[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
BP'S PIPELINE SPILLS AT PRUDHOE
BAY: WHAT WENT WRONG?
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON ENERGY AND
COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
SEPTEMBER 7, 2006
Serial No. 109-135
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/house
U.S. GOVERNMENT PRINTING OFFICE
31-461 WASHINGTON : 2006
_____________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202)
512-1800 Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001
COMMITTEE ON ENERGY AND COMMERCE
JOE BARTON, Texas, Chairman
RALPH M. HALL, Texas JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida Ranking Member
Vice Chairman HENRY A. WAXMAN, California
FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia FRANK PALLONE, JR., New Jersey
ED WHITFIELD, Kentucky SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia BART GORDON, Tennessee
BARBARA CUBIN, Wyoming BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
HEATHER WILSON, New Mexico BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona ELIOT L. ENGEL, New York
CHARLES W. "CHIP" PICKERING, Mississippi ALBERT R. WYNN, Maryland
Vice Chairman GENE GREEN, Texas
VITO FOSSELLA, New York TED STRICKLAND, Ohio
ROY BLUNT, Missouri DIANA DEGETTE, Colorado
STEVE BUYER, Indiana LOIS CAPPS, California
GEORGE RADANOVICH, California MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania JIM DAVIS, Florida
MARY BONO, California JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon HILDA L. SOLIS, California
LEE TERRY, Nebraska CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey JAY INSLEE, Washington
MIKE ROGERS, Michigan TAMMY BALDWIN, Wisconsin
C.L. "BUTCH" OTTER, Idaho MIKE ROSS, Arkansas
SUE MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee
BUD ALBRIGHT, Staff Director
DAVID CAVICKE, General Counsel
REID P. F. STUNTZ, Minority Staff Director and Chief Counsel
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
ED WHITFIELD, Kentucky, Chairman
CLIFF STEARNS, Florida BART STUPAK, Michigan
CHARLES W. "CHIP" PICKERING, Mississippi Ranking Member
CHARLES F. BASS, New Hampshire DIANA DEGETTE, Colorado
GREG WALDEN, Oregon JAN SCHAKOWSKY, Illinois
MIKE FERGUSON, New Jersey JAY INSLEE, Washington
MICHAEL C. BURGESS, Texas TAMMY BALDWIN, Wisconsin
MARSHA BLACKBURN, Tennessee HENRY A. WAXMAN, California
JOE BARTON, Texas JOHN D. DINGELL, Michigan
(EX OFFICIO) (EX OFFICIO)
CONTENTS
Page
Testimony of:
Malone, Robert A., Chairman and President, BP America, Inc. 39
Marshall, Steve, President, BP Exploration Alaska, Inc. 58
Hostler, Kevin, President and CEO, Alyeska Pipeline Service
Co. 92
Barrett, Vice Admiral Thomas J., Administrator, Pipeline and
Hazardous Materials Safety Administration, U.S.
Department of Transportation 505
Fredriksson, Kurt, Commissioner, Alaska Department of
Environmental Conservation 518
Additional material submitted for the record:
Marshall, Steve, President, BP Exploration Alaska, Inc., for
the record 542
Malone, Robert A., Chairman and President, BP America,
Inc., response for the record 552
Fredriksson, Kurt, Commissioner, Alaska Department of
Environmental Conservation, response, response for the
record 555
BP'S PIPELINE SPILLS AT PRUDHOE
BAY: WHAT WENT WRONG?
THURSDAY, SEPTEMBER 7, 2006
HOUSE OF REPRESENTATIVES,
COMMITTEE ON ENERGY AND COMMERCE,
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS,
Washington, DC.
The committee met, pursuant to call, at 10:15 a.m., in Room 2123 of
the Rayburn House Office Building, Hon. Greg Walden (Chairman)
presiding.
Members present: Representatives Stearns, Pickering, Walden,
Burgess, Blackburn, Barton (ex officio), Stupak, DeGette, Schakowsky,
Inslee, Baldwin, and Dingell (ex officio).
Members also present: Representatives Upton, Markey, and Green.
Staff present: Mark Paoletta, Chief Counsel for Oversight and
Investigations; Alan Slobodin, Deputy Chief Counsel for Oversight and
Investigations; Tom Feddo, Counsel; Andrew Snowdon, Counsel; Tom
Hassenboehler, Counsel; Dave McCarthy, Chief Counsel for Energy and
the Environment; Clayton Matheson, Analyst; Ryan Ambrose,
Legislative Clerk; Matthew Johnson, Legislative Clerk; Chris Knauer,
Minority Investigator; David Vogel, Minority Research Assistant; Bruce
Harris, Professional Staff Member; and Chris Treanor, Minority Staff
Assistant.
MR. WALDEN. Good morning and welcome.
The Chairman of the subcommittee, Mr. Whitfield, very much
wanted to be here but had some important legislation he has worked on
for a considerable length of time on the House floor this morning so I
will be chairing this hearing in his absence.
Today the Oversight and Investigations Subcommittee will examine
what went wrong on two crude oil pipelines operated by BP that service
the Prudhoe Bay fields on Alaska's North Slope, the Nation's largest
source of domestic oil. Oil spills on two separate lines within a five-
month period are a cause of major concern. These spills threaten not
only the environment but also the reliability of domestic oil production.
BP's current marketing slogan is "Beyond petroleum." Unfortunately, it
could also stand for "broken pipelines."
In March of this year, BP uncovered a leak in the western
transmission line. This spill resulted in more than 200,000 gallons, or
5,000 barrels of crude oil, breaking into the Arctic tundra, the single
largest spill in the history of the North Slope. In early August, BP
identified areas of significant corrosion on its eastern transmission line
necessitating an immediate shutdown of that line, a shutdown that
remains in effect today, cutting the daily production of Prudhoe Bay
nearly in half. How did two key pipelines, pipelines that transport 8
percent of this country's domestic oil, deteriorate so badly that the entire
production of Prudhoe Bay fields could be in jeopardy? Hopefully
today's hearings will yield some of those answers.
In public statements and in comments to committee staff during this
investigation, BP has acknowledged that it made mistakes in its
corrosion control program, and I commend them for admitting the
obvious. Hindsight is always 20/20 but it appears BP ignored some red
flags along the way.
First, there is evidence that BP received warnings from company
employees about the condition of these lines. It is important for us to
understand exactly what BP knew, when they knew it, what steps BP
took to verify the allegations, and what actions BP took to respond to the
concerns raised.
Second, BP seems to have ignored the results of its own inspections.
In 1998, BP inserted the diagnostic probe, also known as a smart pig,
into the western line to check for corrosion. These pig runs revealed
moderate internal and external corrosion including six areas of internal
corrosion at the very site where the March 2006 leak occurred. Despite
this critical information, however, BP elected to wait until 2006, eight
years, to conduct another pig run. Unfortunately, the leak occurred
before that pig run took place and the eastern line was even worse. It had
not been pigged since 1992.
Experts to a person have explained pig runs as an essential element
of any sound corrosion control program. BP's own internal corrosion
procedures tout the merits of small pigging. The question then is, why
did BP not pig these lines on a more regular basis. Was cost a factor or
were there other concerns about the condition of these lines such as
sediment and sludge buildup that prevented the use of pigs.
I hope that the BP officials appearing here, Robert Malone, President
of BP America, and Steve Marshall, President of BP Exploration Alaska,
will be able to answer some of these questions. Unfortunately, Mr.
Woollam, BP's former chief corrosion engineer on the North Slope, has
elected to assert his Fifth Amendment right not to testify. We will also
hear today from the Department of Transportation about the steps they
took following these spills. I am encouraged by the Department of
Transportation's confident assertions that BP's pipeline troubles are an
isolated incident rather than an industry-wide problem and that the
Department of Transportation's Integrity Management Program has
resulted in a steady decline of serious incidents. I look forward to
learning from Kevin Hostler, President and CEO of Alyeska, what his
company is doing to ensure the integrity of the Trans Alaska Pipeline in
the wake of these incidents and how Alyeska is working with BP to help
get the eastern operating line back in service. I also want to welcome
Dan Stears from Coffman Engineers and Kurt Fredriksson,
Commissioner of the Alaska Department of Environmental
Conservation. Many of the witnesses have traveled a long way to
participate in today's hearings and the committee certainly appreciates
their efforts.
Today's hearing is of tremendous importance to this committee and
to the American people. Companies that operate oil pipelines have a
responsibility to maintain the Nation's crucial energy infrastructure.
Hopefully what we learn about BP's incidents on the North Slope will
help prevent future spills so that both the environment and the reliable
supply of a vital natural resource will not be compromised again.
With that, I now recognize the Ranking Member of the
Subcommittee on Oversight and Investigations, Mr. Stupak, for 5
minutes.
[The prepared statement of Hon. Greg Walden follows:]
PREPARED STATEMENT OF THE HON. GREG WALDEN, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON
Good morning and welcome. The Chairman of the Subcommittee,
Mr. Whitfield, very much wanted to be here, but has some important
legislation on the House floor this morning, so I will be chairing this
hearing in his absence.
Today, the Oversight and Investigations Subcommittee will examine
what went wrong on two crude oil pipelines operated by BP that service
the Prudhoe Bay fields on Alaska's North Slope, the nation's largest
source of domestic oil. Oil spills on two separate lines within a 5-month
period are a cause of major concern. These spills threaten not only the
environment, but also the reliability of domestic oil production. BP's
current marketing slogan is "Beyond Petroleum." Unfortunately, it could
also stand for "Broken Pipelines."
In March of this year, BP uncovered a leak in the Western
transmission line. This spill resulted in over 200,000 gallons (or 5,000
barrels) of crude oil leaking onto the Artic tundra -- the single largest
spill in the history of the North Slope. In early August, BP identified
areas of significant corrosion on its Eastern transmission line,
necessitating an immediate shut-down of that line -- a shut-down that
remains in effect today, cutting the daily production of Prudhoe Bay
nearly in half. How did two key pipelines -- pipelines which transport
nearly 8% of this country's domestic oil -- deteriorate so badly that the
entire production of the Prudhoe Bay fields could be in jeopardy?
Hopefully today's hearing will yield some answers.
In public statements and in comments to Committee staff during this
investigation, BP has acknowledged that it made mistakes in its
corrosion-control program. I commend them for at least admitting the
obvious. Hindsight is always 20/20, but it appears that BP ignored some
red flags along the way. First, there is evidence that BP received
warnings from company employees about the condition of these lines. It
is important for us to understand exactly what BP knew, when they knew
it, what steps BP took to verify the allegations, and what actions BP took
to respond to the concerns raised.
Second, BP seems to have ignored the results of its own inspections.
In 1998, BP inserted a diagnostic probe -- also known as a "smart pig" --
into the Western Line to check for corrosion. This pig run revealed
moderate internal and external corrosion, including 6 areas of internal
corrosion at the very site where the March 2006 leak occurred. Despite
this critical information, however, BP elected to wait until 2006 -- 8
years -- to conduct another pig run. Unfortunately, the leak occurred
before that pig run took place. And the Eastern Line was even worse -- it
had not been pigged since 1992!
Experts, to a person, have explained pigging is an essential element
of any sound corrosion control program. BP's own internal corrosion
procedures tout the merits of smart pigging. The question, then, is why
did BP not pig these lines on a more regular basis? Was cost a factor, or
were there other concerns about the condition of these lines -- such as
sediment and sludge buildup -- that prevented the use of pigs? I hope
that the BP officials appearing here -- Robert Malone, President of BP
America, and Steve Marshall, President of BP Exploration Alaska -- will
be able to answer some of these questions. Unfortunately, Mr. Wollam,
BP's former chief corrosion engineer on the North Slope, has elected to
assert his Fifth Amendment right not to testify.
We will also hear today from the Department of Transportation
about the steps that they took following these spills. I am encouraged by
DOT's confident assertions that BP's pipeline troubles are an isolated
incident rather than an industry-wide problem and that DOT's Integrity
Management Program has resulted in a steady decline of serious
incidents.
I look forward to learning from Kevin Hostler, President and CEO of
Alyeska, what his company is doing to ensure the integrity of the Trans
Alaska Pipeline in the wake of these incidents and how Alyeska is
working with BP to help get the Eastern Operating Line back in service.
I also want to welcome Dan Stears from Coffman Engineers and
Kurt Frederickson, Commissioner of the Alaska Department of
Environmental Conservation. Many of the witnesses have traveled a
long way to participate in today's hearing, and the Committee certainly
appreciates their efforts.
Today's hearing is of tremendous importance to this Committee and
the American people. Companies that operate oil pipelines have a
responsibility to maintain the nation's crucial energy infrastructure.
Hopefully, what we learn about BP's incidents on the North Slope will
help prevent future spills so that both the environment and the reliable
supply of a vital natural resource won't be compromised again.
I now recognize the Ranking Member of the Subcommittee on
Oversight and Investigations, Mr. Stupak, for 5 minutes.
MR. STUPAK. Thank you, Mr. Chairman, and thank you for holding
this hearing.
On March 2 of this year, BP discovered that oil was leaking from a
major transmission line largely responsible for connecting the west oil
field with the Trans Alaskan Pipeline, TAPS. This spill included almost
2,700 gallons of crude and became the largest spill in North Slope
history. Shortly thereafter, a letter was sent by Ranking Member Dingell
seeking answers to the causes of the WOA, western operating area, line
failure and BP's efforts to deal with corrosion. Over the next several
months, what started as a single spill ended in the shutdown of the entire
Prudhoe Bay field, and for a time, reduction of 8 percent of the U.S.
domestically produced oil supply.
Mr. Chairman, this hearing is about far more than oil spills or
pipeline corrosion. It is about trying to understand how a company with
the global standing of BP allowed its North Slope operations to
deteriorate to where the company professes little understanding of the
true condition of major operational assets. It is also about why, when the
Nation is facing ongoing threats to its oil supply abroad, we don't have a
better redundancy in an oil field as strategic as Prudhoe Bay. Given the
record profits of this industry, this aspect of BP's recent North Slope
failures was particular egregious.
Mr. Chairman, this committee's investigation into the failures of
BP's Alaska operations began shortly after the Department of
Transportation issuance of their March 15 corrective action order.
Among the many requirements, that order mandated that BP smart pig a
number of key lines including both the western operating area line and
the eastern operating area line.
In April of this year, committee staff traveled to Alaska to seek
answers to the causes of the western operating area line failure and
determine the implications of the DOT order. In that process, it was
learned that huge amounts of solids were believed to exist in key lines
that BP was now ordered to pig. These solids, it was believed, could
create a number of potential operational challenges. In particular, BP
might not be able to run smart pigs through these lines because the solids
were potentially so excessive as to risk pigs becoming stuck in the lines.
If that occurred, this would essentially block the transit line's ability to
deliver oil to the Trans Alaska Pipeline and perhaps shut down large
parts of the oil field. It was also learned that the dislodging of such
solids would later have profound consequences on TAPS itself including
the introduction of corrosion-causing materials into that system and the
potential for clogging Pump Station number 1 entry screeners. These
new issues prompted Ranking Member Dingell to send a letter on April
25 to the Department of Transportation Secretary which posed a number
of key questions about not only the ability of BP to meet DOT's March
15 order but also about the overall condition of BP's major transit lines.
The DOT's response to that letter raised several troubling issues,
most notably that BP appeared to lack a fundamental understanding of
the condition of both its western operating area or eastern operating area
lines. Moreover, it became clear that despite what appeared to be
knowledgeable buildup of scale and solids over the years, the company
inexplicably failed to pig these lines frequently, if at all. In its response,
DOT also noted that, based on current management information, the
infrequency by BP to pig these lines, and I quote now, "did not represent
sound management practice for internal corrosion control."
I would like to ask, Mr. Chairman, that this and all the letters from
Mr. Dingell on this subject be placed in the record.
MR. WALDEN. Without objection.
MR. STUPAK. Mr. Chairman, I have a number of key questions for
BP that I hope we will find answers to at this hearing. First, why was it
that BP relied so heavily on ultrasonic thickness, UT testing, and the use
of corrosion coupons when BP knew such techniques could not deliver
data on the underground portions of the western operating area line
where the caribou cross? The most recent run on the western operating
area line was last done in 1998 and found that corrosion had increased,
particularly in low-lying areas similar to the area where the March 2 spill
occurred. Moreover, why did BP not install a more aggressive plan to
seek data on these sections, given that the WOA line had a low flow rate
and was thus subject to water and solid separation? It is not Monday
morning quarterbacking to suggest that BP should have known it needed
a plan to physically collect detailed data on these locations, even if it
included moving soil to access the pipe for more aggressive pigging.
Second, why would the EOA, the eastern operating area line, a line
that failed in August and prompted the entire field shutdown, why was
that line not smart-pigged at all by BP until DOT ordered it do so? The
EOA line is a primary transmission line. It is a key asset in BP's field
yet this line was left for almost 15 years with not so much as a
maintenance pig being run through its length. Indeed, the EOA line has
both a pig launcher and a pig receiver and so was clearly designed for
pigging. What explains this failure? So far we have not had a
satisfactory explanation from BP.
Third, why is it that there were virtually no redundancies in either the
eastern oil field or the western oil field which would have allowed BP to
continue operating after the most recent corrosion problems were
discovered? As we note today, BP is now seeking to construct a number
of bypass solutions to reroute oil around the failed eastern operating area
line.
Fourth, why are we suddenly now deciding to replace these lines
with new pipe knowing that for years such pipes were aging and that
their original diameter was not designed for the low flow rates both were
experiencing before they were removed from service? These pipes were
designed for 800-pounds-per-square-inch flow rate. Today they are only
at 80- PSI flow rate. Indeed, some have accused BP of running these
lines to failure or riding the throughput curve. Nonetheless, at a time of
record profits, I find it remarkable that the first major plan to replace a
mere 20 miles of pipe of such strategic importance as these two lines
comes post failure.
Fifth, when did BP first learn that the solids in these pipes would
make immediate pigging extremely difficult? In short, why did it
become such an engineering ordeal to merely determine if pigs could be
run? If BP knew its lines were increasingly collecting shale, sludge or
solids, all of which are known to contribute to corrosion, why wouldn't it
aggressively attempt to remove such materials regularly? Alyeska, the
operator of the Trans Alaska Pipeline, sends a scraper pig down its entire
800-mile length every 14 days, yet the eastern operating area line was
not pigged a single time in 14 years. Why not?
Sixth, more troubling, BP apparently claims it did not know how bad
its lines were. If BP only became aware of the scale and sediment after
the DOT order, then why did it know so little so late? Shouldn't it have
known about the sediment buildup in the western operating area line
given the kinds of crude they were pulling from the field? If BP truly
had a world-class pipe integrity system, shouldn't it have known about
the shale buildup in the EOA line, given its earlier history of huge
problems when it was last pigged in 1992?
Seventh, 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. Though not fully understood, these
problems apparently create a chilling atmosphere for workers' ability to
report health and safety issues and had perhaps at least some impact on
the effectiveness of BP's corrosion control efforts. For example, the
committee is in receipt of an October 20, 2004, report by the Vinson and
Elkins Law Firm that found that the very people that BP relied upon to
detect corrosion in both the WOA and EOA line, the Corrosion
Inspection and Chemical Group, were fraught with worker intimidation
and harassment from senior management.
Eighth, rather than rely on smart pigs to find corrosion in its lines,
BP relied on what are called corrosion coupons. Coupons are pieces of
metal that are inserted into a pipe at various locations and are later
removed and analyzed to determine how much corrosion is taking place
inside the pipe. Unlike smart pigging, which gives you a view of the
entire line, coupons only tell you how corrosion is affecting the general
area where the coupon is located. Nonetheless, according to reports on
worker intimidation and harassment that I just mentioned, the number of
coupons used in BP's operation was reduced by 25 percent for reasons
that remain unclear. At a time when BP pipes were aging and it was
already relying on a limited program to detect corrosion, why would the
company allow such a significant reduction?
Finally, and I appreciate you letting me go over a little bit, Mr.
Chairman, what budget pressures were placed on the corrosion
monitoring group at BP and did such pressures ultimately lead to a
serious deficiency in BP's ability to truly assess corrosion risk? For
example, there is a 2005 memo that I am sure we will get into. There is
an audit, and all these I am sure we will get into during questions and
answers.
Mr. Chairman, I have gone over my time. Thank you for allowing
me extra time. I ask to have my entire statement be submitted for the
record.
MR. WALDEN. Without objection.
MR. STUPAK. Thank you.
[The prepared statement of Hon. Bart Stupak follows:]
PREPARED STATEMENT OF THE HON. BART STUPAK, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
Thank you Mr. Chairman, and thank you for having this hearing.
On March 2nd of this year, BP discovered that oil was leaking from
a major transmission line largely responsible for connecting its west
oilfield (WOA)with the Trans-Alaskan Pipeline (TAPS). That spill,
included almost 270,000 gallons of crude and became the largest spill in
North Slope history. Shortly thereafter, a letter was sent by ranking
Member Dingell seeking answers to the causes of the WOA line's failure
and BP's efforts to deal with corrosion. Over the next several months,
what started as a single spill ended in the shutdown of the entire Prudhoe
Bay field, and for a time, the reduction of 8% of the U.S. domestically-
produced oil supply.
Mr. Chairman, this hearing is about far more than oil spills or
pipeline corrosion. It is, about trying to understand how a company with
the global standing of BP allowed its north slope operations to
deteriorate to where the company professes little understanding of the
true condition of major operational assets. It is also about why, when the
nation is facing threats to its fuel supply abroad, we don't have better
redundancy in a field as strategic as Prudhoe Bay. Given the record
profits of this industry, this aspect of BP's recent north-slope failures is
particularly egregious.
Mr. Chairman, this Committee's investigation into the failures of
BP's Alaska operations began shortly after the Department of
Transportation's (DOT) issuance of their March 15th Corrective Action
Order. Among many requirements, that order mandated that BP "smart
pig" a number of key lines, including both the Western Operating Area
(WOA) line and the Eastern Operating Area (EOA) line.
In April of this year, Committee staff traveled to Alaska to seek
answers to the causes of the WOA line's failure and determine the
implications of the DOT order. In that process, it was learned that huge
amounts of solids were believed to exist in key lines that BP was now
ordered to pig. These solids -- it was believed -- could create a number
of potential operational challenges. In particular, BP might not be able to
run smart pigs through these lines because the solids were potentially so
excessive, the cleaning pigs risked becoming stuck in the lines. If that
occurred, this would essentially block the transit line's ability to deliver
oil to the Trans Alaskan Pipeline and perhaps shut down large parts of
the oilfield. It was also learned that the dislodging of such solids could
later have profound consequences on TAPS itself, including the
introduction of corrosion-causing materials into that system and the
potential for clogging Pump-Station One's entry strainers.
These new issues prompted ranking Member Dingell to send an
April 25th letter to the Department of Transportation's Secretary, which
posed a number of key questions about not only the ability of BP to meet
DOT's March 15th order, but also about the overall condition of BP's
major transit lines.
The DOT's response to that letter raised several troubling issues.
Most notably, that BP appeared to lack a fundamental understanding of
the condition of both its WOA or EOA lines. Moreover, it became clear
that despite what appeared to be knowledgeable buildup of scale and
solids over the years, the company inexplicably failed to pig these lines
frequently (if at all). In its response, DOT also noted that based on
current management information, that the infrequency by BP to pig these
lines "[did] not represent sound management practices for internal
corrosion control." [I would ask that this and all of Mr. Dingell's letters
on this subject be placed into the record.]
Mr. Chairman, I have a number of key questions for BP that I hope
we will find answers to at this hearing and I will raise several of them
here:
First, why is it that BP relied so heavily on ultrasonic thickness
(UT) testing and the use of corrosion coupons when BP knew such techniques
could not deliver data on the under ground portions of the WOA line
(such as the caribou crossings)? The most recent run on the WOA line
was last done in 1998 and found that corrosion had increased,
particularly in low-lying areas similar to the area where the March 2nd
spill occurred. Moreover, why did BP not install a more aggressive plan
to seek data on these sections given that the WOA line had a low-flow
rate and was thus subject to water and solids separation? It is not
Monday-morning quarter backing to suggest that BP should have known
it needed a plan to physically collect detailed data on these locations,
even if it included removing soil to access the pipe or more aggressive
pigging.
Second, why was the EAO line -- the line that failed in August and
prompted the entire field's shutdown -- not smart-pigged at all by BP
until DOT ordered it to do so? The EOA line is a primary transmission
line. It is a key asset in BP's field. Yet this line was left for almost
fifteen years with not so much as a maintenance pig being run through its
length. Indeed, the EOA line has both a pig launcher and a pig receiver,
and so was clearly designed for pigging. What explains this failure? So
far we do not have a satisfactory explanation from BP.
Third, why is it that there were virtually no redundancies in either
the eastern field or the western field which would have allowed BP to
continue operating after the most recent corrosion problems were
discovered? As we know today, BP is now seeking to construct a
number of bypass solutions to re-route oil around the failed EOA line.
Fourth, why are we suddenly now deciding to replace these lines
with new pipe knowing that for years such pipes were aging and that
their original diameter was not designed for the low flow rates both were
experiencing before they were removed from service? These pipes were
designed for 800 psi flow rate. Today they are at only 80 psi flow rate.
Indeed, some have accused BP of "running these lines to failure," or
"riding the throughput curve." Nonetheless, at a time of record profits, I
find it remarkable that the fist major plans to replace a mere 20 miles of
pipe of such strategic importance as these two lines, comes post failure.
Fifth, when did BP first learn that the solids in these pipes would
make immediate pigging extremely difficult? In short, why did it
become such an engineering ordeal to merely determine if pigs could be
run? If BP knew its lines were increasingly collecting scale, sludge, or
solids -- all of which are known to contribute to corrosion -- why
wouldn't it aggressively attempt to remove such material regularly?
Alyeska -- the operator of the trans-Alaskan pipeline sends a scraper pig
down its entire 800-mile length every 14 days. Yet, the EAO line was
not pigged a single time in 14 years. Why?
Sixth, more troubling, BP apparently claims it did not know how bad
its lines were? If BP only became aware of the scale and sediment after
the DOT order, then why did it know so little, so late? Shouldn't it have
known about the sediment build-up in the WOA line given the kinds of
crude they were pulling from the field? If BP truly had a world-class
pipeline integrity system, shouldn't it have known about the scale build
up in the EOA line given its earlier history of huge cleaning problems
when it was last pigged in 1992?
Seventh, 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. 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. For example, the
Committee is in receipt of an October 20, 2004 report by the Vincent and
Elkins law firm that found that the very program that BP relied upon to
detect corrosion in both the WOA and EOA lines -- the Corrosion
Inspection and Chemicals Group (CIC) -- was fraught with workplace
intimidation and harassment from senior management.
Eighth, rather than rely on smart pigs to find corrosion in its lines,
BP relied upon what are called corrosion coupons. Coupons are pieces
of metal that are inserted into the pipe at various locations and are later
removed and analyzed to determine how much corrosion is taking place
inside the pipe. Unlike smart pigging which gives you a view of the
entire line, coupons only tell you how corrosion is affecting the general
area where the coupon is located. Nonetheless, according to the report
on worker intimidation and harassment I just mentioned, the number of
coupons used in BP's operations was reduced by 25% for reasons that
remain unclear. At a time when BP's pipes were aging and it was
already relying on a limited program to detect corrosion, why would the
company allow for such a significant reduction?
Finally, what budget pressures were placed on the corrosion
monitoring group at BP and did such pressures ultimately lead to serious
deficiencies in BP's ability to truly assess corrosion risks? For example,
an April 2005 internal audit of BP's corrosion management system found
the following:
"Currently [the program's] budget is set up-front in line with flat
lifting cost strategy, with corrosion management activities then
developed around this budget allocation. This strategy to maintain flat
lifting costs is driving behaviours counterproductive to ensuring integrity
and the delivery of an effective management system. A more effective
and efficient process would be to derive the set of activities required to
deliver a robust corrosion management system over the longer term, and
thereafter set the budget based on these activities."
Mr. Chairman, this audit suggests to me, that some in BP had grown
concerned that cost cutting was having a troubling affect on the
company's ability to design and maintain a sound corrosion control
program.
Mr. Chairman, I could continue on here, but I will save other key
findings for the question period. Nonetheless, I would like to wind down
my statement by welcoming our witnesses.
In particular, I would like to welcome Mr. Bob Malone, who is now
the newly-appointed President of BP America. I would like to point out
-- Mr. Malone -- that you have an excellent reputation with this
Committee. During the early 1990s when it was Alyeska -- the operator
of the Trans-Alaskan Pipeline -- that was in so much trouble, it was in
part your leadership as president that helped turn the company around.
Over the years you have voluntarily worked closely with this Committee
to keep us apprised of developments both while at Alyeska and later,
while at BP. I thank you for your assistance in that regard and your
interaction with this Committee was helpful and appreciated.
Nonetheless, in your current position, I truly believe that the
situation on the North Slope demands your full attention, as it is frankly
an embarrassment to your company. Like with the mess you found at
Alyeska, this Committee is expecting that you will fully investigate and
evaluate what broke down on the north slope and then pursue major
fixes, whether financial or personnel. This nation cannot allow the kinds
of fiascos we have witnessed over the past several months to continue
with the nation's energy supply. This Committee is expecting answers
and results and ultimately getting this field back up running in a
professional and reliable manner. The public will expect nothing less,
and neither should this Committee.
Mr. Chairman, thank you again for holding this hearing, and with
that, I yield back.
MR. WALDEN. We will try to stick to the 5 minutes, but I know a lot
of work has gone into this on both sides of the aisle, and as the Ranking
Member, I thought it appropriate to accede you additional time.
MR. STUPAK. Thank you.
MR. WALDEN. I would now like to recognize the Chairman of the
full committee, the very able and honorable Joe Barton. Mr. Barton.
