.

In 2009, Mr. Dziubinski engaged his bosses about staffing levels and the length of work shifts. North Slope workers’ normal schedule was two weeks of 12-hour days and seven-day weeks followed by two weeks off. But overtime was common, and some workers told their company safety committees that people were showing signs of fatigue. “You had walking zombies up here,” says Mr. McCarty, the BP technician.

The USW asked BP in 2008 how much overtime had been logged over three years. It turned out to be double the industry average, according to Glenn Trimmer, a North Slope technician who is secretary-treasurer of the union’s Alaska local.

BP added several dozen people to its work force of about 2,000 in Alaska and changed its rules so that for all shifts of longer than 16 hours, approval was needed from what is known as an area manager. Later, BP stiffened this requirement for managerial approval, following a complaint to its ombudsman that some technicians were working consecutive 18-hour shifts.

Mr. Dziubinski, who had access to overtime records, informed his bosses about situations that concerned him, including one employee who had worked 36 consecutive days without proper managerial approval and who had logged 320.5 hours of overtime in a single month.

He told his superiors that at three “gathering centers”—facilities that separate crude into oil, gas and water—some workers “have excessive overtime rates that may require leadership intervention to decrease a safety risk.”

His emails to his bosses, which were contained in the OSHA complaint he later filed and have been reviewed by The Wall Street Journal, said the rule requiring area-manager approval for shifts of 16 hours or more was followed only about half of the time.

In an Oct. 30, 2009, email, Mr. Dziubinski described the overtime situation as “an imminent safety risk.” Citing shift patterns, he wrote to his bosses that “allowing the continuation of the 16+ hour work shifts would be seen by internal and external stakeholders as putting production ahead of safety.”

Asked about the overtime issue, a BP spokesman said it “is being managed at the highest levels” of the company’s Alaska unit. “We have taken measurable steps to reduce the maximum allowable hours,” the spokesman said, adding that the company will “not operate facilities unless we are sure we can do so safely.”

A facility called the Lisburne Production Center suffered a small spill in autumn 2009, which Mr. Dziubinski came to regard as symptomatic of a larger malaise. A worker there emailed BP two months later with a long list of equipment the worker described as out of service or not working well. Mr. Dziubinski investigated and later told the USW’s Mr. Kovac, “The maintenance condition of [that facility] is in a poor state and BP management was not paying attention to it.”

After he started emailing his bosses about the overwork issue, some of his responsibilities were shifted to others, Mr. Dziubinski asserted in his later OSHA filing. He also said a website where employee concerns were logged was changed, and he no longer received email notification of new complaints.

BP disputed these claims. A company lawyer told OSHA that “no effort was made to preclude” Mr. Dziubinski from access to new complaints and that Mr. Dziubinski remained “the single point of contact for roughly 52% of all concerns filed between January 2009 and May of 2010.”

By May he was gone. On March 15, 2010, BP told Mr. Dziubinski, then 59 years old, that he wouldn’t have a position in the Alaska operation after it was reorganized.

On April 21, while Mr. Dziubinski was still coming to work at his Anchorage office, management accused him of trying to contact other staffers who were being let go. Security guards escorted him out.

His suspension came two months after BP’s ombudsman, Mr. Sporkin, had written to BP Alaska saying “we are concerned that the contractor work force has not received adequate assurances of non-retaliation for raising concerns about BP’s operations.”

BP says that “we expect and encourage our employees to raise safety concerns” and “have a zero tolerance policy regarding retaliation.” Mr. Sporkin declined to be interviewed.

The company, in denying to OSHA that Mr. Dziubinski had been dismissed because of his safety activism, said he was terminated as part of a wholesale reorganization of the U.S. business that would shed 200 managers in all, including 30 in Alaska. A BP lawyer told OSHA Mr. Dziubinski’s job performance didn’t “reflect the level of competency or effectiveness” BP sought for the new organization it was forming.

Mr. Dziubinski’s lawyer countered that his client had several years of consistently positive job evaluations and had received a bonus in 2008 and pay increase in 2009. His 2009 performance review described the numerous appeals workers sent to him as “a testament to his reputation and expertise.”

“Phil did a fantastic job during a tough time for the company” and “had [my] fullest confidence,” says a former BP Alaska executive who supervised him.

In July, an OSHA investigator ruled in BP’s favor, finding insufficient evidence for Mr. Dziubinski’s claim he was punished for pushing the safety issue. The Alaska labor department declined to disturb the ruling.

Subsequently, as Mr. Dziubinski was preparing a wrongful-termination suit, in the midst of the furor over the Gulf spill, he and BP reached a settlement, which is confidential.

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