BP Broke Rules, One Critic Says: PRUDHOE: A Letter to a Lawmaker Says Company Scrimped By Adding Water Instead of Chemicals to Pipes.

By Elizabeth Bluemink, Anchorage Daily News, Alaska

Feb. 7–North Slope oil company BP substituted water for corrosion-inhibiting chemicals in Prudhoe Bay pipes and had a policy of allowing some equipment to fail before replacing it, a long-time North Slope oil industry watchdog asserts.

BP’s motivation was to save money, Chuck Hamel wrote in a letter late last week to U.S. Rep. John Dingell, chairman of the House Energy and Commerce Committee.

Alec Gerlach, a spokesman for Dingell, said this week the congressman doesn’t plan to respond to the letter. He declined to say why. But he added, “Just because we’re not responding doesn’t mean we’re not taking a look at it.”

Pipeline corrosion at the giant Prudhoe Bay oil field caused the North Slope’s largest oil spill ever last winter and, after another leak in August, led to the temporary shutdown of half of Prudhoe’s production.

BP runs Prudhoe Bay on behalf of itself and other oil companies, and Congress and others have faulted BP for failing to stay on top of corrosion in the 30-year-old oil field.

BP Alaska spokesman Daren Beaudo said the company takes Hamel’s new allegations seriously and has asked BP’s ombudsman, retired federal judge Stan Sporkin, to investigate them. “We will await his findings and act if actions need to be taken,” Beaudo said.

Though Dingell’s office isn’t responding to Hamel’s new allegations, state officials were already investigating at least one of them.

The state Department of Environmental Conservation said Monday it is investigating a mid-December leak of about 3 barrels of crude oil and 6,580 barrels of water from a tank used to skim oil from water that comes up wells with oil. BP had listed the tank as “out of service” in a document filed with the state, DEC officials said Monday. Yet the tank was in service when the accident happened.

“It’s automatically something that gets our undivided attention,” said Leslie Pearson, DEC’s program manager for spill prevention and emergency response.

In his letter to Dingell, Hamel claimed the December spill has resulted in many oil wells being shut down, cutting North Slope production by a projected 50,000 barrels a day.

But BP and state officials said that’s not true. They said the spill resulted in no production loss because BP switched to using another tank of the same size already on site.

Hamel’s relationship to Alaska oil goes back over 20 years. At one time he was a broker for oil shipments, but for two decades he has been the industry’s loudest and most effective critic.

From his home in Alexandria, Va., he has accused the industry of excessive air and water pollution and retaliating against whistle-blowers who raised safety issues, among other charges. His efforts have led to heightened regulatory oversight, costing the Alaska oil industry tens of millions of dollars.

But he hasn’t prevailed on every accusation. State regulators rejected his claim that the industry sold him watered-down oil when he was a broker. And courts ruled against him when he charged that Exxon cheated him on some valuable oil leases he once owned.

Some of Hamel’s newest claims have been borne out. In the last few days, the company that runs the 800-mile trans-Alaska oil pipeline verified his claim that it lost a piece of a high-tech cleaning device in the pipeline about six weeks ago. He was also correct that DEC was investigating the BP tank that leaked while it was listed as out of service.

His most serious claims haven’t been verified.

For example, Hamel said this week he has “hard evidence” that BP has substituted water for corrosion inhibitors. In his letter to Dingell, he said that information was provided to him by a former BP employee.

To save money, BP repeatedly ordered too little anti-corrosion chemicals for pipelines from oil wells, Hamel said in an interview. He said he couldn’t say how long the substitutions occurred but corrosion crews would run out of the chemical each fall, then place water instead in the chemical reservoirs at each well.

He said he gave the information he obtained to a federal criminal pollution investigator in Seattle.

The investigator, Scott West of the Environmental Protection Agency, was out of the office Monday and Tuesday, according to his phone message, and could not be reached for comment.

The DEC is aware of that allegation as well.

“I suspect that as time allows we’ll take a look at it,” Pearson said, noting that the DEC is already wrapped up in four different North Slope pipeline-related investigations resulting from last year’s pipeline leaks.

Hamel asked Dingell to look into other pipeline problems.

These include:

–An alleged 1990s-era “Demolition Maintenance Program” for BP supervisors that instructed them whenever possible to refrain from replacing deficient equipment until it failed.

–Chronic ongoing equipment problems at the trans-Alaska pipeline’s Pump Station 9 near Delta Junction, caused by what Hamel termed “design blunders.”

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Oil watchdog’s allegations

–BP saved money by substituting corrosion-inhibiting chemicals with water in pipelines at wellhead injection points.

–BP suffered production losses due to a leak at a Prudhoe Bay tank in December. (BP and state officials assert no production was lost.)

–In the 1990s, BP instructed Prudhoe Bay supervisors to let deficient systems run until they failed as a cost-saving measure.

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Copyright (c) 2007, Anchorage Daily News, Alaska

Distributed by McClatchy-Tribune Business News.

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