CHAIRMAN BARTON. Thank you, Mr. Chairman, for chairing this
hearing today. I hope that the testimony is going to provide us some
answers about the recent crude spills on the North Slope of Alaska. I
also hope that it is going to provide some answers about what is being
done and what will continue to be done to prevent those very serious
incidents from happening in the future.
The spills occurred on two transmission lines that move oil produced
from Prudhoe Bay to the Trans Alaska Pipeline. BP Exploration of
Alaska Incorporated, which is an operating unit of British Petroleum, is
responsible for the operation and maintenance of those crude oil
transmission lines. I think it is obvious, but we do need to emphasize
that these lines move approximately 400,000 barrels of crude oil per day
to markets. That is roughly 8 percent of the United States' domestic oil
production. Given that fact, the safe, responsible and reliable operation
of these pipelines is of paramount concern to this committee and to the
country. It is critical that no further leaks occur on these lines. It is
paramount to avoid the threat to human life and the environment. It is
also important to our national security that the oil from Prudhoe Bay be
reliably and safely transported on a daily basis.
On Sunday, August 6, BP announced the complete shutdown of the
Prudhoe Bay oil field. The following Monday, the price that BP and
others commanded on the world market for their crude oil jumped 3
percent to nearly $77 a barrel. This decision came on the heels of an
accident last March when BP's western transmission lines at Prudhoe
Bay leaked about 200,000 gallons of oil from a corroded pipe. Between
that incident and the leak in August from the eastern transmission line,
BP had repeatedly assured this committee, our staffs and me personally
that the corrosion of that pipeline that failed in March was an anomaly.
BP told us that their corrosion control program was effective, that they
were monitoring on a constant basis and they were mitigating corrosion
in the pipelines at Prudhoe Bay. If the March leak was an anomaly, why
did BP suddenly shut down production from the entire Prudhoe Bay oil
field in August due to excessive corrosion discovered in the eastern
crude oil transmission lines? In fact, we now know that BP had failed to
carefully inspect and maintain these pipelines. The decision to shut
down the pipeline in August seems to be the direct result of a
requirement to pig the eastern line because of last March's spill on the
western line.
Pipeline experts and other pipeline operators have explained to us
that internal inspection of pipelines, what is called smart pigging, is the
most reliable, complete and informative way to assess the integrity of a
pipeline's walls, interior walls. U.S. Department of Transportation
officials explained to the committee staff that BP's failure to pig these
lines regularly is unsound management. Other methods are available but
pigging has a distinct advantage. I understand that pigging is relatively
inexpensive on a pipeline that has been designed for it. We might point
out at this point in tine that last year BP reported record earnings of over
$25 billion, $25 billion, and that the Prudhoe Bay field is and was the
lodestar of the BP production. Prior to this year's incidents, not either
the western or the eastern gathering line that BP has been operating had
been smart pigged for years. The western line was last maintenance
pigged and smart pigged in 1998. That is eight years ago, or seven years
ago. The eastern line was last maintenance pigged in 1990 and smart
pigged in 1992, 14 years ago. By comparison, executives at Alyeska, the
pipeline company operating the larger Trans Alaska Pipeline System,
informed subcommittee staff that their line is maintenance pigged every
two weeks, every two weeks, and smart pigged at least once every three
years.
We now know that BP officials have admitted, and I am expecting
that they will again say so today, that their corrosion control and
inspection program for Prudhoe Bay was flawed and that in hindsight,
BP should have been pigging these transmission lines in hindsight. Well,
hindsight is better than blind sight, I guess, but it is not a substitute for
ongoing sound management practices.
I suppose that this committee and Congress is expected to shrug our
shoulders and say, well, now they get it, but the clever use of perfect
hindsight to excuse consistent failure just doesn't cut it. Years of
neglecting to inspect for the most vital gathering oil pipelines in this
country is not acceptable. BP's neglect is having as we speak an adverse
and disruptive effect on the American economy, American consumers
and national security. That is not acceptable. If a company, one of the
world's most successful oil companies, can't do simple, do basic
maintenance needed to keep the Prudhoe Bay field operating safely
without interruption, maybe it shouldn't operate the pipeline. Maybe we
should find a way to get a different operator through the private market
sale of this pipeline and let somebody else do it.
This hearing will largely focus on BP's failure to responsibly operate
the Prudhoe Bay transmission lines but these two incidents of which the
March spill also happens to be the continuing subject of a Federal grand
jury are only part of this company's recent and unfortunately notorious
track record. The Prudhoe Bay spill comes on the heels of the British
Petroleum Texas City Refinery disaster that killed 15 people in 2005.
Now, I know that BP is investing significant amounts of time, energy
and resources to bring Prudhoe Bay back at the full capacity and to
address the very serious corrosion problems that have been discovered,
but this is all after the fact. I understand that sludge and sediment issues
existed in the lines for quite some time, that BP knew about the flaws in
its corrosion control program. Impurities like sludge, sediment and water
induce corrosion and provide a place for corrosion to hide.
Maybe I have the wrong impression, but it seems to me that BP was
betting the company and their field that this field would be depleted
before major parts of the pipeline failed and needed to be replaced. BP's
policies are as rusty as its pipelines. I am very concerned about the
specific incident but I am even more concerned about BP's corporate
culture of seeming indifference to safety and environmental issues, and
this comes from a company that prides itself in their ads on protecting
the environment. Shame, shame, shame.
And I want to say something else before I conclude, Mr. Chairman.
During the course of this investigation, the committee has been informed
by certain individuals that we were trying to interview at the staff level
that they are reluctant to come forward to provide information due to
concerns over possible retribution throughout the oil industry in Alaska.
I want to make it perfectly clear that if we find that any person is
threatened, intimidated or attempted to be retaliated against as a result of
cooperating with this committee, I will use every bit of power that I have
as Chairman of the full committee to ensure that the retaliator is
prosecuted to the fullest extent of the law, and to the extent that that
retaliation against an individual is condoned by any corporate official, I
will exercise the same authority against those officials. We are going to
get to the bottom of this. We are going to make sure that the facts are in
the public purview and we are going to, if necessary, change Federal law
to do everything possible to minimize this happening again.
Mr. Chairman, I look forward to today's testimony. I hope we get
the answers we need. If not, I am sure the subcommittee will continue to
conduct aggressive oversight on a bipartisan basis on this issue.
With that, I yield back the balance of my time.
[The prepared statement of Hon. Joe Barton follows:]
PREPARED STATEMENT OF THE HON. JOE BARTON, CHAIRMAN,
COMMITTEE ON ENERGY AND COMMERCE
Thank you, Mr. Chairman, for holding this hearing. I hope that the
testimony today will provide us with some satisfactory answers about
several recent crude oil spills on the North Slope of Alaska, and what is
going to be done to prevent these very serious incidents in the future.
The spills occurred on two transmission pipelines that move oil produced
from Prudhoe Bay to the Trans-Alaska Pipeline System. BP Exploration
(Alaska), Inc. - an operating unit of BP - is responsible for the operation
and maintenance of those crude oil transmission lines.
I want to emphasize that these lines move nearly 400,000 barrels of
crude oil a day to market. That's roughly 8 percent of the country's
domestic oil production. Given that fact, the safe, responsible, and
reliable operation of these pipelines is of paramount concern to this
Committee.
It is critical that no further leaks occur on these lines. We certainly
want to avoid the threat to human lives and the environment, but it is also
imperative to our national security that this oil be reliably transported.
On Sunday, August 6th, BP announced the complete shutdown of the
Prudhoe Bay oil field, and the following Monday the price BP and others
commanded on the world market jumped 3 percent, to nearly $77 per
barrel.
Americans had already been facing record-high gasoline prices. Did
BP think that shutting in 8 percent of U.S. production would relieve
American consumer prices? We don't need prices suddenly kicked
higher because the company responsible for bringing a vital part of this
country's oil to market isn't taking care of the pipelines. BP owes
Americans a higher standard of operation. These are energy resources
which this country needs and they control.
In March of this year, BP's Western transmission line at Prudhoe
Bay leaked about 200,000 gallons of oil from a corroded pipe. Between
that incident and the leak in August from the Eastern transmission line,
BP had repeatedly assured me, through staff, that the corrosion of the
pipeline that failed in March was an anomaly. BP told us that their
corrosion control program was effectively monitoring and mitigating
corrosion in the pipelines at Prudhoe Bay.
If the March leak was an anomaly, why did BP suddenly shut down
production from the entire Prudhoe Bay oil field in August due to
excessive corrosion discovered in the Eastern crude oil transmission
lines? In fact, what we now know is that BP has failed to carefully
inspect and maintain these pipelines.
Pipeline experts and other pipeline operators have explained to us
that internal inspection of pipelines - what is called smart-pigging - is
the most reliable, complete, and informative way to assess the integrity
of a pipeline's walls. U.S. Department of Transportation officials have
explained to us that for BP's failure to pig these lines regularly is
unsound management. Other methods are available, but pigging has
distinct advantages. I understand that pigging is relatively inexpensive
on a pipeline that has been designed for it.
Yet prior to this year's incidents, BP's pipelines had not been smart-
pigged for many years. The Western line was last maintenance-pigged
and smart-pigged in 1998. The Eastern line was last maintenance-pigged
in 1990 and smart-pigged in 1992. By comparison, executives at
Alyeska, the pipeline company operating the Trans-Alaska Pipeline
System, informed the Subcommittee that TAPS is maintenance-pigged
every two weeks, and smart-pigged every three years. I know that BP
officials have admitted, as I expect they will also do here today, that their
corrosion control and inspection program for Prudhoe Bay was flawed,
and that in hindsight BP should have been pigging these transmission
lines.
I suppose that we're expected to shrug and say, "Well, now they get
it." But the clever use of perfect hindsight to excuse consistent failure
just doesn't cut it. Years of neglecting to inspect two of the most vital
oil pipelines in this country is simply unacceptable. Nor are the adverse
and disruptive effects on the American economy, American consumers,
and national security in any way acceptable. If a company -- a very
successful company -- can't do the basic maintenance needed to keep
Prudhoe Bay's oil field operating safely and without interruption, then
maybe it shouldn't be operating the pipeline.
This hearing will largely focus on BP's failure to responsibly operate
the Prudhoe Bay transmission lines, but these two incidents - of which
the March spill also happens to be the subject of a federal grand jury -
are only part of the company's recent and notorious track record. The
Prudhoe Bay spills come on the heels of the BP Texas City refinery
disaster that killed 15 people in 2005.
I know that BP is investing significant amounts of time, energy, and
resources to bring Prudhoe Bay back up to full capacity and to address
the very serious corrosion problems that have been discovered, but that is
all after the fact. I understand that sludge and sediment issues existed in
the lines for quite some time, and that BP knew about the flaws in its
corrosion control program. Impurities like sludge, sediment, and water
induce corrosion, and provide a place for corrosion to hide. Maybe I
have the wrong impression, but it seems that BP might have been betting
that the field would be depleted before major parts of the pipeline failed
and needed replacement. BP's policies are as rusty as its pipelines.
Mr. Chairman, I look forward to today's testimony. I hope we can
get all the answers we need; and if not, then I hope that the
Subcommittee will continue to conduct its oversight work on these
issues. I yield back the remainder of my time.
MR. WALDEN. Thank you, Mr. Chairman.
I would like to ask unanimous consent that members of the
subcommittee who may not be present or are present and have written
testimony or opening statements they would like to be submitted for the
record may do so without objection, and I have the statement of the
Honorable Ed Whitfield, Chairman of the Subcommittee on Oversight
and Investigation, that we will enter into the record. We will have seven
days for that.
At this point I would turn to the Ranking Member of the committee,
the Honorable Mr. Dingell, for opening statement.
MR. DINGELL. Mr. Chairman, thank you. I commend you for
holding this hearing.
I must confess myself disappointed at our reasons for being here
today. We face many challenging energy issues ranging from high prices
of oil and natural gas to the continued development of renewable fuels
and the nagging problem of nuclear waste. That we find ourselves
conducting oversight of an oil company that seems to be having trouble
managing its core business in this day and age is indeed discouraging.
Nevertheless, events relating to BP's performance over the last six
months necessitate this hearing and I hope that we will learn what went
wrong and what has to be done to assure that it does not happen again.
I welcome our witnesses here today, particularly Mr. Malone,
President of BP North America. Mr. Malone is not a stranger to this
committee during difficult times. I note that he has been straightforward
and honest in his previous appearances and has kept his commitments
made to the committee. His challenge today is quite difficult and I hope
that his participation will assist this committee to get to the bottom of
what went wrong here.
On March 2, 2006, a BP worker discovered a leak in an oil
transmission line in the western operating area of Prudhoe Bay, Alaska.
This previously unregulated pipeline had been leaking for approximately
five days prior to the discovery and it spilled something like 270,000
gallons of crude oil into the Arctic tundra, making it the worst spill in the
history of the North Slope.
On March 15, the Department of Transportation placed its line and
other low-stress BP lines under its jurisdiction and required BP to
thoroughly inspect the lines, to clean them and to analyze their condition
using a smart pig. After extensive testing and the discovery of two
additional leaks, BP reached the conclusion that the status of its transit
lines was indeterminate and decided to proceed with an orderly shutdown
of Prudhoe Bay. World oil markets reacted to the possibility of an 8
percent less domestic production shutdown by bidding up the price of
crude to just over $76 per barrel which will be paid by American
consumers.
For an oil company of BP's size and reputation to allow two of its
most critical transit lines to the America's largest producing oil fields to
reach such a sorry state of affairs is staggering. What went wrong? Did
cost-cutting prove to be the undoing of standard maintenance? Did
management turn a blind eye to problems on the line that at best it should
have known about or at worst knew about and decided to ignore? We
need those answers, because without those answers, we aren't going to
know what should be done either by the regulatory agencies or by the
Federal government or by the Congress.
The one bit of good news here is that the Department of
Transportation has taken action since the initial spill in last March. The
department has been reasonably aggressive in its enforcement of the
initial corrective action order and subsequent amendments and
responsive to the letters that I and others have sent asking questions
about this matter. There are, however, two things that trouble me very
much. First, the lines that failed were exempt from regulation by DOT
itself despite longstanding concerns in the Congress that low-stress
pipelines could pose significant risk. For a field that produces nearly 8
percent of American domestic production to have its main two lines left
unregulated it simply unacceptable and needlessly risky. As we go
forward, the Federal government must take a fresh look at critical energy
infrastructure regardless of its present regulatory status.
Second, DOT should propose rules to regulate low-stress pipelines.
At first glance, the rule appears inadequate and applies less rigorous
standards to these lines than recent events would warrant. Furthermore,
the rule leaves some 4,300 miles of low-stress lines without any
regulation at all, not even the bare minimum requirement to manage for
corrosion and to report spills. The proposed rule is eerily reminiscent of
the Nation's view and experience with the industry which favored the
industry preferred proposals and leads me to conclude that my increasing
confidence in the performance of the Pipeline and Hazardous Materials
Safety Administration on Pipeline Safety has been misplaced. I know
our colleagues who are on the committee will be working together on the
upcoming pipeline safety reauthorization to correct these deficiencies
and this hearing will give us some reference as to what this committee
must do and what we can expect from the Administration in terms of its
administration of the statutes.
Mr. Chairman, thank you for holding this important hearing.
MR. WALDEN. Thank you. I appreciate your comments and your
participation. Now we will go to other committee members, and I
remind you, you have 5 minutes for your opening statements, and with
that, Mrs. Blackburn.
MRS. BLACKBURN. Thank you, Mr. Chairman. I do want to thank
you for holding the hearing and I want to thank the witnesses for
presenting this committee with information on this issue. I will have to
say I wish we were focused on a more positive topic. I wish it were
something about achieving energy independence or new fuel usages, et
cetera, and that it was not a hearing about failed policies, but we thank
you for being here to visit with us.
I have several concerns on how BP maintained their oil pipelines and
if their maintenance met the industry standards on corrosion prevention.
Specifically, I would like to hear from our witnesses to discuss their
known best practices and how those were implemented and how often
extensive testing of oil pipelines should have taken place, as to how often
it did take place, and I hope that you will present us with specifics.
My reading and research and preparing for the hearing today have
led me to an understanding that most of the pipelines in Prudhoe Bay
were not thoroughly inspected for over a decade and that warnings from
engineers for more testing went unheeded, and I think you have heard
that from some of the other members here who have already spoken
today. That is of concern. It is not acceptable and I think it is quite
appropriate for all of us to expect better from you and from your
company and from a company that promotes itself as a safe and
environmentally friendly energy company.
Another concern I have is how BP was prepared for an eventuality
such as this. Currently, the eastern oil fields of the Bay are shut down
for the next 6 months, which means that BP is not pumping 200,000
barrels of oil each and every day. It is unfortunate for you all. It is
unfortunate for the American public. It is a loss from what I understand
of about $14 million each day to your company. I want to hear from BP
why they were not prepared for this and why it will take approximately 6
months before the fields are ready to operate again and what the ramp-up
process will be as you look toward bringing that line back online.
Mr. Chairman, when events such as this occur in the U.S. and affect
a critical market such as our oil supply, Congress needs to examine the
safety and the inspection standards so that another accident like this does
not happen again.
So I thank you for the information that you will bring to us, for the
testimony that you have already supplied, and Mr. Chairman, I look
forward to the time of questions.
MR. WALDEN. Thank you, and the gentlelady yields back her time.
The Chair now recognizes the gentlewoman from Colorado, Ms.
DeGette.
MS. DEGETTE. Thank you, Mr. Chairman. Mr. Chairman, the story
unfolding at Prudhoe Bay in recent months has grown much more
alarming as we learn new facts. Just as we heard this morning from the
other members of this committee, it appears that this whole mess was
preventable. Had BP exercised even basic periodic maintenance of its
pipelines, they would not have had to order the shutdown of the
country's number one domestic oil field at a time both strategically and
economically that this country needed that oil field to be open.
We are all well aware of BP's aggressive advertising campaign,
portraying it as the environmentally responsible and socially conscious
oil company, so why then did it allow the condition of its low-stress
pipeline to deteriorate to the point of the corrosion-induced spill of
270,000 of crude oil? Was it purely for cost-saving reasons as this April
2005 internal audit document intimates? These pipes are in such poor
condition now we are told that they are going to need to be completely
replaced. As I mentioned a minute ago, this was all preventable. Mr.
Chairman, it is my understanding, and we discussed earlier, that smart
pigging, though relatively inexpensive, is the single best way to detect
corrosion. Now, I am no engineer but it seems to me that this high-tech
procedure gives quite a bang for the buck and it perplexes me that the
lines haven't been pigged in some cases since 1992. Now, I would think
that the potential damage to BP's infrastructure, reputation and bottom
line would have been enough to compel it to take care of its pipes but
apparently this is not so.
I applaud BP's efforts in advertising campaigns to move beyond
petroleum to help foster a more sustainable energy future and to become
a truly compassionate corporate leader, but maybe it should start by
sticking to the basics and begin to focus on rudimentary pipe
maintenance as much as it has on PR. BP will undoubtedly assure us
today that its corrosion prevention methodology in the run-up to this
crisis was fully compliant with existing regulations. I look forward to
hearing from the Department of Transportation as to whether that is true
and whether or not we have adequate regulations.
Also, I am interested in hearing the contrasting testimony from the
Trans Alaska Pipeline which pigs their lines every three years. BP may
have believed that using coupons and ultrasonic testing were sufficient to
protect the infrastructure but other industry leaders went well above and
beyond regulatory requirements to properly maintain their pipes and they
have avoided the problems that we have seen in recent months.
I am glad that the DOT is here with us today because the department
has done an excellent job in responding to this crisis and deserves credit
for its rapid response. While I am pleased at the DOT's new regulations
issued in the aftermath of the Prudhoe Bay spill, I fear that they may not
be adequate.
I am also dismayed as I am often these days with what has become
an even more reactionary Federal government. It seems to me that we
have the tendency to ignore major issues like this, exercising limited
oversight and only after a crisis happens do we jump to fix a problem
that should have been prevented in the first place. Perhaps we should
have seen this coming. I hope to hear from the Federal officials today
whether we should have predicted a major oil spill like this given the lax
regulation of the low-pressure lines in unpopulated areas.
And frankly, Mr. Chairman, the United States Congress is not
entirely without blame either. The Pipeline Safety Act reauthorization
has languished in Congress for months. I hope some good will come out
of this mess and that would be passage of this important legislation
sooner rather than later.
Mr. Chairman, I am looking forward to probing these and other
issues, and again, I want to thank you for holding this hearing, and I
yield back.
[The prepared statement of Hon. Diana DeGette follows:]
PREPARED STATEMENT OF THE HON. DIANA DEGETTE, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO
MR. WALDEN. I appreciate your participation and your comments.
Just for the committee's edification and for the audience as well, we have
been called to the floor for a vote on the rule. It is just one vote and then
there will be a break at three to four hours before our next series of votes.
We are going to continue to take opening statements during this period.
The Chairman has gone over to vote and will come back and take the
chair so I can go vote. Meanwhile, I will work through our list, and I
have Dr. Burgess and then Ms. Baldwin next, and there are 11 minutes
left in--oh, I am sorry. I actually have Mr. Inslee. It is Burgess, Inslee,
Stearns, Baldwin. So Dr. Burgess for 5.
MR. BURGESS. Thank you, Mr. Chairman, and I want to thank you
also for convening this hearing this morning. I want to thank our
witnesses for being here with us. The remarks of the full committee
Chairman, Chairman Barton, certainly echo my sentiments on this issue
and I won't belabor those points that he has already brought up, but like
most of my constituents, I was extremely concerned to learn of the oil
spill in Alaska last March. It was the largest spill so far in Alaska but it
is hoped that that remains the case. The spill posed a risk to both the
environment and our domestic supply of oil. Experts believe that there
will be no permanent environmental damage from the spill, and that is
the good news, but we must ensure that the pipeline maintenance
practices do not jeopardize the environment or expose us to further
disruptions in our supply. While I believe that British Petroleum's initial
decision in August to shut down the Prudhoe Bay field following the
discovery of corrosion was prudent, I am also troubled by the fact that
the situation could have been prevented. What is especially troubling is
these transmission pipelines had not been pigged either with the scraping
pig or smart pig since 1992 or 1998. Pigging is not a new technology but
it is and should be a standard industry practice, and I would like to hear
from our panel if in fact that there is recognition otherwise within the
industry.
BP's failure to conduct this type of routine maintenance put in
jeopardy our ability to access the crude oil produced by the entire field.
The Prudhoe Bay field accounts for 5 percent of domestic production,
400,000 barrels per day as we have heard several times this morning, so
the temporary loss of this supply has the potential to significantly impact
oil prices.
We also had, the Chairman brought up the Texas City situation
where 15 people were killed in my home State of Texas and while that
may have been a preamble to the other problems that have now surfaced
in Prudhoe Bay, I know it is difficult to separate out the complexities of
the corporate structure but stipulating what the Chairman brought up that
there was a significant profit earned by BP last year, I think this
committee would be interested in knowing what commitment is going to
be made in investing those profits in further maintenance and further
assurances that these two types of accidents do not occur again in the
future. Maintenance is just one of the primary responsibilities of the
company that is managing the Prudhoe Bay fields, but I am looking
forward to hearing from BP about what happened and having the
opportunity to question the witnesses appearing before us today.
Thank you, Mr. Chairman. I will yield back.
MR. WALDEN. Thank you, Dr. Burgess. Now I will recognize the
gentleman from Washington State, Mr. Inslee, for 5 minutes.
MR. INSLEE. In 1999, another pipeline company didn't do its job. A
fireball erupted in Bellingham, Washington, and killed two young boys
and a young man, and one of the parents of one of those children called
me the other day when this happened and basically asked a question,
when will they ever learn, and I think that is a pretty good question.
When will they ever learn?
What is so profoundly disappointing in this circumstance is that this
is not a matter of hindsight. This is a profound lack of foresight and
responsibility by this particular company, and the reason we know that
is, back in 2001, an engineering company from Seattle, Washington, did
a preliminary draft of a report with the specific purpose of reviewing this
protocol for maintaining these pipes included smart pigging as something
that would be the most effective protocol to prevent this leak. We found
a specific memo from this company, Coffman Engineering in Seattle,
Washington, and it said, "Smart pigging is the only inspection technique
capable of looking at the whole internal and external corrosion picture."
British Petroleum, instead of deciding to smart pig, decided to quash that
information from the public. That information never showed up in the
public record until it was disclosed after this incident. That is a crying
shame, and we are going to find out why that happened because this was
a conscious, willful decision by the particular corporation involved here
not to do smart pigging that they knew was an effective way of providing
repair. This is not a matter of hindsight. This is a matter of lack of
responsibility and foresight. And that is a good question, when will they
ever learn?
Now, that is the profoundly obvious lesson of what happened here,
but there is another profound one that is not so obvious. You know, I
was amazed at what lessons people will take from a tragedy like this.
One of my colleagues suggested that the lesson we should take from this
is we need to drill more oil wells in the Arctic wildlife refuge. He said,
you know, we need to expand our oil production capability. Well, I
thought that was interesting. That would be sort of like after the
Hindenburg saying the problem here is, we need more blimps; that is the
whole problem, we don't have enough blimps. I don't think that is the
lesson to be drawn from this. Eight percent of production has now been
reduced because of one pipeline failure. The lesson is, we need a more
diversified energy future for this country. We need a biofuels segment to
our energy production capacity. We need development of cellulosic
ethanol plants so we can displace some of our dependence on these
vulnerable systems that have been reduced now 8 percent and yet a 3
percent spike that Mr. Barton suggested just from the loss of this one
pipeline. We need a whole new energy policy. And I like the fact that
British Petroleum has spent millions of dollars on things like this and that
their plans for biofuels are growing, which is impressive PR, but
unfortunately, their efforts are less than .2 percent of just their net profits
this year of $26 billion. That is not a sincere effort. It is not enough.
And I would agree with my colleague, Ms. DeGette, that Congress has a
responsibility because it is an abysmal failure of Congress as well. You
know, it is not just pipelines that lack integrity. It is our whole energy
system in this country and Congressional inaction that lacks integrity of
having a real energy policy that will be diversified and truly
environmentally friendly, which this current policy is not.
So I am confident, relatively confident, that we will close this
massive loophole, we will get regulation ultimately of this, but it is not
enough. We need an energy policy in this country that will not leave us
exposed to these terrible price spikes that we have when we have this
vulnerable system go down. So I am hopeful that it is not just the
obvious lessons that we learn but the more profound ones. I look
forward in this hearing to find out why this Coffman Engineering report
was not made available, why the public didn't know about this, why this
was not done, and why the belts-and-suspenders approach to pipeline
management was not followed.
It is obvious you need a belt-and-suspenders approach to pipeline
management. This corporation is dependent on ultrasound, which is
great technology, but it is like a CAT scan that only takes one slice
through your body and doesn't look at the rest of your body. It is very,
very good for that one slice. Ultrasound was very, very good for the one
tiny slice of this pipeline they did but they ignored the rest of it at our
peril, and we are going to get to the bottom of why this happened and
make sure it doesn't happen again.
MR. WALDEN. I want to thank the gentleman for his comments. The
full Chairman is going to take over the gavel so that we can go vote in
the remaining 2 and a half minutes.
CHAIRMAN BARTON. We are going to continue the hearing but we
have a number of members that wish to do opening statements, so the
first one back gets to do an opening statement and we will alternate until
we get regular order when everybody else gets back.
MR. STEARNS. Thank you, Mr. Chairman. Thank you for going
ahead and having this hearing for this investigation.
As I understand, later on today one of the persons is going to take the
Fifth, and having been through several oversight hearings, when you see
an individual take the Fifth it means he does not want to testify under
oath, and that should be a concern for all of us when we are trying to just
explore the truth here.
In a larger sense, BP has to realize they have been given a public
trust because of the impact of oil on our national security and our
economy yet it would appear they failed to exercise this trust, so this is
our concern today, especially in light of the fact that someone is going to
take the Fifth and will not testify openly, clearly and honestly.
Now, the Department of Transportation monitors a lot of sensitive
lines in this country in urban areas, environmental areas, but obviously
not in areas that appear to be low-stress lines, low-pressure areas like in
the tundra of Alaska. Yet these lines are vital, and even though the
Department of Transportation does not monitor these lines, it would
seem to me BP would want to be scrupulously careful to protect these
lines because of their strategic value. Yet today we are here realizing
that that did not occur. Fortunately, it appears it is not having a large
impact on the price of oil. There has been a lot of trading, future trading,
and as a result of trading and the surplus oil, it appears the price of
gasoline is coming down. So despite BP's troubles, our oil infrastructure
appears to be in reasonable shape but a concern we all should have is, as
I understand, is 5,000 barrels of oil were dumped onto the environment.
We are going to have somebody from the government that is going to
explain to us about this cleanup and whether it was sufficient. Did BP
act quickly and do it in such a way that there was no environmental
damage? But think of that amount of oil in any kind of other area where
there would be high urban or high environmental problems, what that
would do and the enormous cost and effort it would create. So again, BP
should realize that they have a fiduciary responsibility that goes beyond
just the bottom line.
While many pipes are getting old, data from the Department of
Transportation's Office of Pipeline Safety indicates a broad decline in
the number of pipeline accidents from 245 in 1994 to 136 in 2005 with
only 57 through July. So in light of the fact that we have these statistics
and a broad decline, it is still a concern what happened.
The Department of Transportation has worked with BP to assess the
extent of corrosion in its transmission lines and to prevent any repeal of
these leaks. The department has also recently proposed a rule to cover
the low-stress transmission lines we are discussing today, and that is a
question for us as members of Congress should we implement legislation
to do that. Right now we have no direct oversight authority up in the
tundra there, and we should give it.
So Mr. Chairman, I appreciate this opportunity again to have the
opportunity to question BP's executives, and I look forward to hearing
their testimony and to make sure that this does not occur again and we as
legislators can do that to make sure the Department of Transportation is
involved where we have strategic value and we have public trust
involved. Thank you.
CHAIRMAN BARTON. We thank the gentleman. The gentlelady from
Wisconsin, Ms. Baldwin.
MS. BALDWIN. Thank you, Mr. Chairman. It is very important that
we are holding this hearing today. Not only must we address what went
wrong at Prudhoe Bay but we must examine how we can prevent it from
ever occurring again. We have had some time to mull over the shutdown
since it was first announced earlier last month, and time and time again, I
simply find myself at a loss. I am frustrated that BP shut down 8 percent
of domestic oil supply, I am angry that gas prices were pushed even
higher during the peak summer season, and I am concerned that the
Alaskan environment has been dealt a blow from which it will not
quickly rebound.
But even more troubling is a trend that I see among companies that
can only be described as a lack of corporate responsibility. Many of us
can remember a time when our communities were proud to associate
themselves with big companies that made their home in nearby towns.
These companies realized that their long-term success depended upon
investing in and improving the community, not just focusing on the
bottom line. BP Alaska was such a company. It has been one of
Alaska's largest employers, providing more than 1,300 jobs to State
workers. It has supported Alaska's communities, offering millions of
dollars for charitable giving and it has played a large role in the social
fabric of the community. In return, the community trusted BP. They
trusted that BP was listening to its workers, investing in its infrastructure
and protecting the surrounding environment, but sadly, somewhere along
that way, the trust has been broken. Consideration of the world in which
neighbors and consumers live and work seems to have disappeared from
BP executives' radar screens, and what has been left behind in Alaska is
muck on the ground and distaste, not only among Alaskans but among all
Americans.
The BP shutdown has brought to light what happens when a
company turns its back on its responsibilities. It allowed years to pass,
years to pass without inspecting the critical pipeline that carries 400,000
barrels of oil a day. Executives ignored workers who raised safety
concerns and consumers have been left to foot the bill. The cost for BP
is not simply calculated in lost production or replacing corroded pipes.
Rather, it must also include the disappointment of loyal customers, the
damage to Alaska's pristine environment and the violation of the
community's trust.
Mr. Chairman, I recognize that we cannot force companies to elevate
their commitment to corporate responsibility above profits, but we can
find a way to ensure that companies are not abandoning their critical
infrastructure by running their pipelines to failure or what is known as
riding the throughput curve. The mess of a company's negligence must
not be borne by the consumer, the environment or the community.
Rather, companies must stand up and take responsibility and BP must be
held accountable for its actions or inactions.
I am hopeful that the series of hearings that Congress is holding on
this matter will force us to look at the way pipeline safety is regulated so
that future disruptions will not occur, and more importantly, I hope this
incident and these hearings will encourage other companies to look at
their actions and keep corporate responsibility and public trust in mind as
they decide what sort of commitment they make to public safety and
maintenance.
Thank you, and I yield back the balance of my time, Mr. Chairman.
CHAIRMAN BARTON. The gentlelady yields back. Does the
gentlelady from Chicago, Ms. Schakowsky, wish to make an opening
statement?
MS. SCHAKOWSKY. Thank you, Mr. Chairman, and thank you,
Ranking Member Stupak, for convening today's oversight hearing into
BP's pipeline oil spills at Prudhoe Bay in Alaska.
Probably everything that needs to be said is said but I think it was
Mo Udall that said, not everyone has said it, so I am going to say a few
things about that as well.
I am really glad that we are taking the time to closely review what is
going on at Prudhoe Bay over the last several years. However, what is
obvious to me and to my constituents and to any reasonable person
reviewing the facts of the case is that BP, a company that raked in over
$7 billion in profits in the second quarter of this year alone neglected to
conduct even remotely adequate or responsible maintenance on its
operating lines in the greater Prudhoe Bay field.
Aside from environmental stewardship obligations, it seems like
plain common sense to me and I think to just about everyone on this
committee that a company extracting oil as a means of profit would want
to routinely conduct thorough inspections of its pipelines to ensure safe
transport of the product. Why BP refused to do it for years is something
I want to know. Hopefully we will get some clue about that today.
BP has presented troubling indicators of diminishing quality in
previous years and conducted no major investigation or corrective action,
and despite discovering a leak on its western pipeline on March 2 of this
year, which put over 200,000 gallons of oil in the Alaskan tundra and
was the single largest leak in history on the North Slope, BP attempted to
get out of conducting further review of its lines as had been ordered by
the Department of Transportation on March 15.
Instead of doing the right thing and what would have been smart
business and conduct an immediate internal investigation of all its lines,
BP waited until June 6 and asked for relief and a pass on DOT's previous
pigging order to conduct a thorough internal review of its lines, and it
wasn't until late July, almost five months after the enormous leak was
discovered and after it was further ordered by DOT that BP finally
conducted internal testing. The results demonstrated numerous areas of
concern and yet another leak. Finally, on August 6, more than five
months after the initial March 2 leak was discovered, BP shut down
production from its greater Prudhoe Bay field. It is astonishing and
infuriating that any company entrusted by the public and the government
to ensure level of safety for our environment and its use of natural
resources to turn a profit, that it would be so irresponsible, but it is truly
beyond comprehension that a company that is so grossly profitable
would willfully avoid routine detailed inspection and maintenance on its
pipelines. As has been mentioned now several times, BP as it turns out
had not taken an in-depth internal look at its pipeline on its eastern line
since 1992 and its western line since 1998. That is 14 and 8 years,
respectively. If this company had spent as much on inspections, safety
and maintenance as it does on advertising and lobbying for tax cuts, none
of us would have to be here today in this hearing. BP executives could
be counting their bonuses and the public would be assured of the
company's pipeline integrity. Instead, BP chose to bury its head in the
sand and tundra and operate a see-no-evil approach to its Prudhoe Bay
operations.
This company has a lot of explaining to do, and as lawmakers on this
committee, we all need to ask ourselves if our policies are adequate, if
we can afford to trust companies like BP to do the right thing and if we
can continue to rely so heavily on energy products that present such risks
to our environment, our bank accounts and our economy.
I wanted to mention that my friend from Chicago, national leader
Reverend Jesse Jackson, was here today. His organization has taken a
great interest in this, is leading weekly pickets across the Nation at BP
stations in several cities including Washington, D.C., and Chicago, Los
Angeles, Atlanta, Detroit, Michigan, raising the questions that all
consumers are asking right now, why are the profits so high at BP and
yet we cannot be sure that they--we know that they are not doing the kind
of maintenance and safety inspections that are needed.
All of us need to focus in on this, including the company, and I
welcome our witnesses today. Thank you.
MR. WALDEN. I thank the gentlelady for her comments. The chair
would now--we are waiting for Mr. Pickering, but in his absence, we will
now go to Congressman Markey, who is not a member of the
subcommittee but we welcome your participation today, and you are
recognized for a 5-minute opening statement.
MR. MARKEY. Thank you, Mr. Chairman, very much, and I
appreciate the courtesy of allowing me to speak on this issue in this
subcommittee. I have been a member of the Energy Committee for 30
years, and this is one of the low points of those 30 years. This is without
question an issue which has had a profound impact on the American
public. At a minimum, they have had to have paid now tens or hundreds
of millions of extra dollars at the pump because of the spike in the price
of gasoline that occurred because of this accident. That is the beginning
of the price that the public has to pay for this kind of a problem
manifesting itself.
British Petroleum's marketing campaign claims that BP stands for
Beyond Petroleum but today we are finding that BP stands for a
company with bloated profits that failed to fix bad pipelines and the
consumer at the pump is responsible for paying the price. It appears to
me that management at BP's Alaska operation knew that they were
essentially driving a car with over 100,000 miles on it without bothering
to spend the money and time needed to properly maintain it. So it seems
to me that BP senior management can't have been surprised that it broke
down eventually. BP's corrosion management set up a testing system
that was designed to save money but it failed miserably at ensuring the
integrity of these critical pipelines. BP had a 2004 report from its
attorneys at Vinson and Elkins that pointed out some of these problems.
BP also had a 2005 audit report that reaffirmed the problems' continued
existence but BP doesn't appear to have revamped the pipeline corrosion
control systems after these warnings. It doesn't appear that the
allegations of harassment or retaliation against whistleblowers were
thoroughly investigated by and adequately responded to by senior
management at BP. These whistleblowers are public interest Paul
Reveres signaling a warning that something could go wrong so that the
public interest could be protected. Those warnings were ignored. This is
simply unacceptable.
BP is one of the largest oil companies in the world. It is an
extraordinarily profitable company. It clearly has the money to be able
to properly maintain their pipelines, and BP failed to do so. Instead, BP
appears to have pursued a strategy of maximizing short-term profits at
the expense of maintaining the integrity of those pipelines. BP appears
to have ignored internal evidence that such a strategy would result in
leaks and there are some indications that those within the company who
raise concerns about this strategy would be harassed and retaliated
against.
I would hope that before this committee takes up any pipeline safety
reauthorization that we would get to the bottom of what happened here
and make appropriate adjustments to the law to ensure that this type of
problem does not happen again. We should not legislate in the area of
pipeline safety until we understand completely what happened at BP,
make an industry example and then change the laws of our country to
ensure that it never happens again. I thank you again, Mr. Chairman, for
your courtesy.
MR. WALDEN. You are welcome, and Mr. Stearns reminds me that I
should have asked UC, unanimous consent, to allow members who are
not on the subcommittee the opportunity to provide an opening
statement, so I will do that, because Mr. Green is next. I ask unanimous
consent to allow Mr. Green to offer an opening statement. Is there any
objection? Hearing none, Mr. Green.
MR. GREEN. Thank you, Mr. Chairman, again. Thank you for
allowing those of us who are not on the committee although serve on the
Energy Subcommittee, and this hearing is very important, particularly in
the area where I come from in Houston. I would like to keep my remarks
brief because I really want to hear from our panelists but I am glad to be
here today to express my frustration with the events in Alaska that
caused this hearing today.
Last year we had two natural disasters, Hurricanes Katrina and Rita,
that blocked domestic oil supplies at a very critical time, the summer
driving season. We may dodge that bullet this year but the American
drivers had to deal with a manmade disaster this year when BP's Alaska
pipeline sprung a leak and had to be shut down due to corrosion. I have
not reviewed all the documents that our subcommittee has obtained but
what I have heard so far is not good. Corrosion on the pipeline does not
seem to have taken BP by surprise, rather there were numerous warning
signs that were underestimated or ignored. Even large corporations can
have bureaucratic problems dealing with maintenance issues, but
unfortunately, this is not the first time we have seen something like this
with British Petroleum. Just last year, an explosion at a BP refinery in
Texas City that is close to our district, in fact, it could be in it because I
have all the other refineries in the Gulf Coast area it seems like, killed 15
contractors who were working in a temporary building placed too near to
dangerous equipment, and again, the information that I understand from
Federal investigators found several safety problems and the investigation
is still ongoing and it makes two major public safety disasters in two
years.
Mr. Malone, I know you are new to your job and we appreciate the
fact that you are here to face this music but we need more than honesty
and sincere apologies at this point. We need concrete action and some
assurance that BP is going to spend the necessary resources on safety.
When you own a pipeline or refinery, Congress and the American people
expect you to invest the necessary amount in safety to protect our
economy, the environment and human life. This committee should look
at our pipeline safety legislation to make sure we are keeping our
responsibility to improve safety at these low-stress oil pipelines.
However, I don't want to have a pipeline safety accident hold up pipeline
safety legislation that would make our pipelines actually safer. Mr.
Chairman and Ranking Member, thank you for holding this hearing and
allowing me to participate, and I look forward to authorizing the pipeline
safety legislation in this Congress, I hope, in light of the accidents that
have happened, and I yield back my time.
[Additional statement submitted for the record follows:]
PREPARED STATEMENT OF THE HON. ED WHITFIELD, CHAIRMAN,
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
Today, the Subcommittee on Oversight and Investigations will
examine the facts and circumstances surrounding two spills on crucial
crude oil transmission pipelines operated by BP in Prudhoe Bay, Alaska.
We will look at BP's decisions and actions concerning the maintenance
and operation of these pipelines in order to better understand how the
corrosion occurred and what can be done to prevent similar problems in
the future.
In March this year, BP discovered the leak of roughly 5,000 barrels
of crude on the Western Operating line, the largest spill in the history of
the North Slope. Just a few months later, BP discovered serious
corrosion problems in its Eastern Operating line, which forced it to shut
down the line, effectively cutting production from the Prudhoe Bay field
in half. BP cannot even say with any degree of certainly when it will be
able to get this line back into operation.
There have been a series of maintenance and safety problems
involving BP over the past several years that are troubling, including the
Texas City refinery disaster and the recent leaks on the North Slope. Are
these isolated incidents, or are they the result of fundamental problems
within the company? I hope that the BP executives testifying before the
Subcommittee today will be able to provide some assurances in this
regard. As stewards of critical energy infrastructure, all pipeline
operators, including BP, bear a tremendous responsibility.
I would like to thank all of the witnesses, and I hope that today's
hearing will illuminate the facts of the situation surrounding BP's
pipelines so that this Committee can help ensure a safe and reliable
energy infrastructure.
MR. WALDEN. I appreciate the gentleman yielding back the time
and his comments and participation in our hearing. With that, we are
going to ask the following witnesses to come up to the table. Mr.
Richard Woollam of BP, formerly corrosion engineer, formerly the
manager of the CIC; Mr. Robert A. Malone, Chairman and President, BP
America; Mr. Steve Marshall, president, BP Exploration Alaska; Mr.
Kevin Hostler, President and CEO of Alyeska Pipeline Service
Company; and Mr. C. Dan Stears of Coffman Engineers. If you would
come forward and be seated at the table.
As you know, when conducting an investigative hearing, this
subcommittee follows the practice of taking testimony under oath. So
now that you are comfortable, I am going to ask you to all rise and if you
would raise your right hand.
[Witnesses sworn]
MR. WALDEN. Please be seated. Under the rules of the House and
this committee, you have the right to be advised by counsel as to your
constitutional rights. Do you have legal counsel here today, Mr.
Woollam?
MR. WOOLLAM. Yes.
MR. WALDEN. And can you identify that counsel for us, please?
MR. WOOLLAM. Yes, Mr. Jim Torgesen with Heller Erman.
MR. WALDEN. Mr. Malone?
MR. MALONE. Yes, I do.
MR. WALDEN. Can you turn on your microphone there, sir? Thank
you.
MR. MALONE. I have Ron Phillipe here.
MR. WALDEN. All right. Mr. Phillipe, welcome. Mr. Marshall?
MR. MARSHALL. Yes, I do, Mr. David Bukey.
MR. WALDEN. All right. Thank you. Mr. Hostler?
MR. HOSTLER. Yes, that is right, Hostler.
MR. WALDEN. Hostler. No counsel?
MR. HOSTLER. No.
MR. WALDEN. And Mr. Stears?
MR. STEARS. Yes, I do.
MR. WALDEN. Can you turn on that mic? That didn't help either.
Sorry. Try again.
MR. STEARS. It indicates it is on.
MR. WALDEN. There we go. Now it is. All right. Thank you. The
chair will now recognize you for purposes of making an opening
statement if you so desire. Mr. Woollam?
TESTIMONY OF ROBERT A. MALONE, CHAIRMAN AND PRESIDENT, BP AMERICA, INC.; STEVE
MARSHALL, PRESIDENT, BP EXPLORATION ALASKA, INC.; KEVIN HOSTLER, PRESIDENT AND
CEO, ALYESKA PIPELINE SERVICE CO.; AND C. DAN STEARS, CATHODIC PROTECTION
SPECIALIST, COFFMAN ENGINEERS, INC.
MR. WOOLLAM. Mr. Chairman, I have no prepared statement.
Based upon the advice of counsel, I respectfully will not answer
questions based upon my right under the Fifth Amendment of the United
States Constitution. I ask that my counsel's written letter of this morning
to the committee be entered into the record.
MR. WALDEN. Without objection. Mr. Malone, welcome.
[The information follows:]
MR. MALONE. Thank you, Mr. Chairman.
Mr. Chairman, members of the subcommittee, good morning. My
name is Bob Malone. I am the Chairman and President of BP America.
I am joined today by Mr. Steve Marshall, who heads our Alaskan
operations.
BP America's recent operating failures are unacceptable. They have
fallen short of what you and the American people expect from BP and
they have fallen short of what we expect of ourselves. We must and will
work hard to fix the problems, and in doing so, regain your trust and that
of the American people. We know we will be measured by what we do,
not what we say.
I assumed this role on July 1 and immediately began to visit our
facilities, meet with our employees and learn about our current
operations. On August 6 I received word of severe corrosion in our of
our transit lines in Alaska. The decision was made to shut down
protection to avert any possibility of an oil spill and to prevent damage to
the environment. We then conducted extensive testing of the transit lines
on the western side of the field, assured ourselves they were fit for
service and maintained production of about 200,000 barrels a day.
Preventing environmental damage and protecting the safety of our
employees and contractors are absolute priorities. We fully recognize
this decision was not without consequences but it was the right thing to
do. Many were concerned about the impact on crude oil and gasoline
supplies. BP brought in cargos of crude oil from around the world and
other suppliers did the same. A short-term supply shortage did not occur
and we continue to acquire stocks to replace the production that is still
shut down. BP is fully committed to restoring production from Prudhoe
Bay as soon as we are confident that it can be done in a safe and
environmentally responsible way.
Across BP, we have taken a number of actions to ensure that our
businesses are run in a manner that meets our expectations and yours. I
would like to highlight a few of those. These were announced--some of
these were announced by John Browne on July 1 and they included my
appointment.
First, I retained three of the foremost corrosion experts in the world
to evaluate and make recommendations for improving the corrosion
management program in Alaska. BP has added an additional $1 billion
to the $6 billion already earmarked to upgrade all aspects of safety at our
U.S. refineries and for the integrity management in Alaska. I have
appointed former U.S. District Justice Stanley Sporkin as an independent
ombudsman reporting directly to me. I have asked Judge Sporkin to
conduct a review of all worker allegations that have been raised on the
North Slope since 2000. I have established an operational advisory
board that is composed of 15 of our most senior business leaders in the
United States, who will advise me on safety operational integrity and
compliance. I am in the process of recruiting an external advisory board
to assist and advise me in the monitoring of BP's U.S. businesses with
particular focus on safety, operational integrity, compliance and ethics. I
am building an internal team of experts who will be employed to look at
safety, process safety, operational integrity and compliance and ethics. I
continue to meet with our employees to reinforce our expectations of
them to ensure that BP operations are safe, to remind they have a
responsibility and a right to shut down any process they feel is unsafe,
and that I encourage them to raise concerns of anything that has to do
with safety and environmental integrity.
I am personally committed to rebuilding the public's confidence in
BP America. I have the full support of our Chief Executive, John
Browne, our executive leadership and the entire BP group. I have been
given all the authority necessary to accomplish this task. Bringing our
operations to the level of excellence you expect and we demand is going
to take time.
If the subcommittee would like, I would be happy to report back in 6
months and periodically thereafter to indicate to you the progress that we
are making, and we will participate and cooperate with you in an open
and honest fashion. Thank you, Mr. Chairman.
[The prepared statement of Robert A. Malone follows:]
PREPARED STATEMENT OF ROBERT A. MALONE, CHAIRMAN AND
PRESIDENT, BP AMERICA, INC.
MR. WALDEN. Mr. Malone, thank you for your testimony today.
We look forward to discussing this issue more with you as we open up
into questions in a few moments.
Mr. Marshall, welcome. We are delighted to have you with us today
and we look forward to your comments on this issue.
MR. MARSHALL. Mr. Chairman, members of the subcommittee,
thank you for the opportunity to be here today. I am Steve Marshall,
President of BP Exploration Alaska.
In the past 6 months, we have had two leaks from the oil transit lines
at Prudhoe Bay. These spills occurred on my watch, and as President, I
am in charge of the overall business in Alaska and the buck stops with
me, and I commit that I and my team will do everything we can to rectify
this situation, going forward and doing everything to get production back
as quickly and as safely as we can and apply the lessons that we continue
to learn from these two events in our forward programs.
We take very seriously the public trust, the trust of government, our
serious role of protecting the environment. Both spills have been fully
cleaned up. We have received a number, several comments from
external sources about the quality of that cleanup and we believe at this
point there will be no lasting damage to the environment. We won't
know the exact cause of the spills until we complete the failure analysis
of the pipe, and that work still remains to be done. We did believe we
had a very comprehensive corrosion management system covering over
1,500 miles of oil pipelines, flow lines, gathering lines and transit lines.
Inspections that we did told us time and again that these transit lines
were in good shape. Clearly, in retrospect, since these leaks, it has
clearly identified gaps in our program and we are going to take the
learnings and apply them going forward.
On August 6, the pigging data that we received was very unexpected.
We encountered a 23-barrel leak from a pipeline. Something was
happening to our flow lines which we didn't understand and we took the
only action we believed we could to prevent the potential of a major spill
in shutting down Prudhoe Bay until we could confirm the integrity of the
remaining lines. Over the next five days we brought in hundreds of
people to complete inspections on the western transit line, sufficient
inspections to give us confidence the line there was in good enough
shape to keep production on, so we never actually shut down the western
side of the line, and today we have in excess of 200,000 barrels a day
producing from the west side and we have heightened surveillance and
contingency plans in place in the remote event of a further incident.
On the east side of the field, we are pursuing two operations. We are
vigorously inspecting the lines. To date we have completed over 4,500
inspections and we are aggressively pursuing bypasses for each of the
facilities to get them into existing lines which are known to be of good
condition. We expect those bypasses to be complete by the end of
October.
Where next? What we believe so far is that the inspections that we
have completed on the west and the east indicate that 10 of 16 miles of
transit lines are in good condition and we are working with the DOT to
understand whether we can bring back the eastern side of the field in
order to smart pig that operation as soon as possible. A very good
discussion is going on with the DOT in that respect.
So looking ahead, step one, we will pig and smart pig the 10 miles of
remaining transit lines and we will implement routine pigging and smart
pigging going forwards on all of our transit lines. Two, we will
determine the corrosion cause and modify our corrosion management
system going forward. Three, we will include all of BP's operated transit
lines, all 122 miles of those lines, in the DOT's PIM program, pipeline
integrity management program. And fourth, we will replace 60 miles of
transit lines at Prudhoe Bay. Fifth, we have already made organizational
changes, added a technical director to define and establish operating
standards and to verify that those standards are indeed being met by the
business.
We have a lot to do but we will get it done, and since 2000, we have
completed many internal and external reviews of our corrosion
management program. We have covered everything from the work
environment to the technical integrity of the program to the integrity of
our data that we use. I rely daily on teams of experts in Alaska to
manage corrosion management, indeed as I rely on many teams to
manage the entirety of our business in the State.
But it doesn't stop there. I welcome challenge, scrutiny, whether it
comes from government, whether it comes from partners, whether it
comes from external consultants, indeed whether it comes from the
workforce. Having worked on the slope for five years, I know the
importance of getting worker input. It just good business and I take very
seriously any way we can to shine a spotlight on our systems and am
determined to make improvements. We have had State reviews, multiple
internal audits including two reviews by our chief engineer. As we have
gone back on any of those reviews, no one pointed to the east transit
lines as a particular problem. If they had, we would have acted on it.
I deeply regret this situation occurring on my watch after five years.
Everyone has talked about the importance of this. I regret it very deeply.
I am determined to do what we can to get production back safely, quickly
and efficiently. Thank you.
[The prepared statement of Steve Marshall follows:]
PREPARED STATEMENT OF STEVE MARSHALL, PRESIDENT, BP
EXPLORATION ALASKA, INC.
MR. WALDEN. Thank you, Mr. Marshall. If you welcome scrutiny,
you are going to feel real welcome here today.
Mr. Hostler, thank you for being here, sir, and we look forward to
your comments.
MR. HOSTLER. Mr. Chairman, distinguished members, thank you for
inviting me to appear before your subcommittee.
I am Kevin Hostler and I am President and CEO of Alyeska Pipeline
Service Company. I am here representing 1,600 employees and
contractors who operate and maintain the Trans Alaska Pipeline System,
or TAPS. We understand the critical importance of our operation of this
system to the State of Alaska and to the Nation.
I am here today to answer two fundamental questions I believe you
have about our operation. First, to address the question of the potential
for accelerated corrosion on our operations at TAPS, and second, to
address the impact of reduced throughout as a result of the recent spills.
My written testimony covers the fundamentals of both of these questions.
It also provides a clear description of our integrity management program.
We have a thorough integrity management program that has been vetted
by regulators. My team and I are confident that the steps we have taken
to mitigate the potential for accelerated corrosion are the right ones. In
my written testimony, you will find a description of our routine
monitoring and maintenance program to prevent both internal and
external corrosion in the main line as well as in our pump stations and
terminal. I would be happy to answer any questions regarding our
integrity management program, about the potential for corrosion in the
TAPS system, the impact of low throughput on our system, or any other
question you may have.
I would like to repeat that I represent a team of high-quality people
who operate and maintain this system, a system that has delivered 15
billion barrels of oil to the American public. I am confident our
employees are capable of dealing with the challenges ahead and would
bring any issue that they had to our attention, any issue that impacts the
integrity of our pipeline.
I thank the subcommittee for this opportunity.
[The prepared statement of Mr. Kevin Hostler follows:]
PREPARED STATEMENT OF KEVIN HOSTLER, PRESIDENT AND CEO,
ALYESKA PIPELINE SERVICE CO.
Thank you for the opportunity to address the subcommittee about the
trans-Alaska pipeline and Alyeska Pipeline Service Company. My name
is Kevin Hostler and I am the President & CEO of Alyeska Pipeline
Service Company. I am here today representing the 1600 people who
operate and maintain the Trans Alaska Pipeline System - or TAPS. Our
company was founded in 1970 to design, construct, and operate TAPS to
safely and efficiently move oil from the North Slope of Alaska through
the Valdez Marine Terminal 800 miles to the south. Alyeska Pipeline
Service Company is owned by a consortium of five companies: BP
Pipelines (Alaska) Inc., ConocoPhillips Transportation Alaska, Inc.,
ExxonMobil Pipeline Company, Unocal Pipeline Company, and Koch
Alaska Pipeline Company.
I am here today to discuss two important issues: to provide the
committee with assurance about corrosion prevention on TAPS through
our integrity management program; and to provide insight into the
challenges we may face due to reduced throughput in the TAPS mainline
and how we will manage these challenges.
I will also explain how Alyeska has been involved with managing
any potential solids generated by Prudhoe Bay oil field pigging
operations.
The issues outlined in this testimony are important to me, our
employees, and our stakeholders. I take seriously the responsibility I
have to run a safe operation that is properly maintained to transport the
oil we receive. Safety is our first priority in resolving the issues we
currently face.
Since the March 2006 Prudhoe Bay spill by - and continuing through
the August spill and production shutdown, we have offered our
assistance to and worked with BP Exploration Alaska Inc. (BPXA) on a
wide range of operational issues. We have offered response personnel
and equipment; we received a technical briefing on the root causes of the
March spill; conducted and then shared our impact assessment analysis
of the impact of potential pigging solids being introduced into the TAPS
mainline; discussed various options to address these solids; and
completed construction of a bypass line to offer a method to receive and
process any solids generated by Prudhoe Bay pigging activities.
CORROSION CONTROL AND INTEGRITY MANAGEMENT ON TAPS
Alyeska has not found evidence of accelerated corrosion in the
TAPS mainline. After the Prudhoe Bay spill in March, our operations
and engineering personnel reviewed our corrosion control program and
have been implementing enhancements identified during this review.
When I learned that the apparent cause of the spill was corrosion, I
asked my integrity engineering staff and my pipeline operations staff to
provide me with assurance that accelerated corrosion was not a threat to
TAPS integrity and what additional precautions, beyond our existing
program, should we undertake. This technical group held a brainstorming
session to think through all of the potential impacts to TAPS based upon
what we knew about the March spill. From this we created a Top Ten
list of issues we should pursue from an integrity perspective. The review
verified we have a solid corrosion control program and did not identify
any immediate corrosion related threats to TAPS. Alyeska staff are
making satisfactory progress on the issues in the list. I have shared this
list and a status matrix with committee staff. I will answer any questions
from the subcommittee about this list.
Specific to potential accelerated corrosion on TAPS similar to what
BPXA reported, the first place we believe we would see this type of
corrosion would be in the piping at Pump Station One. As part of our
Top Ten list, we added several new corrosion monitoring locations at
Pump Station One, including the deadlegs at the station. Deadlegs are
sections of pipe inside the Pump Stations that have no active flow. As an
additional precaution we have increased our corrosion inhibitor injection
volumes by about 25% throughout the system.
It is important to note that TAPS generally benefits from the co-
mingling of the oil from all of the North Slope fields before they enter
the mainline. In addition, TAPS benefits from a velocity in the mainline
that is greater than the lines feeding into the system at Pump Station One.
This multi-field mixing action and velocity reduces the risk of sediment
and water from dropping out of the oil stream. This is worth noting
because standing water is where we would most likely encounter
significant internal corrosion in TAPS.
Also of note from our Top Ten list, we moved forward our 2007
smart pig run to 2006. The first part of the TAPS mainline was pigged
the first week in August and the remainder of the line will be pigged by
the end of the year. I requested that the data from this pig run be
analyzed expeditiously so that we can compare it with the 2004 data to
determine if additional integrity actions are necessary. Since the startup
of TAPS we have run 60 inline inspections. This 2006 pig run will be
the 61st smart pig run on TAPS. These smart pigs have identified
minimal pipe wall loss due to internal corrosion. Alyeska has not
identified any wall loss due to corrosion that exceeds Alyeska's internal
criteria for wall loss, which is stricter or more conservative than the
federal DOT regulatory criteria.
While we have a lot of faith in our pigging program based upon
nearly 30 years of experience, we do continue to challenge ourselves to
make sure we are evaluating the right things on TAPS. It is a process of
continuous improvement.
Alyeska analyzes the pig run data for anomalies. From this our
engineers make recommendations about what sections of the pipeline
should be physically looked at for additional validation and possible
repair. This is what we call our integrity investigations. We investigate
sections of the pipeline - above and below ground - to determine the
significance of anomalies, including corrosion in those areas. Based
upon this assessment the appropriate corrective actions are taken,
including repairing the section of pipe with a sleeve. Since initial startup
of TAPS operations in 1977, we have made 656 below ground
investigations and 293 above ground investigations.
We run a cleaning pig through the entire pipeline every seven to
fourteen days. A cleaning pig pushes wax, water, and sediment that may
accumulate within the pipeline down the line for removal. Further, as
throughput declines this will be an even more important tool because it
will remove water that may drop out of the crude oil at slower velocities.
In addition to pigging and integrity investigations, our corrosion
control program also includes the following:
Corrosion inhibitor is injected in the deadlegs at the pump
stations and Valdez Marine Terminal every two weeks. Deadleg
corrosion management is not new to us. We have had a deadleg
corrosion program since the early 1990's. This program includes
a manual ultra sonic inspection of the dead legs on a regular
basis. The frequency of the investigations is based on
engineering analysis and calculated corrosion rates.
Buried pipeline sections were coated and wrapped with tape to
protect the steel from the environment. (Aboveground pipe has
minimal external corrosion risk.)
A cathodic protection (CP) system passively and actively
protects the below ground pipe from external corrosion. The
passive CP system uses sacrificial zinc and magnesium anodes
which preferentially corrode, thus protecting the pipeline from
corrosion (similar to the zinc anodes in home water tanks). The
active system applies electrical current to the pipeline to prevent
corrosion. 680 CP coupons and 1018 CP test stations are placed
along the pipeline to provide a way to measure CP effectiveness.
Cathodic protection monitoring including CP coupons and close
interval survey verifies the system data. This survey is
performed on one-third of the pipeline each year. Areas failing
to meet CP criteria are either mitigated or if of a minor nature,
the system is electrically adjusted and resurveyed the following
year. We are working with the DOT to assess low CP readings
on the last 20 miles of the mainline to determine appropriate
remedial actions.
Our facilities corrosion monitoring program includes the use
of coupons to assess and monitor internal corrosion rates.
Alyeska's corrosion control program is annually monitored by the
Joint Pipeline Office and is audited routinely by the DOT.
Our corrosion control program is a part of our Integrity Management
Program. Alyeska operates its Integrity Management Program through a
controlled document (IM-244) titled, "TAPS Integrity Management
Program for High Consequence Areas". This is one of the first
documents I read upon arriving at Alyeska and was impressed by the
breadth and depth of our program. If you are interested in reviewing a
copy of the program, I would be happy to provide it for you.
This document is subject to periodic inspections by the U.S.
Department of Transportation Office of Pipeline Safety as a part of our
DOT regulatory program. The DOT has inspected this program in 2002,
2003, 2004 and will do so again this October.
The Grant and Lease Right of Way agreements require Alyeska to
have a comprehensive corrosion control program. Corrosion
management is extensive and monitored by the Joint Pipeline Office to
ensure we are meeting its requirements in addition to those of the DOT.
JPO required Alyeska to develop a comprehensive approach to corrosion
monitoring activities on TAPS and this became the Corrosion Control
Management Plan (CCMP) adopted in 2000. The CCMP has been
incorporated into IM-244.
Alyeska's Integrity Management Program has the following
objectives:
Prevent leaks to protect public safety and the environment
Comply with State and Federal regulations
Manage risks - assess, prevent, or mitigate
Preserve our assets thus providing reliable oil
transportation
Provide stakeholder assurance
We have a number of major elements within the Integrity
Management Program for the mainline pipe. We also focus on internal
corrosion on the piping in our pump stations and the Valdez Marine
Terminal. The major elements of our Integrity Management Program
are:
Mainline pipeline inspection: Corrosion In Line Inspection;
Curvature and Deformation In Line Inspection
Cathodic Protection (CP): CP Monitoring; CP System
Improvements
Aboveground Pipeline Support System: AG Monitoring and
Maintenance; Vertical Support Member Monitoring and
Maintenance; Pipeline Bridges
Valve Maintenance Program
Right of Way Monitoring and Maintenance: ROW Monitoring
and Surveillance; Rivers and Floodplain Monitoring
Earthquake Preparedness: Earthquake Monitoring; Fault
Monitoring; Seismic Design Control; Seismic Housekeeping
Leak Detection System
Overpressure Protection System
Pump Station Facilities: Piping Systems; Tanks
Valdez Marine Terminal Facilities: Piping Systems; Tanks
Oil Spill Response and Contingency Planning
Fuel Gas Line.
As you can see we have a commitment to a comprehensive,
systematic, and documented approach to integrity management,
including corrosion monitoring and mitigation.
Additionally, I want to stress that our program is primarily focused
on preventing a leak. Should we encounter a pipeline discharge, we have
also worked diligently to be prepared to respond to an incident. We have
an approved oil discharge prevention and contingency plan (C-Plan) that
guides our response efforts. The plan is reviewed and approved by four
regulatory agencies: the Alaska Department of Environmental
Conservation; the Environmental Protection Agency; the U.S.
Department of Transportation; and the Bureau of Land Management.
We also have a large inventory of contingency repair equipment and
materials that includes a wide range of replacement piping, stopples, and
leak clamps. We exercise our personnel and equipment on a regular
basis. It remains our goal through our Integrity Management program to
avoid an oil discharge. However, I want the committee to know that we
are prepared for an incident and can respond in a timely manner.
PRUDHOE BAY TRANSIT LINE PIGGING SOLIDS
Alyeska has constructed pipe and processing facilities at Pump
Station One that will allow us to receive pigging solids from BPXA
transit line pigging operations without exposing TAPS to unacceptable
risks.
Upon learning about the potential for substantial solids in the
Prudhoe Bay transit lines, I established a technical team to undertake a
thorough risk assessment of the potential impacts from the solids to
TAPS equipment, systems, and operations, and regulatory requirements.
I asked them to determine if we could manage the solids in the mainline
or into our tanks at Pump Station One. My priority was that any solution
not adversely impact TAPS safety or integrity, nor the safe and efficient
transportation of oil, which is our responsibility as a common carrier
pipeline. The impacts assessment clearly raised concerns about allowing
solids into the mainline and therefore I made the decision that we would
not allow this to happen. We shared this position with BPXA and
interested stakeholders in May.
Some of the concerns we had with the potential for a high
concentration of solids that may be liberated in a short time period
include: clogging and damage to strainers potentially resulting in a
blockage; impacts and damage to meters; impacts or blocking transmitter
and safety instrument devices that could result in an immediate shutdown
of a pump station; solids potentially settling in station piping, valves and
deadleg piping making it difficult to remove; impacts to pressure
transmitters and leak detection systems; and potentially impacting valves
and valve seats, drain lines, strainer baskets as the solids passed through
each facility.
Since that time, we have been working with BPXA to determine the
best path forward and at their request in August we constructed a
temporary line to allow the solids to bypass Pump Station 1 piping
directly from Skid 50 into a storage tank (Tank 110) for temporary
storage and then removal and disposal. We will decant the oil received
from the pigging operations through a line from the tank to our pump
station. The solids will be processed via centrifuges and clean,
marketable oil will be injected into TAPS for transportation to market.
Remaining water and solids will be managed in compliance with federal,
state and local laws. Tank 110 was scheduled for routine maintenance
next summer and any remaining solids will be disposed of when we
clean out the tank.
This bypass line and processing capacity should be operational no
later than the middle of September.
As we were provided with updated information regarding the volume
and constituency of the pigging solids in the various lines, we have been
able to make appropriate decisions. We have approved of the pigging of
those lines where we reasonably believe we can support the pigging
without adverse impact to TAPS. An example of this is the pigging that
proceeded with the Lisburne transit line. As BPXA ran more aggressive
cleaning pigs through the Lisburne line we monitored our instruments
closely to ensure the pigging envelope did not push solids into our
system. Prior to approving acceptance of Lisburne pigging solids we
agreed that the estimates of the amount of potential solids would not
adversely impact TAPS. BPXA Lisburne pigging commenced on June
10th and was concluded on June 16th with the running of a smart pig
through the line. The data from pigging this line demonstrated that this
was an accurate estimate and the data from this was incorporated into the
estimates and analysis for the remaining transit lines.
Throughout this process there have been many meetings and
discussions about the implications and impacts associated with solutions
to address the potential for solids in amount that could cause adverse
impacts on TAPS from the transit lines. Alyeska was researching two
options that TAPS could perform and BPXA was exploring two options
they could perform. The bypass line we constructed has been our
preferred option since we determined the volume of potential solids in
the remaining transit lines would have an adverse impact if received
directly into the TAPS mainline.
OPERATING TAPS AT REDUCED THROUGHPUT
Based upon technical reviews conducted to date, it is likely, although
not certain, that Alyeska will be able to safely manage lower throughputs
associated the partial suspension of Prudhoe Bay production. To do this,
Alyeska will need to resolve several technical challenges outlined below.
Upon learning of the decision to shutdown the Prudhoe Bay field, I
called up our Crisis Management Team and asked them to look at the
short and long term issues this would have upon the operation of TAPS.
For the short term, I wanted to know what issues we would face for
significantly lower throughputs. My Oil Movements, Operations, and
Engineering team put together a plan that would allow for continuous
operations down to 400,000 barrels per day. The first night following the
news, we ran the system at 500,000 bpd and the second night tested it at
400,000 bpd. While this is not an ideal operating situation our initial
report is that it is workable.
We then began looking at the long term challenges this presents for
TAPS and this analysis continues today. While we are confident we can
operate normally down to 500,000 barrels per day, we will face
challenges as throughput drops below this rate. Among the more
significant challenges we are currently evaluating are:
Managing issues associated with cooler temperatures of the
oil, particularly in the winter, and the potential for water and paraffin
drop out from the oil;
Managing the efficiency of the biological treatment process
of our ballast water plant because of lower ballast water flows due
to reduced tanker traffic to the Valdez Marine Terminal; and
Managing the potential for increased vibration due to slack
line conditions at the three mountain passes the pipeline must cross;
Alyeska technical experts are evaluating all of these issues to
determine the full extent of the potential impacts upon TAPS. They are
establishing appropriate mitigating plans for my management team to
consider. From our perspective, we definitely have challenges in front of
us due to the Prudhoe Bay shutdown. I also know that I have some of
the best technical resources available for this situation. I want each of
you to know that our decisions will be based upon the safe operation of
TAPS and with no adverse impacts to the integrity of TAPS.
In conclusion, I wish to restate that we have not seen accelerated
corrosion on TAPS. We have a healthy concern for the potential for
increased rates of corrosion and what that could mean to TAPS. I
believe we have the right programs and people to address corrosion and
integrity management on TAPS.
We will continue to work with BPXA on the best path forward
regarding the pigging solids - one that does not compromise the integrity
of our system. We have the right people assigned to this task and I trust
their ability to accomplish this task safely.
And last, we share your concerns about operating TAPS at lower
throughputs. We're looking at all of the potential impacts this will have
on our system and will develop responsible plans to mitigate these
impacts. I have qualified people working on these challenges and they
understand my expectations that we proceed with the safety and integrity
of our operations as our first priority. It is worth noting that our $500
million dollar pipeline upgrade project will introduce significantly more
flexibility into our ability to manage through a situation like the one we
are facing today.
I thank you for this opportunity to discuss Alyeska and TAPS
operations and welcome any questions you may have about our
operations.
MR. WALDEN. Mr. Hostler, thank you for being here today.
Mr. Stears, do you have an opening statement this morning?
MR. STEARS. I have no opening statement. I am just here to
cooperate and to help answer questions.
MR. WALDEN. Thank you very much. We appreciate the opening
statements of all of you and your participation in this oversight hearing.
Mr. Woollam, I am going to start with you. I know you indicated in
your brief opening comments you were going to assert the Fifth
Amendment, which is certainly your right under the Constitution. The
committee believes that in order to assert that amendment, it needs to be
in response to a question and so with that, Mr. Woollam, you were
formerly in charge of the Corrosion Inspection and Chemicals Group at
BP Exploration Alaska, Incorporated. You were the decision-making
manager and engineer responsible for all operations related to corrosion
control and monitoring of the pipelines operated by BP at Prudhoe Bay.
The subcommittee has learned from several sources that numerous red
flags were raised about the integrity of the Prudhoe Bay pipelines while
you were in charge of the CIC group including the 2000 final draft
Coffman report. Yet in 2002 you initiated and implemented a plan to
reduce the manpower of a key pipeline corrosion monitoring team by 25
percent. So my question, Mr. Woollam, when did you become aware of
the pipeline integrity problems faced by the Prudhoe Bay transmission
lines including concerns about accelerated localized corrosion, microbial
corrosion and that the failure to send maintenance pigs or smart pigs
down the transmission lines was placing those pipelines at high risk of
failure.
MR. WOOLLAM. Mr. Chairman, based upon the advice of counsel, I
respectfully will not answer questions based upon my right under the
Fifth Amendment of the United States Constitution.
MR. WALDEN. Mr. Woollam, are you refusing to answer all of our
questions based on the right against self-incrimination afforded to you
under the Fifth Amendment of the U.S. Constitution?
MR. WOOLLAM. Yes, Mr. Chairman.
MR. WALDEN. And is it your intention to assert such right in
response to all further questions from the subcommittee today?
MR. WOOLLAM. Yes, Mr. Chairman.
MR. WALDEN. Given that, if there are no further questions from the
members, I will dismiss you at this time subject to the right of the
subcommittee to recall you if necessary, and at this time you are excused,
sir.
MR. WOOLLAM. Thank you.
MR. WALDEN. Thank you.
Mr. Marshall, according to information provided by British
Petroleum, the western operating line had not been pigged since 1998
and the eastern operating line had not been pigged since 1992. Why was
there not more regular pigging of these transit lines?
MR. MARSHALL. Mr. Chairman, you are indeed correct. The
western line was pigged and smart pigged in 1998. We recovered a very
insignificant amount of solids, less than two cubic yards, from that pig
run. The line indicated it was in good condition. What we have in each
intervening year is a series of ultrasonic testing at various points along
the line to basically confirm and corroborate the information from the
smart pig run. We also have electrical resistance probes, coupons, and
all of this is on the back of a very comprehensive program of corrosion
inhibition across the entirety of the operations going all the way back to
the well head, through the gathering lines, through the flow lines,
through our facilities, so we are watching all of the corrosion at those
points.
MR. WALDEN. Could you turn to Exhibit 4 in the book, which you
should have at the witness table. Do we have a book at the witness
table? Our staff will be bringing that to you. I will go ahead. On page
2, it says--this Exhibit 4, page 2, it says, "For example, smart pigs can
inspect the service of an entire pipeline. Smart pigs and other automated
techniques are helpful in identifying locations that should be more
closely monitored using one of the point inspection methods, e.g., visual,
ultrasonic, radiographic. Smart pigs can also provide assurance that the
spot inspections are truly representative of the pipeline condition."
Given that BP's own internal corrosion procedures highlight the merits
of smart pigging, and that is what I was reading from, can you explain
the lack of the smart pigs on these lines? I mean, I think that is what we
are getting at here in the committee. We understand you do these other
checks. Why when Alyeska is running smart pigs down the TAP every
two weeks, why would it be years in between when you would run smart
pigs down these feeder lines?
MR. MARSHALL. Again, Mr. Chairman, we looked at the data from
1998, confirmed the line was in good condition, did the ultrasonic
testing. We did see some increases in corrosion starting in 2004 and
2005, and at that point we did take the action to increase the frequency of
testing and--
MR. WALDEN. But not with smart pigs.
MR. MARSHALL. And commissioned a smart pig in 4Q of 2005 to
be run this year. Unfortunately, that smart pig was not run before the
spill but it was planned and budgeted for in Prudhoe Bay's budget this
year.
MR. WALDEN. How much does it cost? What do you have to budget
for a smart pig to run down those lines?
MR. MARSHALL. To the best of my knowledge, it is not a huge
amount.
MR. WALDEN. So budget is really not the issue?
MR. MARSHALL. Budget is not the issue, no.
MR. WALDEN. Okay. Please turn to Exhibit 7 again in this. This
document is an instant investigation report on the March 2006 spill on
the western operating line. According to the report, the leak occurred at
a buried caribou crossing. Aren't bends and low points in the line such
as buried crossings at higher risk of corrosion because of sludge,
sediment, scale and/or water that tend to build up at these locations,
particularly in low-flow lines? Aren't these dips in the line really more
subject to this type of failure and corrosion?
MR. MARSHALL. Mr. Chairman, I am not a corrosion expert but
certainly the lines on the west side of Prudhoe Bay have a number of
road crossings and caribou crossings where there are elevation changes.
What appears to have occurred is the--we believe the accumulation of
solids which had occurred perhaps more recently than we might have
expected in these low areas.
MR. WALDEN. On page 11 of the report, it points out that the 1998
smart pigging of the western operating line showed "moderate internal
and external corrosion" with many areas having 30 percent to 50 percent
wall loss. The pig run specifically identified six locations within the
caribou crossing that was the site of the March leak where internal
corrosion pitting was occurring. Given these results, why didn't BP
accelerate the schedule for the next pigging? Again, this was back in
1998 and it identified some areas with 30 to 50 percent wall loss.
MR. MARSHALL. Mr. Chairman, my understanding here is that the
30 to 50 percent wall thickness loss is not actually generalized wall loss.
It is pitting corrosion, discrete pitting corrosion, generally at the 6:00
position in the bottom of the line, and the inspections that we did, the
ultrasonic testing, was done and the coupons were looked at four times
per year, twice the industry average on those lines, to confirm the
deterioration in the system was not occurring at a greater rate.
MR. WALDEN. Well, on page 6 it says that, and I quote again, "With
the exception of smart pig runs, there isn't a way to directly monitor
internal corrosion inside of the cased pipe road and caribou crossings
without having to excavate the crossing and remove the outer casing
from the pipe." So despite being aware of pitting and corrosion at this
crossing and knowing that these points were not accessible for ultrasonic
testing, BP nonetheless decided to wait 8 years between smart pig runs,
right?
MR. MARSHALL. We did encounter some increased corrosion in--
MR. WALDEN. In the dips?
MR. MARSHALL. In the--
MR. WALDEN. In the crossings?
MR. MARSHALL. I can't say they were actually at the crossings. The
inspection points we were doing through ultrasonic testing, we did start
to see some increases in 2004 and critically in 2005 which led to the
establishment of the smart pig run scheduled for 2006.
MR. WALDEN. So where the problem really was, was in the place
where the leak occurred in the caribou crossing, right?
MR. MARSHALL. Sorry. Could you repeat the question again?
MR. WALDEN. Well, let me go to the exhibit here, and it says, "The
accuracy of the smart pig data was"--I assume it should be were--
"confirmed the follow-up UT inspections. The '98 smart pig run also
identified six specific areas inside this caribou crossing where internal
corrosion pitting was occurring. Percent wall loss at these six locations
in this particular caribou crossing showed relatively low line wall loss of
between 5 and 25 percent." The leak was one of these six locations and
had a wall thickness loss of 9 percent in the 1998 pig run. So you are
seeing leaks where there wasn't even earlier identified much wall loss,
right, if it was 9 percent, and yet the leak then occurred in one of those
areas. It would seem to me that you are really missing the boat by not
putting those smart pigs in there.
MR. MARSHALL. Mr. Chairman, we believe that the changing
conditions on the western side of the field had some bearing on that. We
will not be able to confirm that absolutely until we do the laboratory
analysis of the failed pipe.
MR. WALDEN. Let me ask you this. In other operations you may be
familiar with, with similar feed lines outside of Prudhoe Bay, do
companies run smart pigs on a regular basis, regular being more than
every eight years?
MR. MARSHALL. Mr. Chairman, I am not a pipeline expert. I have
to state that. I am aware of some lines that are pigged. I am also aware
that some lines are not pigged. But I can't give you exact details of that.
MR. WALDEN. Your written testimony notes that BP runs nearly 370
maintenance pig runs per year on the North Slope. Why have none of
these been run on these key transmission lines for the last eight years?
And that is the heart of what we are after here.
MR. MARSHALL. Mr. Chairman, we have a very--notwithstanding
these leaks, we have a very comprehensive corrosion management
system. It is one that is recognized by many as being very
comprehensive in that it covers 1,500 miles of pipelines all the way
through the facilities. Notwithstanding the leaks though, we tend to
focus--we do focus all of our efforts where we believe the risk of
corrosion to be the highest. That typically is where we have gas and
water, where it is three-phase flow. We have high carbon dioxide
content in the gas. Left unchecked, that can corrode about a quarter of an
inch of steel per year. That is where we put the vast majority of our
efforts upstream.
MR. WALDEN. Given all that though, clearly in this case the
procedures and protocols failed your company and the American people,
right? I mean, because you ended up with these leaks and now you have
discovered basically you are going to have to replace how many miles of
the pipe?
MR. MARSHALL. We are going to replace 16 miles of pipe. Even
though we believe 10 miles are actually in good condition, we have
committed to replace all 16 with lower diameter pipe which will provide
a firm foundation for future business for a field that has the potential now
to run for many, many years with the prospect of gas pipeline coming
down the line.
MR. WALDEN. My time has expired. I turn to the gentleman from
Michigan, Mr. Stupak, for 10.
MR. STUPAK. Thank you, Mr. Chairman. Mr. Marshall, if I may
continue. The Chairman asked you a lot about the western operating
area line. I want to ask you about the eastern operating line. And if you
can, just answer yes or no, I would appreciate that. It is the eastern
operating line that had the August spill. Is that correct?
MR. MARSHALL. The eastern line from Flow Station 2 to Flow
Station 1, yes.
MR. STUPAK. And the eastern operating line was last pigged
somewhere around 1992?
MR. MARSHALL. I believe the eastern line was pigged in the early
1990s, maintenance pigged, and smart pigged just after that.
MR. STUPAK. Isn't it true that when the line was last pigged, it had
significant scale buildup and possibly other materials that made pigging
so difficult that it caused problems downstream for the operators at the
Trans Alaskan Pipeline?
MR. MARSHALL. Mr. Congressman, since the March spill, I have
become aware of discussions about solids occurring in those lines and
yes, indeed--
MR. STUPAK. Caused problems for the operators down the line?
The strainers were--
MR. MARSHALL. The strainers were plugging with scale, as I
understood.
MR. STUPAK. And that was 1992?
MR. MARSHALL. I believe it was in the early 1990s. I can't give
you the exact date.
MR. STUPAK. Okay. Isn't it true that it is generally the solids
including scale and sediment can be a contributing factor for corrosive
activity because they can trap water or other corrosion-causing
organisms against the pipe wall? Is that true?
MR. MARSHALL. I am not a corrosion expert but I do believe that is
to be true, yes.
MR. STUPAK. Okay. And isn't it true that sludge, sediment and
scale can also make it harder for corrosive inhibitors to effectively reach
the pipe wall and therefore make them less effective in reducing
corrosion?
MR. MARSHALL. Again, I am not a corrosion expert but I do believe
that to be a possibility, yes.
MR. STUPAK. But you are the head of the corrosion program up here
on the North Slope, right?
MR. MARSHALL. No, I am President of the--
MR. STUPAK. President of the--I am sorry.
MR. MARSHALL. I do rely on a lot of people to give me advice on all
aspects of business including corrosion.
MR. STUPAK. Well, on the eastern operating area line, it has a pig
receiver and a pig launcher, and so it was designed to accept a pig to go
through line, right?
MR. MARSHALL. That is my understanding, yes.
MR. STUPAK. Can we go to photo number 8 right here? This was
taken by the committee staff. That is the pigs in your warehouse up
there, and you can see all of them, different sizes and for all parts of it.
Then why in your best estimation was the eastern line never pigged since
1992? You have all this equipment in here, different sizes, to get it
through the line. Why wasn't it done since 1992 if you had the best
comprehensive corrosion program in the world?
MR. MARSHALL. Mr. Congressman, I cannot comment on the period
from the early 1990s through to 2000. When BP took over operation of
the eastern transit lines in 2000 as a result of the ARCO merger, we
instituted ultrasonic testing. It was something we instituted of the eastern
transit lines. Only two--
MR. STUPAK. Photo 7, please. Photo 7. See, my problem with the
ultrasound, if you had started this in 2000 when you took over the line, it
is so tedious. I mean, all you do is take a little swab and put it on part of
the pipe and then you do a detection much like an ultrasound, correct?
MR. MARSHALL. That is correct.
MR. STUPAK. And that is only where the swab is, and you can do
very little pipe, and those underground, like the caribou crossing, where
we had the spill earlier, you can't do that because it is underground, so
that doesn't seem very effective. So that is why I am thinking, well, why
would you go to ultrasound, not pig it then in 2000 if you didn't know
the quality of it? You are trying to prevent spills and improve the flow
of oil? If you took it over in 2000, if you were unsure of the quality and
the corrosion problem, why didn't you pig it then if it is already designed
for pigging?
MR. MARSHALL. I can't comment specifically on decisions that
were made in 2000 or not. What I can say is that only two years
previously, the western area transit--
MR. STUPAK. I am talking eastern now, eastern line. I want to stay
with the eastern line. The Chairman got you on the western. I am on
eastern.
MR. MARSHALL. If you just allow me--
MR. STUPAK. Sure.
MR. MARSHALL. --a few minutes to explain how the west has
relevance, potential relevance to the east. Only two years previously, BP
in operating the western lines had pigged and smart pigged those western
transit lines. The indications were given that the lines were in good
condition. We were taking over the eastern transit lines as a result of the
ARCO merger. Those transit lines are broadly similar in geometry, eight
miles on either side handling essentially the same fluids. We instituted a
spot check of the ultrasonic testing and essentially confirmed a very
similar condition of the eastern transit lines as the west.
MR. STUPAK. I don't mean to be argumentative, but all of our
reports show that even the western line in 1998 had corrosion problems,
and if it had been 1992 until 2000 when you took over, 8 years, and now
we are 6 years later, 14 years, it was never pigged. If you knew in 1998
when they did the pigging on the western line there were corrosion
problems, I think it would lead you to at least look at the eastern line a
little bit closer. I don't mean to be argumentative with you but common
sense will tell you that.
Mr. Hostler, if I may, you scrape your entire 800-mile line every 14
days. Is there a reason for that other than reducing drag on the pipe?
Why is it generally a good idea for pipeline maintenance, in other words?
MR. HOSTLER. Congressman, it is rather simple. We do that every
14 days just to keep the pipe in good, clean condition.
MR. STUPAK. Can corrosion start in 14 days?
MR. HOSTLER. No, no, but we worry about the buildup of solids or
liquids, water, in the pipeline and so we run a cleaning pig, a mechanical
pig, every 14 days.
MR. STUPAK. Okay. Mr. Marshall, let me ask you this then. When
did BP first know that major solids to the amount that the line could not
easily be pigged were in the eastern operating area line--eastern line?
MR. MARSHALL. Mr. Congressman, to the best of my knowledge,
the discussions started after the March spill. That was when it was first
brought to my attention when conversations turned to the existence of
solids, recollections of the problems that had occurred in the early 1990s
with the plugged strainers and it caused us to consider what might be the
worst case, solids accumulation in these lines. We wanted to--
MR. STUPAK. Okay, so that was March and that was after the
Department of Transportation issued its corrective action order, and from
what I understand, you spent a considerable amount of time engineering
efforts to determine how significant the sludge and scale buildup was in
both the eastern and western line. Isn't that correct?
MR. MARSHALL. Sorry. Could you repeat your--
MR. STUPAK. Sure. After you got your corrective action order, you
spent a lot of time engineering that, that is what you are telling me, to
determine how much buildup did you have in the eastern and western
line. Isn't that correct?
MR. MARSHALL. That is correct. Yes.
MR. STUPAK. Did you have any information prior to the Department
of Transportation March 15 corrective order about the buildup in the
eastern line?
MR. MARSHALL. I can't speak for every level of the organization
but I became aware of that after the March 2 spill.
MR. STUPAK. Well, if you had no idea how much scale, sludge or
other deposits were in your lines, then what does that say about BP's
understanding of the quality of its pipelines? How can BP say it had a
good integrity management plan of its pipelines if it doesn't know the
true condition of its pipes and the volume of solids they contain?
MR. MARSHALL. Certainly we have relied extensively on the
pigging data from 1998 on the western where we had recovered--
MR. STUPAK. I am still on the eastern one, because last time you
pigged that was 1992. It is the major line. I mean, we had to shut that
down. So how can you sit here today and say you have a good integrity
management plan of its pipes when you do not know the true condition
of the pipes or the volumes of the solids they contain and the last time it
was pigged was 1992? So I see a contradiction here. It sounds like you
didn't really explore it until you got the corrective order from the
Department of Transportation in March of 2006.
MR. MARSHALL. It was certainly the spill that caused us to consider
what might be the implications of pigging those lines.
MR. STUPAK. Right. How would you not know that something is
causing corrosion? How would you not know that? I guess that is the
best way to put it. You saw it in the western line in 1998, the one that
hadn't been pigged since 1992. You know your PSI is going down,
don't you, the pounds, the pressure to move the oil through? You know
that is going down every year, right? What was it in 1992? Do you
know?
MR. MARSHALL. I don't have that information.
MR. STUPAK. They tell us it was about 800, and at the time of the
spill it is down to 80. You have lost 10 times the pressure. That in itself
tells you right there that we have a problem with the corrosion, doesn't
it?
MR. MARSHALL. Certainly velocity of fluid through the line appears
to be one of the indicators. The two sections of line that have failed, the
two three-mile sections--
MR. STUPAK. And isn't another thing you look at is how much oil
you are getting out? Isn't most of the stuff you are getting out right now,
isn't that mostly water and sand and less and less oil each year from 1992
to 2006?
MR. MARSHALL. You are absolutely correct about the water,
Congressman.
MR. STUPAK. And therefore if you got more water, isn't that going
to cause corrosion and buildup in these lines?
MR. MARSHALL. Mr. Congressman, the facilities upstream, the flow
stations and gathering centers, are designed to take out the water. We
operate to the same--
MR. STUPAK. But it doesn't take it all out. We know that, and we
know where there are dips in there. That is where it settles and that is
when we have problems. You have slow flow, less oil coming up, more
sand and water. How could you not know that there was buildup and
solids and how could you not pig since 1992? I guess I am just baffled
on that.
MR. MARSHALL. Mr. Congressman, if I could try and offer my
perspective on that. Certainly the conditions of the reservoir are
changing. You are absolutely correct. As the oil production has
dropped, the water production increases. We certainly see some solids
from the west, not necessarily from the east, but the facilities, the
producing facilities, the flow stations and gathering centers, are designed
to take the incoming flows from the wells down to the same
specification, the .35 bottom sediment and water specification that has
been in existence for 29 years at Prudhoe Bay. Our records show that the
performance of those facilities is indeed broadly similar over the years so
those facilities are actually operating and there isn't increasing amounts
of water through those transit lines than there has been over time.
MR. STUPAK. Thank you, Mr. Chairman.
MR. WALDEN. Thank you. The chair now recognizes the gentleman
from Texas, Dr. Burgess, for 10 minutes.
MR. BURGESS. Thank you, Mr. Chairman. Maybe we could just
stay on this subject for a moment, Mr. Marshall, the allegations that BP
did not pig the lines more frequently because of concerns that there was
so much sediment, sludge or scale in the lines that the pigs might get
stuck or unacceptable levels of junk would get flushed into the Trans
Alaska Pipeline. Are those reflections accurate?
MR. MARSHALL. Mr. Congressman, certainly those are some of the
conversations we have had in BP and talking with Alyeska. We are
concerned about any downstream impacts that the pigging operations
might have had. We wanted to fully understand what the implications of
any pigging operation would need to be. We made some very early
estimates of what a worst case solids buildup might have been. We did
some subsequent testing using gamma ray analysis, thermal imaging and
velocity calculations and determined those initial estimates were very
conservative. We determined that the actual solids level was about 10
percent of those initial estimates. It did take us some time to get to that
point. In retrospect, I wish we could have done that quicker. I would say
that. But once we determined that those solids levels were indeed lower,
we have been aggressively pursuing two options to enable pigging
without impacting the strainers or the downstream operations. There has
been a crossover back into our existing facilities that we can pig into that
through Flow Station 3 and we have been working with Alyeska to
institute a crossover into one of the Pump Station 1 tanks. Both of those
crossovers are essentially complete and now we are working with the
Department of Transportation to determine whether the inspections we
have completed on the east side are sufficient enough to allow us to go
ahead and start pigging and start pigging the eastern transit line to
determine the condition it is in.
MR. BURGESS. On the--in the evidence binder that you have, Exhibit
20, there are some handwritten notes that appear to indicate that as a
result of pigging by ARCO in the eastern operating line in 1990, so much
debris was generated that it caused severe damage to Alyeska's strainers
at Pump Station 1. There were also apparently some debris problems
during a September 1991 pig run. Was BP ever made aware of these
problems either before or after it acquired the eastern operating line from
ARCO?
MR. MARSHALL. Mr. Congressman, I haven't seen this particular
copy of this document. What I am aware of personally is that it was only
after the spill that the conversations around solids really started to take
hold. It was in the last few weeks that we actually spoke to the--a
member of my team actually spoke to the engineer with ARCO who
actually was involved in these pigging runs, and what I understand to be
the result of that was that the lines were indeed cleaned, they were
pigged with maintenance pigs and that the smart pig was run but we
didn't get good data or ARCO did not get good data from that smart pig
run. We understand there was scale buildup in the strainers at Pump
Station 1 and that is why we are actually pursuing the bypasses now to
allow pigging to alternative locations so we don't jeopardize those
strainers and meters at Pump Station 1.
MR. BURGESS. That is a 15-year time jump though from when
ARCO did that investigation to when the leak occurred, so I mean, that
was a significant amount of time involved between the pigging that
showed some scale buildup and the demonstration of a problem with the
leak. Is that--am I correct in that?
MR. MARSHALL. It is 15 or 16 years, yes.
MR. BURGESS. Well, let me ask you this. If the company didn't
have concerns about the possibility of buildup in the lines, why didn't it
pig the lines immediately after the corrective action order was issued by
the Department of Transportation in March of 2006?
MR. MARSHALL. It was only when we started--after the March spill,
it was only when we started thinking about the implications of pigging
either the east line or the west line that we started to have conversations
with Alyeska and the concerns were raised about the potential of solids,
and that is when we did some estimates and then we did the further
testing as I said. One of the other things that precluded us from doing a
rapid pigging of the line, we originally indicated that we would intend to
pig the western line within 3 months of the spill and as it turned out, the
Department of Justice required a section of the failed line to be
preserved, and not to be able--and to not pig the line in the west to
disturb the solids and the sediment that may exist on that failed section of
line. So that has proved to be a difficulty and we have not been able to
use the pig launcher on the western section of the line to pig to Pump
Station 1. In order to pig the remainder of the west, we are installing a
34-inch launcher at GC-1, at Gathering Center 1, to enable the 5-mile
section of line to be pigged. We expect that work to be completed in
October and we will be able to pig that line shortly after that.
MR. BURGESS. Let me just ask an opinion or ask your opinion that,
would the company BP have an obligation to know the condition of its
lines at all times?
MR. MARSHALL. I am not sure of my opinion. I need to think about
that. We strive to understand the condition of all of our equipment and
lines.
MR. BURGESS. But as someone on the other side pointed out, it is
your core business. I think Mr. Dingell said your core business is the
recovery and delivery of oil to the Nation's energy supply.
MR. MARSHALL. And we spend--
MR. BURGESS. And the pipelines are a critical part of that.
MR. MARSHALL. Indeed, we spend considerable amounts of money.
We have increased the corrosion spent 80 percent since I have been in
Alaska. We spread that effort over the areas where we judge the
corrosion risk likely to have corrosion to be the highest, so we--clearly in
retrospect, this is something we missed.
MR. BURGESS. Now, Admiral Barrett has publicly expressed
significant concern, disappointment about BP's failure to plan for, invest
in bypass solutions for the Prudhoe Bay transmission lines. Why did BP
not have any contingencies in place for crucial transmissions so that a
complete shutdown could have been avoided?
MR. MARSHALL. Mr. Congressman, there are a number of lines on
the North Slope, a considerable number of flow lines carrying different
products various places. The western side of Prudhoe Bay, which is the
side of Prudhoe Bay that BP has operated since 1977, indeed has a
number of bypass options there. We were able to use one of those, a 24-
inch line, on the back of the GC-2 transit line failure, to bring the
majority of GC-2's production over to Pump Station 1. We were able to
take advantage of that. Unfortunately, there are not the same level of
bypasses and options designed in to the eastern side of the field. I can't
go back and comment on the design basis from the 1970s but we are
working very diligently now to implement the bypasses to the Endicott
and Lisburne flow lines. We expect to have those done and the potential
to have the field fully back up to over 400,000 barrels a day by the end of
October subject to DOT approval.
MR. BURGESS. Mr. Hostler, does Alyeska have redundancies or
contingency plans in place?
MR. HOSTLER. Yes, Congressman, we do. You know, our first
focus is on preventing any type of oil spill or leakage from the pipeline
but we do have contingency repair equipment in place. We have
additional pipe in place so that if we do have a spill, we can replace the
damaged area. In addition to that, as a result of the bullet hole that we
experienced in the early part of this decade, we have bullet hole repair
equipment and items like that that are available to us. In addition, we
have built redundancy in our pumping system that allows us to continue
to operate in the event of a shutdown.
MR. BURGESS. Great. I will take that as a yes.
Mr. Marshall, my time is just about up and there is a series of
questions that relate to the Vinson and Elkins redacted report which I in
fact just received this morning about the whistleblower concerns and I
am concerned about some of the health and safety issues that were raised
in this, and Mr. Chairman, I am going to ask permission to submit these
questions in writing for the record, but I would just ask in the two
seconds I have left, Mr. Marshall, that it appears that there have been--
some of these concerns have been going on for several years, that when
we had an individual just take the Fifth Amendment here on your panel,
were there concerns over the behavior of someone on your team who was
supposed to be overseeing some of these issues and listening to the
concerns of the employees who actually operated and administered the
pipeline?
MR. MARSHALL. Yes, there was. I first became aware of some
employee concerns in this particular area to the best of my knowledge in
early 2003. Those concerns were raised through our safety committee,
and at the same time to one of our external contacts that we have. We
have a number of avenues there.
MR. BURGESS. And again, I am going to submit these questions in
writing and I would appreciate an answer, but can you reassure the
committee with all of the problems that we have seen, not just in Alaska
but in my home State of Texas where 15 people died, that the people
who bring up health and safety concerns, whether they be whistleblowers
or just regular people who are voicing concerns, that those concerns are
being addressed and that there is not retaliation brought against
employees who bring up these problems?
MR. MARSHALL. You have my absolute assurance on that, that that
is totally against BP's policy. We--I don't care where employee
concerns are raised, through one of our internal channels, externally, I
don't care where they are raised, as long as they are raised. If we get
specificity so we can go out and external what the issue is, we will
investigate it, take the appropriate action and move on. That is just
simply good business. As I said earlier, I worked on the slope for five
years. It is the people on the slope that know what is working well, what
isn't, and if any of us ignore those concerns, that is just simply not good
business.
MR. BURGESS. I have been there. There is not much margin for
error in that environment.
Mr. Chairman, you have been very indulgent and I will yield back. I
do want to submit these questions--
MR. WALDEN. Without objection, the questions will be submitted.
We look forward to your answers.
Before I go to Mr. Dingell, I just want to clarify one thing I think I
heard you say. Did you say the Department of Justice has subpoenaed a
piece of the pipe?
MR. MARSHALL. That is correct.
MR. WALDEN. Do you know why they would have done that? That
seems like a rather extraordinary piece of evidence to--
MR. MARSHALL. I believe it is to understand and do the testing on
the corrosion mechanism and confirm what the basis for that leak in the
GC-2 line was.
MR. WALDEN. Why would the Department of Justice do that though
as opposed to the Department of Transportation?
MR. MARSHALL. This is part of the criminal investigation going into
the potential violation of the Clean Water Act.
MR. WALDEN. I see. Thank you. Mr. Dingell.
MR. DINGELL. Mr. Chairman, I thank you.
Mr. Marshall, as the President of BP Exploration Alaska, you are
primarily responsible for the operation of the Prudhoe Bay field. Is that
correct? Yes or no?
MR. MARSHALL. I am responsible for all of BP's activities in
Alaska.
MR. DINGELL. Great. And you have held that position for how
long?
MR. MARSHALL. I arrived in September 2001.
MR. DINGELL. Thank you. With regard to the oil transit line that
failed in the western operating area of Prudhoe Bay in March, isn't it true
that the last time that line was inspected and smart pigged was 1998?
MR. MARSHALL. The last time it was smart pigged indeed was
1998, yes.
MR. DINGELL. Are you familiar with the term "viscous oil"?
MR. MARSHALL. Yes, I am.
MR. DINGELL. If so, would you agree that the characterization of
that production of this type of oil is known to increase the amount of
water in the crude stream and the amount of sediment also known as
sand fines or flower? Is that true?
MR. MARSHALL. Mr. Congressman, I am aware that the production
of viscous oil does indeed produce more sands through the well bore into
the flow lines and into the facilities, yes.
MR. DINGELL. Okay. Isn't it true that a buildup of these flower
sands in a line could cause corrosion either by trapping water beneath
them or by providing an environment in which bacteria could flourish?
MR. MARSHALL. Mr. Congressman, I am not a corrosion expert. I
believe that to be a possibility. In this particular case, it is only when we
do the failure analysis of the pipe will we truly understand what
mechanism actually caused the failure of both the east and west transit
lines.
MR. DINGELL. All right. Now, isn't it true that BP did not schedule
a maintenance pig run through the western transit line in 2000 when it
began to increase the amount of viscous oil in the line?
MR. MARSHALL. Mr. Congressman, the viscous oil production
actually started in 2004 when we started drilling the western flank of
Prudhoe Bay from the Orion field. So that was a 2004 startup, I believe.
MR. DINGELL. Let me do the question again, if you please, sir, and
the question is this, and all it really requires is a yes or no. Isn't it true
that BP did not schedule a maintenance pig run through the western
transit line in 2000 when it began to increase the amount of viscous oil in
that line? Is it true or false?
MR. MARSHALL. I am not sure I can answer your question, Mr.
Congressman.
MR. DINGELL. Well, let me read this. This language says this:
"Electronic data collected during the investigation in graph below
documents an increase in viscous oil production at GC-2 from
approximately 1,500 BPD in January 2000 through a production high of
16,098 BPD in October 30. G-2 produces more viscous oil than any
other facility on the North Slope and today represents approximately 15
percent of total GC-2 production." Is that a true statement?
MR. MARSHALL. I can't comment on the statement. I haven't seen
that. My understanding, Mr. Congressman, is that we did not start
viscous oil production until 2004--2000.
MR. DINGELL. Now, the document is regarding the GC transit line
spill at Prudhoe Bay western areas or rather western operating area
March 2, 2006, incident investigation report. That is a BP document.
MR. MARSHALL. I am not familiar with the specific reference but I
would be happy to look into that and provide back to the subcommittee a
specific answer.
MR. DINGELL. I find myself somewhat hard-placed to ask questions
when you are not prepared to answer. Let me ask another question. Isn't
it true that since 2000 BP's production of viscous oil moving through the
western transit line increased from 1,500 barrels a day to a high of
16,000 as reported in the document from BP which I just read to you?
MR. MARSHALL. Mr. Congressman, I don't have the information
available to me to be able to confirm or corroborate that. I would be
happy to look into it. The increases in viscous oil production occurred
primarily when we started drilling the Orion field in 2004 but I would be
happy to look into the specifics--
MR. DINGELL. Mr. Marshall, I want to be courteous to you but I
have a limited amount of time and I am trying to get answers to questions
that I think we should agree are important. Now, I assume you are
aware, Mr. Marshall, of internal BP data that suggests that the amount of
sediment moving through the western transit lines was increasing and
that the increase was commensurate with the amount of viscous oil that
you are moving through the line. Now, this is from the Chapman Report,
page 14. Just yes or no.
MR. MARSHALL. I am not in a position to say yes or no. I am sorry,
Mr. Congressman.
MR. DINGELL. All right. Now, are you aware of a report issued by
John Baxter, an employee of BP, entitled Alaska Transit Pipeline
Technology Review released in April of 2006, yes or no?
MR. MARSHALL. Yes, I am.
MR. DINGELL. That report indicates that since the introduction of
viscous oil in the western transit lines, one of your gathering centers had
experienced a number of upsets which resulted in increased amounts of
water and sediment being released into the transit line. Are you aware of
this?
MR. MARSHALL. Yes, I am.
MR. DINGELL. Now, the Baxter Report cites an upset of nearly
10,000 barrels of water being unintentionally released from Gathering
Center 2 into the western oil transit line. Isn't it true that you did not
run a maintenance pig after this event in the western transit line to ensure
that the water didn't get trapped in low-lying spots in the line?
MR. MARSHALL. It is correct that we did not run a pig after that
incident, yes.
MR. DINGELL. You did not. Given all this, isn't it true that you had
potentially corrosive agents in your lines as a result of increased
production of viscous oil and that you should have scheduled a
maintenance pig run sooner than the 8-year interval that you had this line
on?
MR. MARSHALL. I am not sure I am in a position to say that there
was definitive evidence of that.
MR. DINGELL. Well, that is--
MR. MARSHALL. Clearly in retrospect, you know, pigging would
have been a positive step we could have taken--
MR. DINGELL. Well, let us--
MR. MARSHALL. --to clean those lines.
MR. DINGELL. --look at this. Alyeska, which runs a pipeline with
which I am sure you are familiar, said this in their testimony today: "We
run a cleaning pig through the entire pipeline system every seven to 14
days. A cleaning pig pushes wax, water and sediment that may
accumulate within the pipeline down the line for removal. Further, as
throughput declines, this will be an even more important tool because it
will remove water that may drop out of the crude oil at slower
velocities." Now, how many times did you run maintenance pigs
through the western line and how many times did you run them through
the eastern line?
MR. MARSHALL. We ran--
MR. DINGELL. Just the maintenance pig.
MR. MARSHALL. We ran maintenance pigs in 1990 and 1998 and we
ran smart pigs in 1990 and 1998.
MR. DINGELL. Why didn't you run them more often? You knew
that the amount of viscous oil that was being put through the line was
increasing on a continuing basis and you knew that that changed the
characteristics of the oil, or at least you should have, and you knew that
that oil because of its changing characteristics had a potential for
increasing the risk of increased corrosion because of acid formation or
other things such as water which might have created problems but you
didn't do anything at all about increasing the number of times that you
ran a pig through the line or checked to see whether the change in the
quality of the oil going through the line was going to impair the
capability of the line to resist corrosion.
MR. MARSHALL. Mr. Congressman, certainly as the viscous oil
increased more significantly in 2004 and 2005, we were aware of, as you
pointed out, a number of the incidents there but the general quality of the
crude oil there is sales-quality crude oil which is--
MR. DINGELL. It is still quality crude oil but it has got more viscous
oil in it, a significant increase as we have already shown in the questions.
MR. MARSHALL. But the viscous oil in and of itself does not--is not
a corrosive agent.
MR. DINGELL. Well, let us look at the numbers again. The Baxter
Report cites an upset of nearly 10,000 barrels of water being
unintentionally released from Gathering Center 2 and the western oil
transit line. Also, as we discussed earlier in my questions, you had a
significant increase in the amount of viscous oil that you are moving
through the line and other things which had a potential risk in terms of
increasing corrosion. BP's production of viscous oil increased from
1,500 barrels a day to 16,000 barrels in 2005. Is that a significant
increase or not?
MR. MARSHALL. Certainly that is the increase as mentioned earlier
that when the Orion field came in, we saw the increase start in 2004 into
2005.
MR. DINGELL. Doesn't that warn you that you ought to do
something about it to check to see what is happening? I trust in God but
I know he expects me to lift my end of the log and find out whether I am
doing what I should be doing or whether it is going to have the proper
effect. Obviously you are a very trusting man and it is very clear to me
you have great trust in God but don't you have some responsibility to do
a little better job of running pigs through to find out what is going on?
MR. MARSHALL. Mr. Congressman, indeed in 2005, we did plan and
schedule a smart pig run.
MR. DINGELL. You told me about three times that you ran pigs
through there and Alyeska does it every seven to 14 days. They are
running the same oil you are. Are they smarter than you or less trusting
than you, or what is the situation there?
MR. MARSHALL. Mr. Congressman, pigs and smart pigs are run for
many different reasons. We run 370--about 370 pigs every year on our
lines.
MR. DINGELL. Now here again is from attorney-client privilege
ATP Technological Review. It says here: "With such a release, it is
most likely that some water and also basic sediment will be held back in
the lower elevation sections of the O-21 line." Now, that is where this
occurred. It occurred in the lower elevation sections. And what did you
do to prevent this holdback or to find out if this holdback was going to
create you any problems?
MR. WALDEN. Mr. Marshall, I am going to go ahead and let you
answer that and then I--
MR. DINGELL. Mr. Chairman, you have been most kind.
MR. WALDEN. We need to move on.
MR. DINGELL. I am not sure I am getting answers anyhow so I am
happy to yield back.
MR. WALDEN. Mr. Marshall, go ahead and respond.
MR. MARSHALL. Mr. Congressman, we did schedule a maintenance
pig and cleaning pig run in 2005. It is my regret that that was too late.
MR. DINGELL. Thank you. Mr. Chairman, thank you for your
courtesy.
MR. WALDEN. Absolutely, Mr. Dingell.
The Chair now recognizes the full committee chairman, Mr. Barton.
CHAIRMAN BARTON. Thank you, Mr. Chairman.
Mr. Stears, you work for Coffman Engineering or Engineers. What
is your company's relationship with the State of Alaska and with British
Petroleum?
MR. STEARS. We are providing corrosion expertise or corrosion
expert opinions for the State of Alaska on BP's program.
CHAIRMAN BARTON. So would you say your client is the State of
Alaska or is your client British Petroleum?
MR. STEARS. Our client is the State of Alaska.
CHAIRMAN BARTON. State of Alaska. So you are a private
contractor helping the State of Alaska do oversight on some of these
issues with the various, I assume all the pipelines or is it just these
particular pipelines?
MR. STEARS. It is the non-common-carrier pipelines.
CHAIRMAN BARTON. Okay. Do you--we have repeatedly been told
that there is no Federal regulation of these particular lines because they
are low-pressure lines and they are also an intrastate commerce. What is
the definition of low pressure versus high pressure in an oil pipeline?
MR. STEARS. I don't have that information.
CHAIRMAN BARTON. Does anybody know the difference? No one?
I can't believe I have asked a question--
MR. HOSTLER. Congressman, I believe the answer is, any time a line
operates below 20 percent of its design pressure, it is considered a low-
pressure line, but I would confirm that with the DOT.
CHAIRMAN BARTON. So there is not a specific pressure, it is
depending on the capacity?
MR. HOSTLER. The capacity of the pipeline that is installed, but I
would confirm that with the DOT this afternoon.
CHAIRMAN BARTON. All right. Now, these lines that are in question
are called gathering lines. Now, in Texas, a gathering line is a much
smaller line. I am told these are 34-inch-diameter lines. Is that correct?
MR. MARSHALL. Thirty-inch and 34-inch, Mr. Congressman. That
is correct.
CHAIRMAN BARTON. So I am told that each of these lines was
transporting about 200,000 barrels of oil a day. What is the capacity of
these lines? What could they transport?
MR. MARSHALL. Mr. Congressman, I don't know the ultimate
capacity. I do know that at the peak, Prudhoe Bay was producing in
excess of a million barrels a day, and--
CHAIRMAN BARTON. So each of these lines at peak would have been
transporting 500,000 barrels a day?
MR. MARSHALL. I can confirm that. I would say probably at least
and maybe even more but I will get back to you with a more specific
number on that.
CHAIRMAN BARTON. All right. Now, I am an engineer but I am not
a petroleum engineer or hydrostatic engineer, and in fluid mechanics, I
made a D, so I am--I did pass but just by the skin of my teeth.
MR. WALDEN. I figured you made an R.
CHAIRMAN BARTON. An R? A pipeline that could carry 500,000
barrels a day, that it is only carrying 200,000 barrels a day, if a layman, if
we did a cross section and looked inside that pipeline, would it be full,
would the total volume be oil or would it be half full and you would have
air above the oil?
MR. MARSHALL. I am a mechanical engineer so but even with that, I
would say that the pipeline remains full and it is a function of the
velocity--
CHAIRMAN BARTON. That is what I would think, so it would have to
be full in order to push the oil through the pipeline.
MR. MARSHALL. That is correct. It is pumped through from each of
the flow stations or gathering centers and the line is full. It is simply the
500,000 barrels a day versus 200 results in low velocities through that
line.
CHAIRMAN BARTON. Now, we have--these pipelines that are under
question today, I assume that they have been in service for over 30 years.
Is that correct?
MR. MARSHALL. Mr. Congressman, the lines have been in service
for--since June 1977.
CHAIRMAN BARTON. Okay. So almost 30 years. And they were
designed to carry much more oil than they are carrying today so they are
operating under much lower pressure than they were designed to operate
under, and the probability based on the inspection reports that we have is
that there is sludge and water and other sediment in there. So was it a
decision of BP that they didn't have to do the smart pigs or the
maintenance pigs because the pressure differential was down and there
wasn't as much pressure on the wall?
MR. MARSHALL. Mr. Congressman, I am not aware of any--
personally aware of any discussions that led to that conclusion.
CHAIRMAN BARTON. Okay. Well, I want to ask the gentleman from
Alyeska, Mr. Hostler, your company, which operates the Trans Alaska
pipeline which is the much bigger pipeline. It is, what, 5 feet in
diameter?
MR. HOSTLER. Four feet, sir.
CHAIRMAN BARTON. Four feet in diameter. So it is not much bigger
than these lines. You inspect your line every two weeks. BP--with the
pig, clean it every two weeks--BP doesn't do it at all except by
exception. Why is your operating procedure so much different than BP's
was? It is the same oil and the--I actually thought the line was much
bigger but apparently it is not that much bigger so why are you doing
something every two weeks that BP basically wasn't doing at all?
MR. HOSTLER. Well, Congressman, I can't speak for BP but the
reason as we spoke earlier today that we clean the line every two weeks
is one, for hydraulics, as mentioned, and two, to take out any
accumulation of solids or water in the system and then we smart pig
every three weeks as has been mentioned as well.
CHAIRMAN BARTON. But what is--this is kind of key to the whole
issue here. Why would BP on their 34-inch-diameter lines of which they
had two not do what you are doing on one 48-inch line? What is the
difference in management approach there? It is the same oil.
MR. MARSHALL. Mr. Congressman, we didn't believe we had a
corrosion problem in those lines. Clearly in retrospect, in two sections of
those lines, the eastern sections of those lines, the two three-mile sections
that have failed, we did. The inner 10 miles of those 16 miles appear to
be in far better shape based on the inspections so far but clearly in
retrospect, the corrosion did occur.
CHAIRMAN BARTON. Well, now, we have in our reference book for
this hearing tabs 9, 10 and 11 which deal with an inspection report that
Coffman Engineering prepared back in 2001 and the State of Alaska
environmental officer, a lady named Susan Harvey, has told our
committee staff that the draft report which was critical of BP's corrosion
control program was extensively changed after she was removed from
the project and she feels like that she was removed because of pressure
by BP to remove her, and the subsequent final report that came out was
much different and less critical of BP's corrosion control program. So
how could it be, Mr. Marshall, that BP wasn't aware of some of these
problems because at least they are implicitly alluded to in this 2001 draft
report which BP objected to?
MR. MARSHALL. Mr. Congressman, I am not aware of Susan
Harvey's involvement. I don't have any information--
CHAIRMAN BARTON. Are you aware of the debate over the report
that the Coffman associates helped prepare in 2001?
MR. MARSHALL. I became aware of that after the March spill and
we launched an investigation into the reports from the 2000 program, I
believe the one in question. We interviewed as many people as we
could, both with Coffman and with BP and with the Department of
Environmental Conservation. While we haven't been able to interview
everybody, we found no evidence of pressure to change those reports.
What I understand to have been the case was this was the first report that
was produced as part of the charter agreement with the State that BP and
indeed the other operator, ConocoPhillips, was preparing and that as we
developed this report, there were some conclusions drawn that appeared
to BP to be perhaps not quite accurate, that the Coffman and the State did
not have all the information that we could have provided.
CHAIRMAN BARTON. But when this report happened back in 2001--
you have been in your current position since 2001. Is that not correct?
MR. MARSHALL. That is correct, yes.
CHAIRMAN BARTON. And you are testifying under oath here, you
did not have any knowledge of this draft report in 2001?
MR. MARSHALL. I did not. I wasn't even aware of a Coffman report
at that time, no. That is correct.
CHAIRMAN BARTON. And you became aware of this situation when?
MR. MARSHALL. After the March spill.
CHAIRMAN BARTON. Okay. This year?
Okay. I have got one final question. We have got all kinds of
anecdotal--evidence is too strong a term but we have been told by a
number of individuals that the reason BP decided to discontinue pigging
was because the last time they attempted it, there was so much sludge in
the line that it fouled the screens at the endpoint of the pipeline and that
because of that, BP just decided the field was depleting and it wasn't
worth messing with and they would rely on other means to do
inspections for corrosion. So my question is to you, Mr. Marshall, isn't
it normal in a pipeline that you are going to have sediment and sludge
buildup? I mean, that should be, I would think--and again, I am not a
pipeline engineer, but I would think that would be a problem that you
know is going to occur and that you would take steps to manage as it
occurred. Am I wrong in that assumption?
MR. MARSHALL. Mr. Congressman, I can't comment definitively
that all pipelines necessarily have solids. Our experience has been that
some do, some don't. It depends on--
CHAIRMAN BARTON. Well, this is one that you know did. I mean,
you knew the last time you tried to put a pig through one of these lines
that there was sediment and sludge and material in it that wasn't oil. I
mean, that is a fact.
MR. MARSHALL. What I understand to be the case--again, if I
separate the east and west for one second. On the west, which is what
BP pigged in 1998, we received virtually no solids, less than two cubic
yards out of 10 miles of pipe which is a very relatively low amount of
solids. I understand when ARCO tried to pig the eastern lines in the
early 1990s, there was considerable scale. I am not aware if there were
other solids other than calcium scale that had build up on the inside of
the pipeline which did indeed cause some fouling of the screens and
strainers at Pump Station 1.
CHAIRMAN BARTON. But that would tell me, the last statement, that
you needed to do more maintenance pigging, you needed to have some
program to get that out of the pipeline and again, not being a pipeline
engineer, I can't state this definitively but it would seem to me that that
would be an engineeringly manageable problem, that you would take
steps to prevent that and clean it out and keep it clean, and apparently the
BP action was to do nothing, to just say okay, we can't run a pig through
here, there is too much garbage in the line and so we are not going to
mess with it, and to me, that seems to be 180 degrees from what you
should do. Apparently you are doing today what you should have done a
long time ago. You are building a bypass line. You are doing some
cutout valves. You are doing all this stuff to rectify the problem today.
The only thing that is different between today and the early 1990s is that
you have got the United States Congress watching you and you have got
the State of Alaska watching you and it has become an environmental
disaster.
MR. MARSHALL. Mr. Congressman, to my knowledge, I found no
evidence so far of any deliberate decisions to not pig those lines because
of solids. We are still looking at that but I have found no evidence so far
to say that is indeed the case.
CHAIRMAN BARTON. Well, you have got a different operator
operating the main line that goes from the gathering station down to
Valdez that does maintenance inspection pigging every two weeks. It is
the same oil coming from the same oil field coming from your two
transit pipelines. They are doing something every two weeks routinely
that your company has only attempted intermittently on either line over
the last 15 years. I mean, it just--there has to be a conscious decision
somewhere in your chain of command to ignore the reports that are
coming out. I mean, the corrosion manager for BP took the Fifth
Amendment, which he has got the right to do, but I cannot believe that he
is the only one in the company that knew about this problem. It just
doesn't make sense.
So my time has expired, Mr. Chairman, I would yield back. I hope
we continue to--
MR. WALDEN. Before you do that, Mr. Chairman, I would like to
ask unanimous consent to enter into the record the committee's hearing
book dated Thursday, September 7, 2006, BP's Pipeline Spills at
Prudhoe Bay: What Went Wrong? It is the document binder from the
Subcommittee on Oversight and Investigations. And so without
objection, I will enter that into the record. Mr. Chairman.
[The information follows:]
CHAIRMAN BARTON. Mr. Chairman, I want to make clear that when
I mentioned Susan Harvey's name, we approached her, the committee
staff approached her. She did not voluntarily come forward. It is at our
request, the committee staff, that we interviewed her.
MR. WALDEN. Thank you. The Chair now recognizes the
gentleman from Washington, Mr. Inslee, for 10 minutes.
MR. INSLEE. Thank you. Mr. Malone and Mr. Marshall. I want to
do something that I think will be unique at this hearing and saying one
good thing about British Petroleum, and that is that you have met Kyoto
targets in your internal operations for reducing carbon dioxide. You
have demonstrated the ability to keep our economy going while reducing
carbon dioxide emissions. That is a good thing you have done. I want to
note that in this hearing. But I also want to note profound
disappointment in this abysmal corporate record on this particular
maintenance issue, and the reason is, is that it appears from even a
cursory review of this that this was not some sort of oversight. You
know, people run red lights; we are all human. But this was a very
willful, deliberate, clear, premeditated, if you will, decision not to do this
known maintenance procedure of using smart pigs, and what leads me to
that conclusion, looking at this report, a preliminary draft of the report by
Coffman Engineers, this says out of Anchorage, it is entitled Corrosion
Monitoring of Non-Common-Carrier North Slope Pipelines. It was
received by the Department of Alaska on November 2, 2001. This was
their preliminary draft, and their preliminary draft made repeated
references to the efficacy of smart pigging these lines. I look at the
preliminary draft before British Petroleum got their hands on it. It had
lines such as, "Smart pigging is the only inspection technique capable of
looking at the whole internal and external corrosion picture." That
disappeared after British Petroleum talked to these engineers. No such
reference in the final report. We have a line saying "Some questions
which arise after reading the report are, does BP pig every non-common-
carrier pipeline of suitable diameter." That line disappears from the final
report. We have a line saying, "Are there plans to install/configure EOA
pipelines for smart pigs?" Gone in the final report. "Are baseline smart
pig runs performed on newly commissioned lines?" Gone on the final
report. "How are lines selected for smart pigging and what is the recur"-
- that is what it says--"frequency of inspection." It means recurrence.
Gone in the final report. There are loads of language like this in this
report that is gone after British Petroleum started to work on this report,
and to use a bit of a British understatement, it turned an inspection report
into a bit of a whitewash, and so we are here today. Now, I understand, I
think, your logic that you decided just to rely on ultrasound inspections
in lieu of doing smart pigging. It is a very sensitive, exquisitely effective
tool but it only affects a very small part of the pipeline. When you put a
sensor on the pipeline, it only gives you data for a very small section.
How wide is that? When you put one of these monitors, how wide is that
section?
MR. MARSHALL. It is one-foot sections.
MR. INSLEE. One-foot sections. So when you put this monitor, you
are only getting data for one foot of the pipeline at a time and you go to
various places and you get one-foot slices. What percentage of the
pipeline did you get real data for when you do that? Just give me a
ballpark. Fifty percent, 10 percent, half a percent?
MR. MARSHALL. I can't give you an honest--an exact number. I
think it varies on the different lines.
MR. INSLEE. It is probably less than 5 percent, isn't it?
MR. MARSHALL. I can get you an answer. I will come back with a--
MR. INSLEE. Well, the point is to me, isn't that a fair metaphor for
like a CT scan? You go to the doctor, that takes little slices of your
body, and it is like giving it a CAT scan but you have just got little slices,
not the whole enchilada. That is why this report specifically brought up
the issue and said, "Smart pigging is the only inspection technique
capable of looking at the whole internal and external corrosion picture."
Now, that was in their preliminary report. Then they talked to BP and
then in the final report that language disappeared. Is that accurate?
MR. MARSHALL. We have investigated, as I said. When that issue
came to light, we investigated the two drafts, the draft and the final
report, and we interviewed every--a number of people involved in that
preparation of that report and were involved on both sides of the
discussion. We haven't interviewed everybody but so far we have
identified no pressure. I think that is a fair question there for Coffman to
address in terms of why certain things were kept in and certain things
were kept out. I don't believe BP wrote that final report. It was still a
Coffman report. But so far we found no evidence of pressure on
Coffman Engineering to change that report.
MR. INSLEE. Well, I am not sure I have to refer to violations of the
Geneva Treaty as far as pressure. There was communication between BP
and Coffman before this final report, right?
MR. MARSHALL. Absolutely. There were--
MR. INSLEE. Coffman does a lot of work in the oil and gas industry,
don't they?
MR. MARSHALL. Absolutely. There were discussions between
Coffman, the State Department of Environmental Conservation, BP and
indeed ConocoPhillips who are working this first draft of report and I
would say with any audit, it is normal and customary to sit down, discuss
drafts, you know, provide additional information, you know, perhaps
draw different conclusions from the data that is subsequently presented.
I believe that was a large part of what was discussed between the draft
and the final report.
MR. INSLEE. But it is not normal when an engineering outside
consultant suggests that you consider doing the smart pigging and
specifically says it is the only thing that gives you data for the pipeline--
by the way, you agree with that, don't you?
MR. MARSHALL. Smart pigging gives an indication across the entire
pipeline length and girth of where corrosion may be occurring which
then has to be subsequently checked to precisely define what that level of
corrosion is.
MR. INSLEE. I want to make sure I understand you. Smart pigging is
the only thing that gives you data for the entire internal section of the
pipeline that does not require you drawing assumptions that tiny little
pieces of the pipeline are the same as the pieces you checked?
MR. MARSHALL. I am not a pipeline expert, Mr. Congressman. I
believe that the path we are on with the east line and the west line right
now of ultrasonically testing the entire length of the line will give the
same kind of indications.
MR. INSLEE. But you didn't do that, did you?
MR. MARSHALL. No, we did the spot checks.
MR. INSLEE. You did spot checks, and I can tell you when Congress
became somewhat experts on this, we required smart pigging essentially
for the internal sections of these main lines, and obviously the TAPS
system uses as well, you know, both cleaning and inspection purposes.
So I just have to tell you that, haven't you concluded that your
communications to this outside expert had some bearing in keeping the
public from knowing that smart pigging was, A, an option to you, B, that
it had been considered, and C, that you decided, you made a conscious
decision not to do it?
MR. MARSHALL. I have no evidence to support those allegations,
quite frankly.
MR. INSLEE. Do you have any other suggestion why this outside
expert on their own desire or concern would all of a sudden whitewash
this report?
MR. MARSHALL. I think it is a question maybe addressed to
Coffman Engineering. I don't have any information which would
eliminate that.
MR. INSLEE. Are you telling me that your investigation did not give
you any reason to believe that British Petroleum asked Crowley to take
this information out of the report--Coffman. Excuse me.
MR. MARSHALL. I don't have any information to support that. What
I do understand is that more data was provided from the initial basis.
This was the first report that was done after the charter agreement.
MR. INSLEE. I have to tell you too, one of the disappointments of my
constituents is the public relations effort by the organization to I think
indicate that the organization is going in an environmentally friendly
manner, and we made reference to this. I saw this advertisement in
Autobahn magazine just this week. It says our plans for biofuels are
growing, and I think any step forward I suppose is great, but I just want
to ask while I have you here, there are 170,000 pumps, gas station pumps
in America. There are about 858 that have E85 available, ethanol for
consumers. What can you tell us as to when British Petroleum will have
25 percent of its stations having E85 pumps available?
MR. MALONE. Congressman, if I might, I don't have that exact
figure but I will get it for you. We are moving to have E85 pumps in
certain of our markets right now but I don't have the number and
locations with me today. If I could though, Congressman, just on your
point about our values around the environment, I would say we just
acquired two wind companies. We are investing some $500 million into
biofuels research which we think is very important, and we also have a
very aggressive program in working with alternative fuels, and I would--
whether the advertising is the issue but just so you know, the core values
are real.
MR. INSLEE. Let me--we would applaud any step forward so we
appreciate those steps forward including, as I indicated, your CO2
reduction. But I have to tell you, a $50 million-a-year investment in
biofuels is less than chicken feed for a company that has $26 billion of
profit this year. It is less than .2 percent of your net profits, not just your
gross. Our Nation needs a new energy future for this country. We
believe your corporation is capable, should it decide, of having a
meaningful role in that, and we hope both Congress will act--it will take
a new Congress but eventually we are going to act, and we hope you will
be part of that, and I hope that as part of this hearing, perhaps you can go
back to corporate headquarters and say maybe we need to redouble that
effort as our penance for this massive abysmal failure. That would be a
good result of this. I hope you will take that message back to your
leader, who has done good work in this effort. Thank you.
MR. WALDEN. The chair now recognizes the gentlewoman from
Wisconsin, Ms. Baldwin.
MS. BALDWIN. Thank you, Mr. Chairman. I would like to focus
some questions for Mr. Marshall on the corrosion management group
and I think it is also known as the CIC, the Corrosion Inspection and
Chemicals Group. Are you aware of an internal audit issued in April of
last year called BPXA Corrosion Management System Technical
Review?
MR. MARSHALL. Could you explain the--I am sorry. Which one
again?
MS. BALDWIN. Are you aware of an internal audit issued in April of
last year called the BPXA Corrosion Management System Technical
Review?
MR. MARSHALL. Yes, I am. I am sorry.
MS. BALDWIN. And in that report, under the section called budget
processing, is the following finding, and I am just going to quote from
that: "Currently, the budget is set up-front in line with flat lifting cost
strategy, with corrosion management activities then developed around
this budget allocation. This strategy to maintain flat lifting costs is
driving behaviors counterproductive to ensuring integrity and the
delivery of an effective management system. A more effective and
efficient process would be to derive the set of activities required to
deliver a robust corrosion management system over the longer term and
thereafter set the budget based on these activities." Mr. Marshall, this
report seems to suggest that there was pressure at BP to reduce
expenditures on its corrosion program. Would you agree with that?
MR. MARSHALL. I would say--I would make several comments,
Congresswoman. The fact of bringing in our chief engineer to review
this program I think it is an indication that while many had considered
our corrosion program to be comprehensive, we were prepared to subject
that to some scrutiny, to shine a spotlight on the program and find out
where we could make improvements, and indeed, the perception of flat
units costs was still there when the team issued that report in 2005. The
same team came back in 2006 and said action had been taken. They had
seen a considerable change in 12 months in their follow-up report. One
of my regrets in terms of, I have thought long and hard in the last 5 to 6
months about what I could have done differently. That has occupied a
big part of my time. And one of the things I regret is that I didn't do
more to change the perception inside our team about spending money
because the reality of what we have done or what has happened since I
have been there is our lifting costs, which are a measure of spending
divided by how much production, has gone from $1.89 a barrel to $5.22
a barrel. Our corrosion spend has increased by 80 percent. Our major
repair spend has gone up threefold. But I recognize that still it takes a
huge effort to change the perceptions of cost cutting that were a feature
of the late 1990s when we experienced $9 and $10 oil and the industry
took some significant belt-tightening under its way. I believe that that
caused some poor practices, and certainly when I arrived in Alaska in
2001, the organization wasn't in good shape. We had a poor relationship
with our workforce, we had some issues around maintenance, and one of
my goals has been to change both of those. I am proud to say that the
conditions today are far better than they were. They are clearly a long
way short of being good enough, and I do regret that. But this is a long
journey and we are going to re-establish that track record with our staff
and with the public.
MS. BALDWIN. Mr. Marshall, I want to continue to explore this
topic. I think you already acknowledged awareness of the investigative
report from the law firm of Vinson and Elkins, October 20, 2004. They
were charged with looking into allegations of workplace harassment and
corrosion data falsification in the CIC, the Corrosion Inspection and
Chemicals Group. So you are aware of this report, correct?
MR. MARSHALL. I am, yes.
MS. BALDWIN. Okay. What prompted Vinson and Elkins to
conduct that review? Can you give us some brief history of that and
what were the allegations?
MR. MARSHALL. Congresswoman, yes. I became aware of this
issue in early 2003, an issue of alleged harassment in the corrosion
group. That issue was raised through two channels: one, through our
employee-run safety committee, and concurrently through one of our
external contacts who represents one of the channels for workers to use.
That was a channel that I was instrumental in setting up and that resulted
in investigation by two outside counsel, Billy Guard and Paul Floudy,
who went up and reviewed the situation in the corrosion group. They
confirmed and established that there was an atmosphere of intimidation
that was potentially suppressing safety concerns. The recommendation
of that review was that the CIC manager, Mr. Woollam, should undergo
coaching and counseling and change his working practice. That was
their recommendation. We followed up with that. Mr. Woollam did
indeed take on that training, and by some measures and follow-up was
willing to kind of take that on. The following year in 2004, Billy Guard
and Paul Floudy returned to the slope on a different issue and did some
checking and were still concerned that there was a chilled atmosphere in
the CIC team. On that basis, we said we needed to perform a more
comprehensive review and that was the Vinson and Elkins review, so
that was a very extensive review of everything from falsification of data,
the workplace harassment, and my recollection of the Vinson and Elkins
report is that while there was no apparent continuation of harassment
from Mr. Woollam, the chilled atmosphere still remained. There was a
legacy of chilled atmosphere and the recommendation from that team
was that Mr. Woollam should be taken out of a supervisory role. I took
that action one step further and believed in Mr. Woollam's best interests
and in BP's best interests that Mr. Woollam should be removed to a non-
supervisory role outside of Alaska, and that was what was done.
MS. BALDWIN. So bad were the allegations coming from this group
that the EPAs' Region 10 Office of Suspensions and Debarment and the
U.S. District Court's Anchorage Office of Probation and Pretrial
Services asked BP to look into these harassment claims. Isn't that true?
MR. MARSHALL. I believe that is correct, yes.
MS. BALDWIN. And then back on the budgetary implications of this,
Mr. Marshall, one of the issues mentioned in this report that seemed to
cause so much strife among BP's corrosion inspectors was when the
manager of the program decided to reduce the amount of staff and
corrosion inspection points by 25 percent, and let me again quote from
page 17 of the report. I quote: "It is not clear exactly what motivated the
CIC manager to insist that the coupon crew be reduced from eight
workers to six. During our interview of him, he told us there was no
budget pressure as the CIC budget was increasing at the time. It appears
to have been driven by a metric he developed that total coupon pulls had
been reduced by 25 percent which he believed had to translate to a 25
percent reduction in crew size." Mr. Marshall, given that BP's facilities
were aging and the amount of water in the field as we have heard in
previous questions was increasing and the quality of oil coming from the
reservoir was increasingly capable of causing corrosion, why would BP
opt to cuts its coupon pulls by 25 percent, and who made this decision
and why was it made?
MR. MARSHALL. The issue of the coupon crew reduction was one of
the foundations of the initial review by Billy Guard and Paul Floudy. It
was one that was raised in 2003. That was looked at. We took action on
that and increased the crew size back to the full complement and
performed the corrosion coupon pulling back to its pre-existing level, so
we took action on that basis.
MS. BALDWIN. Mr. Chairman, I see that I have run out of time. I
would also like to submit some further questions relating to this--
MR. WALDEN. Without objection.
MS. BALDWIN. --CIC group in follow-up. Thank you.
MR. WALDEN. The Chair now recognizes Mr. Markey for questions.
MR. MARKEY. Thank you, Mr. Chairman. Mr. Marshall, the Vinson
and Elkins report depicts that a major chilling atmosphere existed in the
CIC group. On page 2 of the report is the following conclusion from the
Vinson and Elkins investigative team. Let me quote: "Our overall
conclusion is that there is an atmosphere in the CIC group that chills
reporting HSE concerns, especially among several employees of the
coupon crew." Mr. Marshall, do you believe that this chilling
atmosphere had any impact on the quality of this program?
MR. MARSHALL. Mr. Congressman, I can't definitively say that it
did but I would say this, that we don't tolerate--I don't tolerate chilled
atmospheres, harassment. We did take steps to make sure that we are
doing everything we can, not only with our BP supervisors but also with
our contractor supervisors.
MR. MARKEY. But did this chilling effect have any impact on the
safety or quality of the program at that time?
MR. MARSHALL. I have no information to know that there was a
direct correlation. Clearly the potential exists but I don't have any
evidence that something was suppressed that could have resulted in an
improvement.
MR. MARKEY. Well, when whistleblowers don't come forward
because they are frightened obviously, they can be, and in this instance I
think probably it was serious safety issues that were compromised, it
appears that the manager of the CIC group, according to this report, had
an extremely abrasive management style. Is that correct?
MR. MARSHALL. That is one of the conclusions, yes.
MR. MARKEY. So bad were the allegations coming from this group
that EPA's Region 10 Office of Suspensions and Debarment and the U.S.
District Court's Anchorage Office of Probation and Pretrial Services
asked BP to look into these harassment claims. Isn't that correct?
MR. MARSHALL. That is correct, yes.
MR. MARKEY. Mr. Marshall, one allegation on page 10 of the
Vinson and Elkins report's appendix notes the following allegation:
"The Corrosion Inspection and Chemicals manager is brutal and screams
and shouts at contractors." Here is what the Vinson and Elkins report
found: "Status: We have been informed that the Corrosion Inspection
and Chemicals manager had very poor communications skills but has
recently been improving. This is a very common perception." Mr.
Marshall, given the chilled atmosphere experienced by the employees
and apparent abrasive personality of its manager, would you think that
this was a favorable atmosphere to recommend that BP explore other
types of corrosion detection technology such as more frequent runs of
smart pigs which can be costly?
MR. MARSHALL. I am aware certainly of the conclusions of the
report. I agree with the conclusions of the report in terms of the abrasive
nature, the intimidation, and we have taken steps to change that. What I
am not clear about is the linkage of that to the pigging runs. I have no
evidence--
MR. MARKEY. Does that report not lead to the conclusion that an
individual would risk losing their job if they made such
recommendations and that they were not consistent with what the CIC
manager wanted? Let me ask you this. What happened to the CIC
manager after Vinson and Elkins did this internal report? What did you
do?
MR. MARSHALL. The recommendation from both the Billy Guard
review and the Vinson and Elkins review was to take action and we
followed that action. Indeed, the Vinson and Elkins action was to
remove Mr. Woollam from a supervisory role, which we did, and I took
that one step further and said it was in Mr. Woollam's best interests and
indeed BP's best interests to move him out of Alaska, which is what
happened.
MR. WALDEN. Mr. Markey, just a point of interest. You might want
to turn to page 6 of the Vinson Elkins report of the appendix, number 26.
It would be number 26 of page 6 of the appendix. It is more along the
lines of what you are raising.
MR. MARKEY. Thank you, Mr. Chairman. I appreciate it. Could I
ask you, Mr. Malone, do you believe that the chilled atmosphere in the
CIC group had any impact on the quality or capability of the corrosion
program?
MR. MALONE. Congressman Markey, I don't have--I read the report.
I don't have any direct evidence yet to be able to give you an answer on
that.
MR. MARKEY. Mr. Marshall, on page 7 of the appendix of the
Vinson and Elkins investigation is the following allegation:
"Independent corrosion experts who are all formerly contractors working
on Prudhoe Bay have resigned their positions over the last few years
allegedly due to their growing worries over the potential for a serious
incident on the field." Vinson and Elkins, according to their report,
looked briefly into this allegation though how much is unclear, and this
is what they concluded: "Status: We have been told by one person that
an operator resigned because of concerns over pipe integrity. Others
suggested that this is not why he resigned. We have tried to contact that
individual to interview him and have thus far been unsuccessful. We are
aware of no other persons who could possibly fit this description." Mr.
Marshall, has BP attempted any further efforts to locate this individual?
MR. MARSHALL. I am not aware that we have. That doesn't mean
to say that we have not done that. I am just not aware of it.
MR. MARKEY. Well, I would say that that was a big mistake. Mr.
Marshall, has BP attempted to look further into the general allegations
that independent corrosion experts felt that something was amiss in BP's
corrosion management program and that this might explain the failures to
truly understand the condition of your lines?
MR. MARSHALL. We take very seriously any allegations, safety
concerns that are raised about our programs. It doesn't matter where
they come from, whether they come through our internal channels or
external channels. The only thing we need to do is be able to understand
where there are specifics rather than general concerns. We have
investigated hundreds, literally hundreds of allegations and issues since I
have been back in Alaska in 2001. Where we have specifics, where there
is specific equipment or specific lines, we can go investigate that and
take the appropriate action. The only thing I find very difficult and the
team finds difficult is where we have, you know, general allegations
which are very difficult to address.
MR. MARKEY. Mr. Marshall, earlier this year you stated that BP was
unaware of the problems that ARCO had when they had last tried to pig
the eastern lines back in 1992, and that you weren't aware of the
problems that Alyeska had experienced downstream as a result of
ARCO's pigging of the line. Did BP do any due diligence review of the
condition of ARCO's pipelines in Alaska prior to your acquisition of the
company?
MR. MARSHALL. I am aware there was considerable amount of due
diligence done across-
MR. MARKEY. Who did that due diligence?
MR. MARSHALL. I don't have that information.
MR. MARKEY. Did that due diligence review indicate any potential
corrosion problems or solids buildup problems within ARCO's lines?
MR. MARSHALL. I am not aware of any but I am just not in
possession of that information. I would be happy to go back and
reconfirm that with the transfer documents.
MR. MARKEY. Now, after the ARCO merger, were any of the
former ARCO employees responsible for corrosion management and
control kept on by BP?
MR. MARSHALL. I don't know the answer to that question.
MR. MARKEY. Wouldn't, Mr. Marshall, those individuals have
knowledge of the solids buildup problem and the difficulties that the last
pig run through the eastern line had created downstream?
MR. MARSHALL. I suspect so. I don't know that for sure but I
would imagine that is the case.
MR. MARKEY. So wouldn't there be someone at BP who knew
about the problems that had existed before the sale was consummated?
MR. MARSHALL. I don't--I am not able to confirm that.
MR. MARKEY. You haven't found that out yet?
MR. MARSHALL. No.
MR. MARKEY. After six months?
MR. MARSHALL. We have contacted the ARCO engineer that was in
charge of that pigging operation in the last few weeks and--
MR. MARKEY. You understand, Mr. Marshall, that Congressional
expert is an oxymoron? We are only experts compared to other
Congressmen. You have had six months to ask all of these questions
which I am asking right now which directly go to the question of how
much BP knew and when they knew it and you are telling me that these
questions have yet to be asked in terms of what that transition period
produced in terms of information for your company in terms of the
corrosion inside of those pipelines, and frankly, I just don't believe it. I
don't believe that in a company of your stature and expertise that no one
was asking these questions at that time, and it is six months later and a
Congressional committee should not be the one prompting you to go and
to get the answers to those questions, and if I may, Mr. Chairman, I have
one final question with your indulgence. If BP had no knowledge that
pigging the eastern line would cause problems downstream for Alyeska
prior to the March 2006 spill, why is it that BP chose not to pig the
eastern line? Earlier you said you run about 370 pigs through your lines
in Alaska but apparently these eastern and western lines weren't pigged.
Why is that?
MR. MARSHALL. Mr. Congressman, the 350 to 400 pigs that we run
every year are focused on those lines where we believe the probability of
corrosion is to be the highest, water lines, gas lines, three-phase flow
lines, typically the lines upstream of these transit lines. Clearly in
retrospect, we should have pigged these lines, and going forward, we
absolutely commit to a full program of very frequent maintenance
pigging and smart pigging.
MR. MARKEY. Thank you, Mr. Chairman.
MR. WALDEN. Thank you. The Chair recognizes Mr. Green.
MR. GREEN. Thank you, Mr. Chairman, and I appreciate the
patience of the Chair in allowing those of us on the full committee but
not on the subcommittee. You know, I represent a district in Houston
that has both refineries and pipelines and we live and work around them
our whole lives, and I guess what bothers me is the testimony today and
following the questions is that our country needs the energy, and when a
company like BP that both at the refinery in Texas City and the pipeline
not only the last six months of publicity but today at this hearing, and it
just makes it so much harder for us to be able to deal with energy
matters, even though some of our districts are so dependent on it. And
whether somebody on the east or west coast wants to drill off their coasts
or they want a pipeline, you know, they still want their lights turned on
and they still want something in that gas station whether it is E85 or
refined product, and when a company like BP does this, it sets a bad
tone. You are not a third-rate company, you know, you are not a tier
down. You are one of the largest in the world, and that is what is
frustrating to us who know that our country has to have energy, and in
Texas we have tried to provide it for 100 years, and that is the frustration
I hear today, and it is frustration from the Chairman of the committee but
also from those of us who have a lot of facilities. We do everything in
our district from downstream to upstream. We drill and we also have
chemical facilities. So that is what bothers me.
Mr. Malone, the allegations in the Texas City, and I want to talk
about and in Alaska, have been made and hopefully the committee and
the Federal investigators get to the bottom of it, but it just seems like
there has been lower investment on maintenance and safety,which means
less employment for my district because I have people that either work
for the companies or they work for the contracting companies. Can you
tell me about BP's plans for investment in maintenance and safety in the
facilities both in Texas City and Alaska? As what you have learned in
your short term there, do you see a change in the culture in BP because,
you know, I see it both in the refinery side but we see it in the pipeline
side.
MR. MALONE. Congressman, if I could, I just want to start with your
disappointment. We are equally as disappointed, and we are in action,
and in Texas City, we have done a number of items including an
additional billion dollar investment into that side where we are going to
look at the process safety systems, we are making the capital expenditure
and the changes in management, all the actions that are necessary to
assure ourselves of the safety of Texas.
MR. GREEN. Okay. Let me follow up on that. I know you have
created a special committee that Secretary Baker chairs. Does that
committee include people from the bargaining unit in Texas City?
MR. MALONE. It includes a union representative from the United
Steelworkers.
MR. GREEN. Okay. Thank you. That is something--one of the
questions that I really was concerned about because if we are going to
solve the problem, it needs to be not only for folks in the front office but
folks who actually do everything along the way, and I hope that that
committee's recommendations will be taken seriously, because again,
you set the standard whether it is Texas City, and again, I have lots of
refineries along the Houston ship channel. I want to make sure, you
know, that the problems are fixed because I don't want to see that happen
in one of mine. I didn't want to see it happen in Texas because I actually
lost a constituent, a contract worker from Bay Town, who is part of our
district.
Mr. Marshall, I know that there has been some discussions on why
there weren't smart pigs technologically but, you know, I remember
being in Alaska in the 1980s as a State legislator, and when ARCO ran it
and they talked about how the safety of these smart pigs but you are
telling me that the engineering of that east and west lines when they were
built were not made to handle the smart pigs to be able to tell?
MR. MARSHALL. Sorry, Mr. Congressman. Let me reestablish, that
is not the impression I wish to leave with my remarks. What I was
referring to earlier was I think in response to a question about whether
there were alternatives in the event of issues whether we could divert the
flow from one pipeline to another, and certainly what I was referring to
on the west was that we had alternative bypasses that we could use.
Indeed, we had actually used one of those bypasses to route oil from
Gathering Center 2 to Gathering Center 1 once the OT-21 line failed.
The pigging and smart pigging facilities on the east and the west were
installed from day one so they do have them.
MR. GREEN. Okay. And I know you used alternatives and I guess
the next question, British Petroleum is such a huge company, do you
have actually part of your company that will do the smart pigging or is
that something you contract?
MR. MARSHALL. We have expertise inside the company but the
specifics associated with the smart pigging, we rely on a variety of
contractors, well known, world known contractors to actually--
MR. GREEN. So if somebody in BP decides that I think there is
enough question about this line and it seems like just what the
subcommittee has brought together in 2001 the discussion went back and
forth between BP on the final draft of the Coffman Engineers report, it
just seems like somebody would have said maybe we ought to smart pig
that line and not wait 8 to 10 years. Can someone in BP actually say yes,
we need to do it, and you know, that is what bothers me that if is a cost
issue, and I know oil was $10 a barrel not that long ago, I am sure it is
$60 now or $70, but--and I know cost considerations but when we have
different agencies saying there is a problem with the pipeline, then it
would seem like the next step would be someone from the company
would say okay, we have a problem, instead of negotiating the report
language, ought to say maybe we ought to actually smart pig that and see
what we have in that line, at least more often than every 8 years. Has
that been a discussion, particularly since after the line?
MR. MARSHALL. Certainly, Mr. Congressman, since the leaks that
has been a very strong discussion and certainly in retrospect, I think
everybody in BP including everybody in BP Alaska says that if we could
do it again, we would have pigged and smart pigged those lines.
MR. GREEN. And to set the tone for the industry though because the
technology again has been around for a long time. You know, I know
there are cheaper methods you can use but why would a company not on
a regular basis, not every 10 years or when your technology--why would
they not want to just say I am going to invest in that smart pig to make
that determination?
MR. MARSHALL. Let me stress, Congressman, this is not an issue of
cost. Safety and integrity spending in BP are the highest things. They
don't get cut. They are the things that get through the budget so that is
not something that--cost is not a consideration.
MR. GREEN. Well, why again would we see a report again
negotiating the language in 2001 on a report with Alaska, the State of
Alaska, but why wouldn't there have been a decision to actually smart
pig those lines in 2003 or 2004 before it broke in 2006?
MR. MARSHALL. Mr. Congressman, I--
MR. GREEN. I appreciate the Mister, but you don't have to call us
that. They do a lot of things to us in D.C. You know, they don't have to
call us Mister.
MR. MARSHALL. Thank you.
MR. GREEN. They can't change our name.
MR. MARSHALL. The thing I am not clear about and I will look into
is whether the references in the draft report, the draft of the Coffman
report were referring to smart pigging the transit lines or to the flow
lines, the other 1,500 miles or so of lines that we have on the North
Slope. We do have a very active program of maintenance pigging, as I
said earlier, 350 to 400 every year. We have inline inspections, i.e.,
smart pigging, on a number of our lines, whether they are regulated, and
indeed many lines which aren't regulated. This is not an issue of cost.
This was simply an issue of where we judged the likelihood of corrosion
to be the highest, and we didn't get this one right.
MR. GREEN. Well, I know I only have a minute left, and Mr.
Chairman, I would hope that whatever comes out of the investigating
committee, that we may need to see legislation. But I would hope that
whether it is British Petroleum or any other pipeline company would
actually use the technology that has been available on a more regular
basis because when it does break, it is just not near worth you sitting here
today and all the problems that you are going through and also for the
nature of our country because we have to have the energy, and the
message that is being sent today is that if we need to do a pipeline
somewhere else, and I have been involved in lots of pipelines whether it
is crude or refined products different places, it is difficult. So if we can't
be assured that the people running those pipelines are going to maintain
them and monitor them with the technology that is available now, then it
is going to be very difficult to do it, and we fight these battles in this
committee all the time and on the floor and I know in the Senate so, you
know, you being here today may set us back on trying to make sure that
we can deal with it. And I know Mr. Inslee has got the legislation on
alternatives, which is great, but for the next 20 to 30 years, hydrocarbons
is what is going to keep our country running, and sure, we may be able to
use ethanol, we may be able to use other things, and I support that, but I
know we have to have hydrocarbons and we need more. We need
obviously the North Slope, we need Anwar, we need the discovery that
Chevron did, and if we can't be assured that it is going to be done safely,
it is going to be very difficult in the halls of Congress, much less in the
courtrooms around the country, for companies that don't do the right
thing.
MR. MARSHALL. Mr. Chairman, if I could make a comment there, it
wasn't a question, but I am very conscious of the impact we have had to
many constituencies, to the State of Alaska, to the Nation, the disruption
in oil supply. It is something that I have taken very strong personal
disappointment in as has the entire Alaska team. I am also conscious of
how we have let down the industry. A track record takes a long time to
build, and it is very easy to lose, but I am proud to say I work for a
company that will learn and will do the right thing. We are committed to
investing whatever it is we need to to reestablish confidence. It may take
time. We are going to work with the Department of Transportation to
not only meet their standards but exceed their standards, not just bring in
technology but the best technology. If we can help the industry do that
better, we are committed to doing that.
MR. GREEN. Mr. Chairman, it is sad that when we have an accident
like at Texas City Refinery, where the contract trailer was too close to a
unit, or something in Alaska, we see the loss of both lives in Texas City
but also the problems in Alaska, but I would hope that we would see
legislation from it and again, a reinvigoration of not only British
Petroleum but other companies to make sure that we provide that energy
that our country needs.
MR. WALDEN. Thank you for your participation in the hearing
today, Mr. Green. I now recognize the gentleman from Florida, Mr.
Stearns, for 10 minutes.
MR. STEARNS. Thank you, Mr. Chairman. Mr. Marshall, let me just
ask you, what is the status of Mr. Woollam? Has he been fired or what is
his position now?
MR. MARSHALL. Mr. Woollam doesn't actually work--
MR. STEARNS. Does he still work for BP?
MR. MARSHALL. He still works for BP. He doesn't work actually in
Alaska so I don't--I would call on Mr. Malone to make a comment on
that.
MR. STEARNS. Mr. Malone, where does Mr. Woollam work now,
and he is still an employee of BP, right?
MR. MALONE. Yes, he is. He has been put on leave.
MR. STEARNS. He was put on leave, but does he come to work every
day?
MR. MALONE. No, he will not.
MR. STEARNS. And have your people done an investigation and
spent some time talking to him to get his side of the story or did you just
put him on leave and that is it?
MR. MALONE. The attorneys have spoken, Congressman, and they
have spoken to him.
MR. STEARNS. So your attorneys have talked to his attorney?
MR. MALONE. Yes, and to him. Our attorneys have spoken to him.
MR. STEARNS. But he is still under payroll, right?
MR. MALONE. He has been put on leave but yes, he is on the
payroll.
MR. STEARNS. All right. Thank you. Mr. Marshall, you just
mentioned that--and I just want to make sure I understand this better.
You mentioned that safety and integrity programs don't get cut in your
corporation, and I guess the question is, do budgetary expenditures
impact the bonus of individual managers? So the first question that I
have for you is, do budgetary expenditures--if a person meets his budget,
does that impact the bonus of your individual managers? Just yes or no.
I would think that is pretty easy. I mean, if I have a budget and you give
me a budget and I keep under budget, I guess that is positive, isn't it?
MR. MARSHALL. Costs aren't a direct linkage between reward and
bonus in BP.
MR. STEARNS. Right, so the bonus is directly proportionate to the
budget?
MR. MARSHALL. No. Sorry, no. I did not mean to leave that
impression. It is not a direct linkage.
MR. STEARNS. There is a linkage?
MR. MARSHALL. No, there is not.
MR. STEARNS. Not? So if a person is way over budget because he
or she says we need more safety and integrity in this program, we need a
lot more money, that doesn't affect his--
MR. MARSHALL. Bonuses are set on the basis of a balanced
scorecard, what we call a balanced scorecard of a suite of performance
metrics for the business.
MR. STEARNS. Okay, and the budgetary is not one of them?
MR. MARSHALL. The budget is included in there but there is very
little--
MR. STEARNS. Oh, okay. I see. Okay. I had the privilege to be
here for the oversight's investigation of Enron, and during that
investigation, we found that when Sharon Watkins went to her boss and
talked about the problems in Enron, her boss gave the problem to Vinson
and Elkins as a consulting firm and so it appears that at this point it is
sort of a parallel just in that sense, that Vinson and Elkins is doing an
analysis for you folks instead of you folks going out, investigating and
saying we are going to make some action here, we are going to take these
complaints from the EPA that came in. You sort of punted it to Vinson
and Elkins. That is the same thing Enron--I am not implying anything. I
am just saying, I was struck by the similarities, that you certainly punted
this to Vinson and Elkins and said okay, you do analysis, we are not
going to do it, you do it for us. Now, they came up--the Vinson and
Elkins report contains an appendix of 72 allegations about the corrosion
control program and specific safety concerns. The question for you, Mr.
Marshall, is have all of these issues been addressed to your satisfaction
and completely corrected, remedied, if necessary, since BP received the
law firm's report?
MR. MARSHALL. There was a series of actions coming out of that
report. We converted those actions into a management plan and yes,
indeed, I can confirm that all those actions have been taken.
MR. STEARNS. So there is no more corrective action necessary?
MR. MARSHALL. The actions coming from the Vinson and Elkins
report have all been acted on.
MR. STEARNS. On page 5 of the appendix, allegation number 19
mentions that agency inspectors are directed to inspect only good areas
of the pipeline, although Vinson and Elkins found no evidence of this.
Can you speak to the relationship between the Alaska Department of
Environmental Conservation and BP Alaska? Can and do inspectors go
wherever they want when inspecting BP's pipeline? Is it true, that what
is stated is true?
MR. MARSHALL. To the best of my knowledge, I believe that is true,
and not only that, I would welcome open scrutiny wherever agencies
demand to go. I think that is--
MR. STEARNS. So they can go wherever they want?
MR. MARSHALL. In my opinion, I welcome that, yes.
MR. STEARNS. On page 3 of the appendix, allegation number 10 and
11 describe concerns that over the past several years there have been
concerns raised about cost cutting and that corrosion control and
monitoring was suffering, that serious damage was occurring to the
pipelines and infrastructure. Has there been cost cutting in the corrosion
program over the past seven years--several years?
MR. MARSHALL. Since I arrived in 2001, our corrosion spend has
gone up 80 percent. It has increased every year and will continue to
increase going forward.
MR. STEARNS. On page 4 of the appendix, allegation number 13
discusses an allegation of data scrubbing, and allegation number 17
describes concerns that corrosion field data was being manipulated.
What does the report mean that no evidence was found on manipulation?
In other words, the status comment doesn't explain where the
investigation looked for evidence and seems to imply that data may
receive a "positive spin" and isn't spin and manipulation the same thing?
MR. MARSHALL. I am not aware of anything beyond what the
Vinson and Elkins report found. We take very seriously any allegations
of data manipulation. It is not in a business's best interest to falsify data
or for any individual to falsify data so we take that very seriously, and
we found no evidence that data had been manipulated for any purpose.
MR. STEARNS. Mr. Hostler, there is a question for you. Since TAPS
provides a significant percentage of Americans' energy security and
evidently will for some time to come, could you tell the committee what
your primary concerns are with respect to the TAPS system and what are
you doing about these concerns?
MR. HOSTLER. Congressman, thank you. If you look at our risks,
our primary concerns are security of the pipeline. I think everybody in
this room knows the importance of this line and its security and a lot of
good work is being done there. I will come back to it. We do worry
about the potential for mechanical damage associated with work along
the pipeline and we do worry about corrosion as we have been talking
about today, both internal and external, and so we have a comprehensive
integrity management program to look at all that. But the one action I
would like to talk about is as a learning from the spill on March 2 and the
learning from the follow-up, we have been putting a lot of effort into our
corrosion program. One of the things that we have done is, we have
actually initiated an intelligent pig run this year, one year prior to our
next scheduled run in 2007. So we have taken the instances around the
Prudhoe Bay spills and learned from that and put an action plan in place,
not to discount any of the other areas that we have concerns around.
MR. STEARNS. Would you agree that regular pigging is even more
important as throughput declines?
MR. HOSTLER. Yes, sir.
MR. STEARNS. As a pipeline operator, would you expect to see
regular pigging of low-stress lines where the oil moves at a slower
velocity?
MR. HOSTLER. In the low-stress lines, yes, sir.
MR. STEARNS. Okay. Are you aware of any crude oil pipeline that
is not pigged as part of a regular corrosion maintenance program, leaving
aside lines that may not be piggable due to sharp turns in the line or other
structural obstacles?
MR. HOSTLER. Leaving aside those lines that have those types of
problems, no, sir, I am not aware of any that are not pigged as a routine
maintenance program.
MR. STEARNS. Prior to the March 2006 leak and the subsequent
examination of these lines, were you aware that there might be sludge,
sediment and/or scale problems with these transmission lines?
MR. HOSTLER. Prior to March 2? No, I wasn't, but I had only been
in place about five months, and I don't--I cannot find any records or
notice, indication within our organization that we were concerned or
aware of the issues with EOA and WOA line.
MR. STEARNS. Thank you, Mr. Chairman.
MR. WALDEN. Thank you, Mr. Stearns. I think we have--everybody
has had an opportunity to ask questions who are here so we will go into a
second round, and I will yield myself 10 minutes.
Mr. Stears, can you briefly explain what Coffman Engineers does
and who you are?
MR. STEARS. Coffman Engineers is a multi-disciplined engineering
company. We have offices in Seattle, Spokane, Los Angeles and
Anchorage.
MR. WALDEN. In Anchorage. Could you turn to Exhibit 10 in the
binder there and could you please describe what is the Coffman report
regarding Prudhoe Bay corrosion control?
MR. STEARS. It is an overview of BP's program and it gives the
reader a description of what the program consists of and areas for
improvement.
MR. WALDEN. And this is done for whom?
MR. STEARS. For the State of Alaska.
MR. WALDEN. And exactly what does the State of Alaska do with
the Coffman reports that you submit to them in final form and how does
the State utilize your analysis?
MR. STEARS. I am not positive of that. I do know they forward the
results to BP but other than that, I don't know what they do with it.
MR. WALDEN. Okay. Turning to tab 9, this is BP's response to the
final draft. As you are aware, BP is highly critical of the Coffman final
draft, correct?
MR. STEARS. That is correct.
MR. WALDEN. And if you can now turn to tab 26, Richard
Woollam's November 12, 2001, e-mail says that at the November 5 meet
and confer that Coffman "seemed unwilling to discuss BP/PAI's
concerns." So Mr. Stears, was Coffman surprised or frustrated by BP's
response, given your view that you had satisfied the scope of the work?
MR. STEARS. This is the first time that I have actually seen this in
person. I talked briefly with your staff about it. Yes, it is my
understanding that BP was upset.
MR. WALDEN. Right, but was Coffman surprised or frustrated by
BP's response?
MR. STEARS. My role in the program to begin with was, I was the
manager of the corrosion engineering group so I just had a supervisory
role, and I had to take the responses of my staff that was the direct
project engineers on that.
MR. WALDEN. Were Bierry and Watts frustrated? They work for
you right?
MR. STEARS. Yes. Tim Bierry did work for me. Mike Watts was a
subcontractor to us, and--
MR. WALDEN. Were they frustrated?
MR. STEARS. I would say it at certain points yes, they met a level of
frustration.
MR. WALDEN. And why was that?
MR. STEARS. Well, to begin with, this was the very beginning of
this program, and so the roles and responsibilities, the reporting metrics,
things of that nature were all being agreed upon and actually discussed
both with the State and the operators at that time, and so amongst those
discussions, there was quite a bit of give and take, if you will, as far as
what should or should not be in the program because there were already
some things that were agreed upon with the State and the operators
before Coffman got involved.
MR. WALDEN. Is that what should be in your analysis or what
should be in the program? I mean, the findings of your report, is that
what was in disagreement here or what the scope of the report--
MR. STEARS. The scope of the report would be a better clarification
of that.
MR. WALDEN. So the frustration that people who worked under you
had with BP was over what should be considered?
MR. STEARS. What should be considered in the actual report as well
as what should be talked about in the meet and confers.
MR. WALDEN. All right. Did Larry Dietrich or Mr. Fredriksson or
any other ADEC employee ever instruct or pressure Coffman Engineers
in any way to change the tone and content of the 2000 Coffman report?
MR. STEARS. No, not that I am aware of.
MR. WALDEN. Could you turn to tab 29?
MR. MARSHALL. Mr. Chairman, I apologize for the interruption.
Could I be excused to go to the bathroom, please?
MR. WALDEN. Well, okay. Yes, of course. And then if--yes,
absolutely. Anyway, if you turn to tab 29, this e-mail from Richard
Woollam dated November 25, 2001, criticizes Coffman for a lack of
sophistication and not thinking through the consequences if your final
draft were really the final document. Can you respond to this criticism?
Was it Coffman's job to be concerned about public reaction or
consequences of the report?
MR. STEARS. No, it was our obligation to meet the contract
requirements with the State of Alaska.
MR. WALDEN. Was Richard Woollam worried about the public
response to the report that was as critical of BP's corrosion program as
the Coffman final draft had been?
MR. STEARS. Could you please repeat that?
MR. WALDEN. Was Richard--do you know if Richard Woollam
worried about the public response to the report--to a report that was as
critical of BP's corrosion control program as the Coffman final draft had
been? Was he worried about the final draft and the public's reaction to
it?
MR. STEARS. I don't know about this one in particular. Mr.
Woollam has on several occasions expressed a concern that accurate
information be provided so that the public understands it.
MR. WALDEN. Could you turn to tab 28? Tab 28 criticizes Coffman
for not having sufficient review of the final draft at senior levels. You
were the supervisor in charge of the final draft, were you not?
MR. STEARS. I was.
MR. WALDEN. And do you have a response to this criticism?
MR. STEARS. Where are you reading from, please?
MR. WALDEN. Tab 28. Let me double check to make sure I gave
you the right tab number. My apologies. We are one off, tab 29, and it
is the second bullet point, lack of review I believe that the final draft was
issued by Coffman ADEC without review at senior levels within
Coffman and/or ADEC. There had been issues about balance and the
report being public would not have occurred, and that is from Mr.
Woollam.
MR. STEARS. Yes, Mr. Woollam was inaccurate in that. There were
several reviews internal, first of all, between the engineers that were
working on it and then I did review the draft as well as the final.
MR. WALDEN. Mr. Malone, in Mr. Marshall's absence, because the
next set of questions I have is actually for Mr. Marshall, and speaking of
Mr. Marshall, your timing is exquisite. I have been asking Mr. Stears
about the Coffman report and some of Mr. Woollam's criticisms and
concerns as expressed in e-mails and elsewhere. Mr. Marshall, at tabs 10
through 15 are documents prepared for the State of Alaska by Coffman
Engineers regarding BP Alaska's corrosion control program. Can you
explain the significance of these reports from BP's perspective, the
Coffman reports? Do you consider them to be binding documents or
helpful documents?
MR. MARSHALL. Mr. Chairman, thank you for the break.
MR. WALDEN. Yes, absolutely, and if other members need to do
that, let me know.
MR. MARSHALL. These reports I would say are important
documents for BP.
MR. WALDEN. Do you consider them binding documents?
MR. MARSHALL. From a legal perspective? I am not sure I
understand the legality of the term to be able to say what it is.
MR. WALDEN. And I am not a lawyer so--but if you have the
Coffman report that goes to the State of Alaska, do you look at that like
you would, say, an internal audit and follow it precisely and say we have
got to address these issues?
MR. MARSHALL. Any document which goes outside the company,
we want to ensure its veracity, its accuracy. We want to provide the
transparency on our operations, absolutely.
MR. WALDEN. But on these Coffman reports, do you basically
consider whatever they say that you are basically bound to follow?
MR. MARSHALL. I haven't looked into the implications of Coffman,
if there are specific issues there that I am not aware of, but on the basis
of your question I would say that we would work to follow
recommendations that Coffman came up with. We take those on board
and incorporate those into our business practices.
MR. WALDEN. All right. Did you direct Richard Woollam or
anyone else at BP to pressure ADEC in any way, in any way to change
the tone and content of the 2000 Coffman report?
MR. MARSHALL. No, sir.
MR. WALDEN. In November of 2001, did you personally place any
pressure or request of ADEC in any way to change the tone and content
of the 2000 Coffman report?
MR. MARSHALL. No, sir.
MR. WALDEN. Have you ever directed any employee at BP to
contact ADEC or any other State official to request the removal of an
ADEC employee from oversight work on the North Slope?
MR. MARSHALL. No, sir.
MR. WALDEN. Okay. Were you aware that Susan Harvey told
Richard Woollam that she was only willing to make changes to the draft
of the 2000 Coffman report if BP could show factual errors?
MR. MARSHALL. No, I was not aware of that comment.
MR. WALDEN. And what would your reaction be if you knew that
was her comment?
MR. MARSHALL. Sorry. Could you repeat the comment again,
please?
MR. WALDEN. The comment is that Susan Harvey told Richard
Woollam that she was only willing to make changes to the draft of the
2000 Coffman report if BP could show factual errors.
MR. MARSHALL. Again, not having much time to kind of consider
that, my reaction would be that, that would be a very reasonable request.
We have got to--I think any organization needs to make conclusions
based on truth and fact. If we were unable to provide facts to shift or
adjust a conclusion, that prior conclusion should still stand. If there is
new information or information we hadn't provided, if it was an
omission, I think that is something we would want to offer into the
record--
MR. WALDEN. Absolutely.
MR. MARSHALL. --for consideration.
MR. WALDEN. All right. That wraps up my questions. Thank you,
sir. Mr. Stupak.
MR. STUPAK. Thank you, Mr. Chairman. We have been talking a
lot from 1992 to 2006 and the pipeline came online in June of 1977. Is
that right?
MR. MARSHALL. Yes.
MR. STUPAK. Can you tell me, Mr. Malone or Mr. Marshall or
anyone else at the table, if the lines were pigged at all between 1977 and
1992, during that 15-year span?
MR. MARSHALL. I am only aware of the western area line being
pigged in 1990.
MR. STUPAK. Okay. Eastern was pigged in 1992, I think.
MR. MARSHALL. That is correct. What I don't have in front of me
but I can find out is, were there any earlier pig runs on that--
MR. STUPAK. Yes, I would like to know that because you have a 15-
year block there and we are talking about a four-year block. If you are
pigging in the 15-year block when the oil is flowing a little quicker, a
little stronger, I would think that it would be helpful to us because I think
the only smart pigging we have, as you said, is the late 1980s on the
western line. What I am hearing and the way I would guess I would
paraphrase BP's testimony today was that we believe we had a good
corrosion prevention program but we didn't believe we had corrosion. Is
that fair? You are sitting there telling us you have this integrity in this
program so are you saying therefore we didn't believe we had it? When
you did pigging before, you had all kinds of problems.
MR. MARSHALL. We didn't believe we had aggressive corrosion in
these lines until we started to see indications of that in the 2004-2005
time frame. The data that we had, and I do stress that it is based on the
data that we had, the information that we had--
MR. STUPAK. In 2004-2005?
MR. MARSHALL. In 2004-2005 indicated an increase in corrosion on
the western area line.
MR. STUPAK. Let me ask--Mr. Malone, let me ask you this question.
This question came up, and I ask this question respectfully because I was
just--I have been in and out of this hearing today because when
constituents come from northern Michigan, even though I am stuck all
day in these hearings, I still like to try to meet with them. We were
talking, you know, we are at this hearing today, and a couple of them
brought up the fact that on the Today show, they asked you a question
about how you spend, based on the profits of BP, like one-quarter of a
penny for maintenance of the lines and then I think Matt Lauer asked you
if you were going to--the cost to do this replacement, I think you are
doing, what, 16 miles of pipes or something like that. That has pretty
tremendous cost to the company, so therefore to the average American
consumer, will the cost of gas go up because of this pipeline problem or
will you just take it out of profits.
MR. MALONE. Well, first of all, the way the global market works,
Congressman, and particularly once the incident occurred, we didn't see
a rise in the price of gas--
MR. STUPAK. That is my next question. Go ahead.
MR. MALONE. Because we were able to get supply into the west
coast. We actually brought in about--
MR. STUPAK. Well, when will we start to feel the pinch here and
when will the price go up then from BP's point of view? Isn't that what
you are basically telling us, we haven't seen the pinch yet because other
supply is adequate?
MR. MALONE. Congressman, if I can, I would like to submit that for
the record because--forward a response back to you because I am not
quite sure how that would work and I need to consult with--
MR. STUPAK. Because here is the question that constituents want to
know: Since this has been announced, gas prices have gone down, but
yet if we don't have as much oil coming in available to this country, but
prices are going down, therefore they should not go up even with your
added costs as prices go down, right? And that is sort of what they asked
me out in the hall and I said okay, good question, I will ask.
MR. MALONE. I will get that for you, Congressman. My apologies
for not--
MR. STUPAK. No, no, no problem. And by the way, Mr. Malone, at
least on this side of the dais, I am sure on both sides, you had worked in
the 1990s, right, in Alaska before for BP?
MR. MALONE. Yes, I did.
MR. STUPAK. And you were called over to England and no sooner
got there and this happened?
MR. MALONE. I was in Alaska and I ran Alyeska also for a period of
time but I had a four-year stent with BP Shipping Limited in England.
MR. STUPAK. Well, I know they indicated that in the past when we
had some problems in Alaska, you were one of the people who stepped
forward and got it corrected and cleaned up and we are hoping the same
thing will happen here, so a lot of people up here were glad to see you
take this position and we have faith that you will get this thing cleaned
up as soon as possible.
Mr. Marshall, let me ask you this. Isn't it true that both the eastern
and the western pipes are now low-stress lines and that they were
originally designed to hold greater amounts of oil and that the flow rate
of this oil was originally much higher, right? It was 800 PSI at one time
and we are down to 80 PSI now?
MR. MARSHALL. Congressman, I am not in a position to say what
the pressure was. The flow rate was much higher.
MR. STUPAK. Was much higher than it is now?
MR. MARSHALL. At the time, and compared to what it is right now,
yes. That is correct.
MR. STUPAK. And if we can have photo number 3 up. And these
are the current lines now in fact as soon as we get it up here. The red one
is the one where we are working on now. This is where the March spill
occurred. Again, our staff was up there over the break and took these
photographs. So why were such strategic lines in the eastern and the
western lines which are both low flow and thus susceptible to corrosion
not replaced with smaller diameter lines earlier? Why did we have to
wait for total failure to get to the point of now deciding to replace them
with smaller diameter lines? I think the question earlier was 34-inch
lines and now they are going to be replaced by smaller ones to get the
flow going to keep the corrosion out, right?
MR. MARSHALL. And again, until we get the failure analysis of the
pipe from both the OT-21's failed section which this is and the Flow
Station 2 line, it is still only a theory that velocity is a factor. It is
emerging as a more likely factor than it might have been at the time of
the March spill but it still only one factor. There may be others as well
including microbial--
MR. STUPAK. Sure. The faster the flow, usually keeps the corrosion
out, right? The water is moving and everything is moving.
MR. MARSHALL. Velocity is certainly a factor to prevent dropping
out of solids or liquid but equally the effectiveness of corrosion
inhibitors going through the line and the existence of bacteria and the
effectiveness of bactericide to prevent the growth of bacteria are also
factors.
MR. STUPAK. BP provided the committee with an internal report it
issued on June 7, 2006, called the Alaska Transit Technology Review.
Are you familiar with that Alaska Transit Technology Review?
MR. MARSHALL. Yes.
MR. STUPAK. Sometimes referred to as the Baxter report.
MR. MARSHALL. Yes.
MR. STUPAK. And it was done after the March 2 spill, right, and you
are familiar with that one?
MR. MARSHALL. I am aware of that report, yes.
MR. STUPAK. Okay. On page 6--I realize there are no page numbers
but if you go to page 6, there is a series of bullet points, and let me quote
from the first bullet--
MR. MARSHALL. Excuse me, Congressman. Which tab is that?
MR. STUPAK. Hang on. Let me get it.
MR. MARSHALL. I have got it.
MR. STUPAK. You got it? Okay. I know the pages aren't numbered
but on page 6 there, you will find these bullet points, and the first one
says, I am quoting now, "Where sand deposits and entrained water are
able to drop out from the fluid stream onto the bottom of the pipeline as a
result of the low-velocity flow, this creates ideal conditions for the
proliferation of sulfate-reducing bacteria (SRB) on the pipe surface. The
most likely cause of the accelerated corrosion is therefore believed to be
the micro-influenced corrosion (MIC) under sediment deposit onto the
bottom of the pipe, and you were just talking about the MIC. So my
question is then, Mr. Marshall, when did BP first suspect that such
sediments were collecting in the western pipe?
MR. MARSHALL. Mr. Congressman, to the best of my knowledge,
certainly from my perspective, the existence of solids in that line
occurred after the March spill. Certainly the existence of solids upstream
of that transit line were known before that.
MR. STUPAK. I am not necessarily talking about the solids.
MR. MARSHALL. I am sorry. I misheard the question then.
MR. STUPAK. When were you--when did BP first suspect--I mean,
this is a report they provided in June--first suspect that sediments were
collecting in that western line? March, after the spill, or before?
MR. MARSHALL. After the spill. Certainly from my perspective,
after the spill.
MR. STUPAK. When was the water and sediment drop-out as a
potential corrosion contributor first suspected by BP? Was it before or
after the March spill?
MR. MARSHALL. I don't have any specific evidence of when that
may have occurred at some level in our organization. I do know that we
experienced planned upsets. I do know that we experienced sediment
drop-out in Gathering Center 2 as a result of the startup of viscous oil
production in 2004 and 2005. We did take action to remove those solids
at that time.
MR. STUPAK. In 2004-2005?
MR. MARSHALL. In 2004-2005 timeframe.
MR. STUPAK. Did you try to remove the solids?
MR. MARSHALL. We basically installed sand jets into a number of
our vessels. As the solids--
MR. STUPAK. How far would a jet blow the sand then?
MR. MARSHALL. It blows it into a container which we then take
away and we dispose of the solids in the appropriate way, so they are
actually removed from the facilities or from wherever they accumulate
and are disposed of there.
MR. STUPAK. But you didn't scrape the pipe though?
MR. MARSHALL. No. The expectation was that the solids would
accumulate where they are designed to accumulate inside the separators,
the big vessels that exist inside Gathering Center 2, which are designed
to separate the oil, gas and water, and indeed any solids from the crude
oil stream.
MR. STUPAK. But in 1992 you knew that wasn't happening because
on the eastern pipes that is when you had all the problems with the
strainers.
MR. MARSHALL. I should stress that my understanding of what
occurred in the early 1990s on the eastern side was actually calcium
carbonate scale, not solids.
MR. STUPAK. But still, it would be enough to disrupt the flow of the
pipe, and you said earlier in your testimony what was happening on the
western you figured was happening on the eastern, so in 1992 if you
figure it is happening on the eastern, why didn't you figure it was
happening on the western? If it holds true for one, it holds true for the
other.
MR. MARSHALL. The existence of calcium carbonate scale is
something which is more of a factor on the eastern side of the field in the
same way that the viscous oil is only evident on the west. The calcium
carbonate scale as we have looked into it, tends to be a factor more on
the east than it is on the west, certainly in terms of how it translates to the
transit lines.
MR. STUPAK. Thank you.
MR. WALDEN. Thank you. We have a vote on the floor. Mr. Inslee.
MR. INSLEE. Thank you. Mr. Malone and Mr. Marshall, I asked you
about this Coffman report earlier where there were very significant
deletions from the report, from the preliminary draft before it went to BP,
deletions about the fact that smart pigging is the only inspection
technique capable of looking at the entire internal structure of the pipe.
A statement, the actual magnitude of the corrosion increase is not
reported. That was deleted. A statement, external corrosion inspection
levels are not consistent with the relative risk. That was deleted. A
statement that no differentiation between weight loss and pitting
corrosion are discussed. That was deleted. No statistics on the extent of
corrosion defects reported. That was deleted. You can go through this
report, there are just reams of negative critical statements in the original
report sent in to the State of Alaska by Coffman contractors that were
then deleted after communications with British Petroleum. So the
question is, how did that happen and why did that happen? It is
disturbing to me that the public only found out about that after this
incident, that these deletions occurred. What I want to ask you about is
this disturbing e-mail that we just saw. It is an e-mail dated November
11, 2001, 9 days after the original Coffman report was submitted, so
nine--
MR. WALDEN. For the record, Mr. Inslee, that is tab 25.
MR. INSLEE. Thank you. Nine days after the original was submitted,
here is an e-mail from Mr. Woollam, the gentleman who took the Fifth
Amendment in charge of this program, BP employee, it says, "Michelle,
could you please do a little research for me in a hurry? I want to know if
BP Exploration Alaska, Inc. has any contracts with Coffman Engineers,
and if so, what and who is the contract CAM, if any. My understanding
is that they have a general services contract but have been unable to find
out any more than this. Thanks, Richard." Now, frankly, it is hard for
me to imagine another reason out of the blue this gentleman would be
asking if Coffman has any other contracts with British Petroleum other
than perhaps we have a way of influencing their behavior. Do you have
any suggestion why this gentleman would have all of a sudden asked
about Coffman contracts with BP other than perhaps finding a way to
influence their behavior?
MR. MARSHALL. I have not seen this e-mail before and I really
cannot comment on what Mr. Woollam's intent would be. Could I offer
one alternative though, that one of the things that--if we engage with any
company that is working for a third party, we need to make sure that we
don't have any conflicts of interest in the dealings with them. I am not
suggesting that was the case but that is certainly a possibility to avoid
conflict of interest.
MR. WALDEN. Mr. Inslee, just as a point for the record, I am told by
staff that actually that document is a cited document in the Feldman
report.
MR. MARSHALL. I have not actually read it, so--
MR. INSLEE. Thank you. Given the attitude we have heard about
this particular individual and the difficulties, your suggestion while
creative I suspect probably was not the case. We will leave that to other
discussion. But it is of great concern that we had this failure now about
something exactly that this contractor pointed to. You have discussions
with BP, there are deletions to the report and bang, you got this process
now that is reduced by 8 percent, the total production of our domestic
capacity. You can see why that causes us some great concern here.
I want to ask you about one suggestion I made. BP has had now
what is a significant black eye. I think we would all agree with that on a
failure of this responsibility and I think Mr. Malone and Mr. Marshall
recognize that. The question is, what do you do as a corporation right
now. I suggested sincerely that it would make sense to go back and talk
to your highest decision-makers about finding a way to demonstrate your
commitment to being an environmentally responsible company, and the
reason this idea comes up is, Mr. Green was talking about how maybe
we are, you know, decades away from having a more ethanol-based
economy. I don't think it is decades. Brazil today has 40 percent of all
their fuel essentially as its ethanol, it is domestically produced. This is
the here and now. They drive flex fuel cars that drive either--operate
either on gasoline or ethanol and they work great, and you pull up to
your pump and you see which one is cheaper, the ethanol or the gasoline
that day, and fully 40 percent of their fuel source is from that. This is
something that we are capable of doing. But when I talk to the Brazilian
leader who is responsible for developing that protocol and basically
asked for his advice, what do you have to do to get there as a national.
He said frankly, you have got to break the arms of the oil and gas
industry because they resist putting these pumps in and they control the
infrastructure. Now, there are 170,000 pumps in the United States for
gasoline today and there are about 858 for E85 ethanol when almost
every single station in Brazil makes that available to its consumers and
they essentially broke the elbows of the oil and gas industry in Brazil to
make that happen. We don't want to have to go through that. We would
like British Petroleum, that controls a very significant part of the
infrastructure of this country, to make a very specific corporate
commitment to getting E85 pumps into their stations as fast as they can.
This is very possible. The USDA has done a very sophisticated analysis
and found that we could have 30 percent of our transportation needs at a
minimum within 30 years from ethanol domestically produced but we
need your leadership to put those pumps in to develop how we do this.
Now, the Brazilian also told me, don't let those oil and gas guys tell you
they can't deliver it by pipeline either because we do it down there in
Brazil. So I guess the question I have for you, given your experience
here, which probably hasn't been too comfortable, rightfully so, isn't it a
legitimate thing for you to go back and talk to your leadership and say
here is one option for us as a corporation to demonstrate moving forward
after this debacle to say let us double our commitment to ethanol
production in this country; let us make some specific numerical targets of
how many E85 pumps we are going to have in our filling stations across
this country, and you have got a lot of them in the State of Washington
and I love to see them there. What do you think of that idea, going back
and talking to Sir Henry Brown and say let us come up with a numerical
target and let us meet it.
MR. WALDEN. Mr. Inslee, just for the record too, we are down to 3
minutes.
MR. INSLEE. All right. I am done. That is my last question.
MR. MALONE. I would say, Congressman, I felt kind of bad because
when we bumped heads the last time, I think we were both bumping
heads on stuff we both agreed with. I will have that discussion and I
have some ideas of my own. If I could, I will come back and see you on
that and I will also talk to John Browne, who has a very, very strong
commitment as I do, and I will be back directly in touch with you.
MR. INSLEE. Thank you.
MR. WALDEN. Thank you, Mr. Inslee. Thank you, Mr. Malone.
And just finally as we begin to dismiss this panel and recess the
committee while we vote on the floor, Mr. Marshall, in light of Miss
Harvey's statement to the staff that she was only willing to consider
factual changes to the Coffman report, can you see how it looks a little
suspicious that Ms. Harvey gets removed from the project and then the
tone and overall conclusions of the final report are changed significantly?
I mean, it raises some red flags for us.
MR. MARSHALL. Certainly I can understand and appreciate that. I
just don't have any information to offer any further illumination to that.
MR. WALDEN. Understood. Thank you. I want to thank the panel
members for being here today. I know it has been a long day already.
We have a second panel after this. We have about five votes on the
House floor. We will reconvene as soon as we can get back here, but
you all are free to go and we again appreciate the work you are doing and
your participation in this hearing. The committee will stand in recess.
[Recess]
MR. BURGESS. The committee will reconvene and at this point I
would like to call forward our second panel, Vice Admiral Thomas J.
Barrett, U.S. Coast Guard, retired, Administrator for Pipeline and
Hazardous Materials Safety Administration, U.S. Department of
Transportation; Ms. Stacey Gerard, the Chief Safety Officer, Office of
Pipeline Safety, Pipeline and Hazardous Materials Safety
Administration, United States Department of Transportation; and Mr.
Kurt Fredriksson, Commissioner, Alaska Department of Environment
Conservation, and I want to thank you all for your forbearance. I know it
has been a long afternoon while we dealt with pressing matters before the
country. You are aware the committee is holding an investigative
hearing and when doing so has had the practice of taking testimony
under oath. Do you have any objection to testifying under oath? The
Chair then advises you that under the rules of the House and the rules of
the committee, you are entitled to be represented by counsel. Do you
have any desire to be advised by counsel during your testimony today?
In that case, if you will rise and raise your right hand, I will swear you in.
[Witnesses sworn]
MR. BURGESS. You are now under oath. You may give a 5e-minute
summary of your written statements. Admiral Barrett, please, sir, you
may begin your 5 minutes.
TESTIMONY OF VICE ADMIRAL THOMAS J. BARRETT, USCG (RET.), ADMINISTRATOR,
PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION, U.S. DEPARTMENT OF
TRANSPORTATION; AND KURT FREDRIKSSON, COMMISSIONER, ALASKA DEPARTMENT OF
ENVIRONMENTAL CONSERVATION
VICE ADMIRAL BARRETT. Thank you, Mr. Chairman and members
of the subcommittee, for the opportunity to discuss recent actions of the
Pipeline and Hazardous Materials Safety Administration overseeing the
safe operation of BP exploration pipelines at Prudhoe Bay, Alaska.
Our agency mission is achieving and maintaining safe,
environmentally sound and reliable operation of the Nation's pipeline
transportation system. In practice, this requires understanding the
condition of pipelines and ensuring that operators take actions to prevent
and address any unsafe conditions.
As you know, the first responsibility for safety rests with the pipeline
operator. Since the spill of approximately 5,000 barrels of crude oil from
the BP-operated low-stress line at Prudhoe Bay on March 2, PHMSA has
been on the job to ensure safe operations. The line where the spill
occurred had not been federally regulated. In mid-March, using our
statutory authority, we asserted Federal jurisdiction over the failed line
and other BP unregulated low-stress lines at Prudhoe Bay, a total of 22
miles of transit line. We subsequently issued a series of orders to the
operator to upgrade safety. These related to understanding conditions of
the lines and ensuring the operator was taking all necessary measure to
assure their safety. We ordered BP to run cleaning pigs to remove solids
from the lines, run inline inspections, or smart pigs to understand the
conditions of the lines from the inside out. We directed extensive
ultrasound testing and an enhanced corrosion management plan. We
directed external surveillance using infrared detectors to detect any leaks
and also the development of plans to manage solids in a way that
prevented any risk to the Trans Alaska Pipeline.
It was as a result of the pigging that we ordered that BP discovered
the wall loss and leaks on a line segment in the eastern operating area
that led to the production shutdown on 6 August. Our personnel have
been on the job tirelessly since March overseeing and directing these
actions. We brought on additional technical resources from Oak Ridge
National Laboratory, and along with my western regional director, Mr.
Chris Hoydell, and my chief safety operator, Ms. Gerard, I visited
Anchorage and Prudhoe Bay in early July to assess the situation
firsthand. I met with my field inspectors, BP and Alyeska executives,
State officials including Commissioner Fredriksson, and the Joint
Pipeline Office. The Acting Secretary of Transportation, Maria Cino,
visited in August and I went back last week to reassess progress and
compliance with our orders. While this was progressing, we also put an
inspection team on the Trans Alaska Pipeline and updated our risk
assessment on other lines on the North Slope to minimize risks of any
ripple effects from the BP incidents.
BP is finally making progress in addressing our concerns but the
operators' management of the lines in the years leading up to the March
incident and their initial response to our orders was disappointing.
Frankly, we do not understand why BP did not more aggressively
address the corrosion problems that led to these leaks. Given the
multiple risk factors for corrosion in the Prudhoe Bay environment and
the low velocities on these lines, it is mystifying that BP did not run
cleaning pigs regularly on these transit lines. Most pipeline operators
demonstrate a higher standard of care than this regardless of whether
they are federally regulated or not.
The overall safety record of the U.S. pipeline is good and getting
progressively better. We are seeing a steady decline in the number of
pipeline incidents that cause serious harm to people or the environment,
and on August 31, the Administration proposed robust new safety
requirements for low-stress pipelines in unusually sensitive
environmental locations in rural areas including the BP lines at Prudhoe
Bay. These rules have been in development since 2004, well in advance
of these spills. Most of the lines involved are far smaller than the BP
Prudhoe Bay lines. Low-stress lines in populated areas and near
navigable waterways were already covered by our regulations. As this is
a proposal, we are seeking public and stakeholder input about it
including the scope of coverage and the requirements that should be
included.
I also want to touch on our reauthorization proposal. One exception
to the positive safety trends we see across the industry is damage caused
by excavation on gas distribution systems. This poses serious life safety
risks and the number of incidents of this type is increasing. These lines
are regulated by our State partners. The Administration's pipeline safety
reauthorization proposal would greatly enhance the State's ability to
improve damage prevention and more effective address this risk, and I
am pleased to see this priority being address by this committee.
Mr. Chairman, I want to assure you and members of the
subcommittee that the Administration, the Acting Secretary and the
dedicated men and women of PHMSA, by the way whose work at
Prudhoe Bay I am enormously proud of, share your strong commitment
to improving the safety, reliability and the public confidence in our
pipeline transportation systems. We understand the importance of our
mission to the citizens, communities and energy security and continued
economic growth of this country.
With your permission, I will submit my written statement for the
record and am pleased to answer any questions you may have. Thank
you, sir.
[The prepared statement of Vice Admiral Thomas J. Barrett follows:]
PREPARED STATEMENT OF VICE ADMIRAL THOMAS J. BARRETT,
ADMINISTRATOR, PIPELINE AND HAZARDOUS MATERIALS SAFETY
ADMINISTRATION, U.S. DEPARTMENT OF TRANSPORTATION
September 7. 2006
I. INTRODUCTION
Chairman Barton, Ranking Member Dingell, members of the
Subcommittee, thank you for the invitation to appear today. I am pleased
to discuss the actions of the Department of Transportation's Pipeline and
Hazardous Materials Safety Administration (PHMSA) to oversee safe
operations of BP Exploration pipelines on the North Slope of Alaska.
The responsibility for safety rests first with the operator. Our
mission is achieving and maintaining the safe, environmentally sound
and reliable operation of the nation's pipeline transportation system.
This requires understanding the condition of pipelines in the U.S. and
assuring that operators take action to address any unsafe condition. We
manage oversight based on risk and take a "systems approach" to setting
priorities. We make full use of the authority given us in the Pipeline
Safety Improvement Act of 2002. Our progress with integrity
management programs positioned us well to take effective action when
the BP low stress transit line failed in Prudhoe Bay March 2nd. I believe
quick DOT/PHMSA action was crucial to improving the performance of
BP since the first incident. Only as a result of additional controls we
imposed could limited operation of these key pipelines continue.
Over the past six years, PHMSA has designed and executed a risk-
based systems approach to oversight of the national pipeline
infrastructure. As to regulatory framework, we undertook rulemaking
projects on a risk prioritized basis, acting first on those parts of the
infrastructure that posed the greatest risk to people and then the
environment. To begin the program, we defined high consequence areas
and mapped the locations, including areas unusually sensitive to
environmental damage, previously defined in regulation in 2000, in the
National Pipeline Mapping System. We completed and implemented
regulations which provided integrity management protections for people
and the environment that could be affected by a failure from high
pressure, large and small hazardous liquid pipelines and provided
protections to people that could be affected by high pressure gas
transmission pipelines. We began considering this rulemaking in 2003,
with discussion in our advisory committees, followed by public meetings
in 2004.
The BP transit pipelines that failed in Prudhoe Bay were not
regulated by DOT. On August 31 we offered a proposal to bring these
lines under Federal oversight. Our rulemaking proposal provides for
robust integrity protections, including corrosion control with cleaning
and continuous monitoring, integrity assessment, leak detection and other
measures for low stress pipelines. The proposal is the last remaining
element in our regulatory framework designed to protect unusually
sensitive environmental areas from low pressure pipelines in rural
locations. The proposal would mandate a level of care well in excess of
what BP had in place in the lines that failed. The recent BP pipeline
failures in Alaska are not indicative of the safety of the national pipeline
infrastructure which has a steadily improving safety record.
Furthermore, BP's low stress lines in Alaska are not a characteristic of
other low stress pipelines in the U.S. lower 48 states. We believe that
most other unregulated low stress pipelines are operated to a higher
standard of care similar to that underlying our regulatory proposal, based
on the record developed in connection with our rulemaking proposal.
Since the March 2 spill of 200,000 gallons of crude oil we have been
working steadily to ensure BP adequately addresses the safety, integrity
and reliability of all of the company's pipelines. While PHMSA was not
previously regulating BP's three low pressure transit lines in Prudhoe
Bay, following the spill we exercised our statutory authority to protect
life and the environment. These pipelines will remain under DOT orders
as long as we believe they pose a threat to life and the environment.
II. WHAT DOT HAS DONE TO RESPOND TO THE FAILURES
PHMSA has been on the job since the response began. When the
accident occurred on a segment of 34" diameter above ground pipeline in
the Western Operating Area referred to as OT21 on March 2, we offered
our assistance on cleanup to the Unified Command conducting the
response operation, under leadership of the Environmental Protection
Agency (EPA). Shortly thereafter, PHMSA notified EPA, the
Department of the Interior, and state agencies, as well as the Joint
Pipeline Office (JPO), of our intent to exercise statutory jurisdiction over
these three transit lines by issuing a Corrective Action Order (CAO) and
bring them under the regulatory authority of the DOT, essentially taking
the Federal oversight role in the remediation and repair of the failed line.
Our order covered the Western Operating Area line, which failed in
March, as well as the Eastern Operating Area and the Lisburne lines, a
total of 22 miles. Our mission is and remains ascertaining the condition
of these lines, understanding the failure mechanisms, and assuring that
the operator takes all needed action to keep them operating safely in the
future.
Our Corrective Action Order started with the fundamentals of
requiring BP Exploration Alaska, Inc. (BPXA) to determine the
condition of its pipelines and to repair defects. First, we ordered BPXA
to run what are known as cleaning or maintenance pigs in order to
remove solids in the line and to perform in-line inspections, known as
smart pigging, in order to understand the pipe condition from the inside
out. Second, we directed more frequent testing, and an enhanced
corrosion management plan, including changing the mix of corrosion
inhibitors to improve corrosion prevention. We required running
cleaning pigs on a routine basis to remove water and other constituents
that could contribute to internal corrosion. Third, we set standards for
assuring integrity of each of BPXA's low stress pipelines in service.
Fourth, we dispatched the first of many inspection teams to inspect the
pipe that failed, assess the cause of failure, review operations and
maintenance records, monitor operations, including testing, inspect
repairs, and verify compliance with our requirements. Our inspection
indicated the probable cause of the failure on March 2 to be internal
corrosion. According to records provided by BPXA to the agency, the
line that failed had been operating at a very low pressure, well below the
20 percent of designed yield strength that would have been the threshold
for DOT regulation. BPXA's records indicate that this pipeline was
designed to operate at approximately 825 psi and BPXA was operating it
at about 80 psi. Most of the line is above ground on vertical and
horizontal supports. The pipeline is bare steel pipe, covered with thermal
insulation, surrounded with a steel jacket. The pipeline had been
hydrostatically tested in 1977, and was internally inspected with a smart
pig in 1990 and 1998. We found no history of previous failure. A leak
detection system was installed and working but did not sound during the
leak.
Until recently, BPXA has not moved as swiftly as we would have
expected to comply with key requirements of our orders - namely, the
requirements to clean and smart pig its low stress lines. We provided an
extension in March to allow BPXA to collect more information, and a
second extension in April, pushing the first deadline to June 12, 2006,
more than three months after the spill. Soon after we issued the order,
BPXA advised PHMSA that it would not be able to comply with the
requirements to "smart pig" the lines within the specified time period, the
critical step in meeting our objective of having the best possible
understanding of the condition of the pipelines.
On May 23, PHMSA dispatched a more comprehensive field
investigative team to evaluate all potential integrity threats to the transit
lines along with BPXA programs to mitigate those threats. The team
reviewed BPXA's overall program to manage the transit lines, assessed
findings emerging from the monitoring plan, reviewed inspection
records, observed testing procedures used on the transit lines, toured all
facilities, interviewed technicians, reviewed qualifications of personnel,
inspected test records, and reviewed the leak detection system. The team
suggested improvements for BPXA's Interim Monitoring Strategy such
as increased corrosion monitoring points to reduce the potential that
vulnerable locations not be overlooked. PHMSA directed BPXA to
increase the inspection frequency to provide an early warning of any
unanticipated corrosion acceleration. We directed that more stringent
repair thresholds be incorporated in the program and asked that
communications be improved between analysts and field teams. We also
required improved patrolling of the lines. Since the May field
inspection, we have maintained a field oversight presence at all times to
ensure the operator was taking the actions necessary to maintain safety.
Based on our analysis to date, we believe that internal corrosion,
induced by microbial activity, caused the pipe to deteriorate at the point
where it failed on March 2 - a low section in a caribou crossing.
Typically, operators control this type of corrosion through a combination
of cleaning pigs and biocide injections. The cleaning pig is usually
necessary to deliver the biocide to the pipe wall and to disperse active
bacteria colonies.
We do not understand why BPXA did not address these problems
more aggressively much earlier. BPXA could have used cleaning pigs to
clean out liquids accumulating in low spots within its low stress
pipelines. Further, there is a high likelihood that cleaning pigs would
have improved the effectiveness of the biocide or corrosion inhibitor by
getting the chemicals to the wall of pipeline without the interference of
solids and other deposits. Given the many risk factors in the North Slope
environment, including use of water in the production process, the
chemistry of the crude oil product itself, and the varied geologic factors
in the production field, it is very puzzling that BP did not choose to run
cleaning pigs. From information provided by companies who operate in
less challenging environments in response to the public meetings held in
conjunction with the rulemaking for low stress pipelines, we believe
most operators demonstrate a higher standard of care in their operations,
regardless of whether they are federally regulated or not.
On June 6, BPXA sought a further extension of the deadlines for the
pigging, contending that factors beyond their control would make it
impossible to complete the required pigging until the latter half of 2007.
They proposed an alternative plan they claimed would provide safety
equal to what could be accomplished with a smart pig until the three
transit lines could be smart pigged. We denied the requested extension
but issued an order making clear to BP that we were not requiring it to
shut down its operations on the basis of its failure to meet the pigging
deadlines. We had preliminarily reviewed the alternative test procedures
and the testing data furnished by BPXA, and did not believe that a
shutdown was required for safety. Our order expressly reserved all other
enforcement options with respect to BP's failure to comply with the
deadlines.
PHMSA engineers were very concerned about the primary reason
BPXA gave for its alleged inability to complete pigging -- build up of
solids, including impurities in the product stream such as waxes and
other materials. Alyeska, the operator of the Trans-Alaska Pipeline
(TAPS), had notified PHMSA about its concerns with adverse impact on
its pipeline if these solids should be allowed to pass through from BPXA
to TAPS. The Joint Pipeline Office (JPO), which coordinates TAPS
issues, had concerns as well, and ensuring the continued safe operation
of TAPS is a primary concern of PHMSA.
To address those concerns, PHMSA needed to understand the
amount, composition and density of this "sludge" material and how it
would be handled before we could allow BPXA to proceed with pigging
to be sure that BPXA operations could pose no risk to the safety and
reliability of the Trans-Alaska Pipeline System. Alyeska needed to be
certain about its ability to handle the waste. BPXA put forward
preliminary estimates of as much as 12 inches of sludge, with varying
amounts in different segments of its 22 miles of transit lines. After
several weeks, BP revised its estimate of the amounts of sludge in the
lines downward. PHMSA still does not have a confident estimate of the
amount of sludge in the line segments that have not yet been pigged.
BPXA also took months to develop plans to handle the removal of
sludge. Based on a conclusion that there was limited sludge in the
Lisburne line, BPXA pigged that line in June.
Because of the delay in resolving this and other issues, in early
July, my Chief Safety Officer, Ms. Stacey Gerard, and my Western Regional
Director, Mr. Chris Hoidal, and I traveled to Prudhoe Bay and
Anchorage to meet with BPXA and Alyeska executives, JPO officials
and State of Alaska representatives and to see first hand what BPXA was
doing to comply with our order and to overcome any engineering or
other issues that would complicate or delay maintenance and smart
pigging required on each of the lines. Our assessment was that BPXA
was not pursuing all available options for handling the sludge and
preparing for pigging. We were concerned they were exploring a single
option, one at a time, rather than considering multiple options, and not
working or communicating effectively. I was dismayed at the slow rate
of progress and observed difficulty in problem solving, poor
communications, delay in ordering needed parts and equipment, and
failure to take actions necessary to ascertain fully the condition of the
pipelines and to address the conditions uncovered.
For example, BPXA told us in May of the need to order valves and
stopples to isolate a certain section of the failed pipeline and the need to
move the pig launcher around the failed site. Two months later, during
our July visit, we learned that some parts were still not ordered. It is
still not clear to us that it was impossible to make plans to remove the
solids and begin pigging operations by the June 12 deadline in our order.
Subsequent to this visit, on July 20, we issued an amendment
(Amendment Number One) to our original order intended to address
these deficiencies by mandating that BPXA develop specific plans and
timetables or parallel tactics to expedite pigging operations on lines that
had not yet been cleaned. We required development of preliminary
engineering design and an implementation plan to install a permanent
facility for handling solids resulting from cleaning pig operations plus a
concurrent contingency plan for a bypass around TAPS Pump Station
(PS)-1 facilities so solids could be delivered into storage. This action
would assure that sediment in the product stream picked up in pigging
would be safely managed in tanks to avoid contamination and maintain
the safety of TAPS. We required a comprehensive engineering plan for
the draining or "de-oiling" of approximately 17,000 barrels of oil
contained in the idled OT21 line segment that failed in March. We also
ordered the taking of wall samples and gamma ray photography post
pigging to gain the best possible understanding of the real time levels of
remaining solids.
By the end of July, BPXA was finally making progress to address
our safety concerns and to restore reliable energy transportation service.
I am pleased to report that as a result of these orders extracting product
from the OT 21 segment of line was completed in late August. The PS-1
bypass - aimed at delivering solids from the WOA line through the use
of a bypass line into TAPS storage tanks was successfully hydro-tested
in early September and that an alternate bypass, "the Fizzy Bypass," will
be completed at the end of September. All these steps are necessary to
get us to our goal of understanding the condition of these pipelines and
making sure the operator is doing all that is needed to operate them
safely.
In our observation however, progress has also been impaired by
operator error on the startup of the production line damaged by falling
equipment near the Lisburne line, and failure to maintain backup
compressors. Discovery of asbestos on the WOA and BP's need to
provide worker protection delayed testing on the WOA. While these
missteps may not appear to have a direct bearing on the low-stress line
corrosion issues, failure to understand and manage change in operations
always poses safety risks.
On July 22, 2006, 37 days after the deadline established in our
March order, BPXA performed the smart pigging ordered by PHMSA on
the 30 inch segment of the FS2-FS1 Eastern Operation Area pipeline.
BP informed us of the results of the testing on August 4. The report
identified 16 locations of wall loss in excess of 70 percent, including two
over 80 percent, at 12 separate areas. While the failure on the Western
line occurred on a low spot in a caribou crossing, the locations of severe
wall loss on the Eastern line were on straight pipe.
On August 6, BPXA reported that it discovered a leak while in the
process of performing direct examination of the EOA as a follow-up to
the pig inspection. On the basis of this leak and the discovery of several
other locations that were beginning to leak, BPXA initially reported to us
its decision to shut down this and the Western line. BPXA explained that
its decision was based on a complete lack of understanding of the
corrosion that could cause this type of wall loss. BPXA subsequently
decided to keep the Western line operating and to consider restarting the
34" segment of the Eastern line.
In response to this second spill on the Eastern line, PHMSA issued a
second amendment to its order (Amendment Number Two) requiring
additional rigorous, automated ultrasonic inspections on a continuous
basis of the company's entire North Slope pipeline network and outlining
the standards BPXA would need to meet to restart its pipeline. Prior to
completion of smart pigging, we need to have the best possible factual
information about the condition of the pipelines. The order required the
conduct of four daily ground patrols using heat-seeking infrared
equipment to spot leaks along the entire length of the 22 miles of oil
transit lines. The order required continuous automated ultrasonic testing
on the outside of the operating portion of the Western line, including the
stripping of the insulation to apply the instrument directly to the pipeline.
This technology is producing promising results. The order also required
the de-oiling of the failed segment of the Eastern line and specified the
testing that would be needed on the Eastern line until it could be smart
pigged, and as a condition of smart pigging.
In addition to imposing new requirements for BPXA, PHMSA
further stepped up its presence in Alaska to respond to new threats
presented by the August 6 failure. Our first concern was the impact of
transit line shutdown on the Trans-Alaska Pipeline System. Reduced
product flow from the BPXA transit lines could cause new safety risks to
the TAPS pipeline. The hydraulics of the pipeline is set to operate at a
certain threshold of product flow. It was necessary to determine whether
the operation could be adjusted to a lower level flow. A reduced level of
flow can cause vibrations to occur over certain high elevation passes,
causing PHMSA to question whether it would be necessary to monitor
strain. Long-term reduced flow rate could also cause an environment
more susceptible to internal corrosion. We have determined that Alyeska
can adjust the hydraulics to operate at a lower flow rate, that it is
monitoring the strain caused by vibrations, and that it has an aggressive
cleaning pig program to minimize internal corrosion.
Given the impact of the BPXA line shut down, we were concerned
about any immediate risk that could lead to a shutdown on any of the
other feeder lines to TAPS. We therefore deployed a team to update our
knowledge of the risks to these other pipelines, including those at the
Kuparuk, Alpine, Badami, North Star, Oliktok and Milne Point fields.
We were particularly concerned about a nine-mile section of non-
piggable line on Kuparuk. While we have some long-term integrity
management concerns, no immediate concerns were detected.
We are working with BPXA on its plan to restart the 34" diameter
section of the Eastern line (the line with extensive corrosion discovered
in August) and the conditions it would need to meet to satisfy our safety
concerns. Given that BPXA was not able to sufficiently explain the
causes of the corrosion on the Eastern line, and the potential extent of
damage to the pipe wall, PHMSA has required that BPXA demonstrate
that the Eastern line is in safe condition for pigging operation. PHMSA
needs to be sure that the wall condition is satisfactory to return flow to
the line and pass a smart pig through it, without causing another failure.
On August 29, PHMSA provided very detailed written guidance to
BPXA as to how it must demonstrate the Eastern line's integrity prior to
commencing pigging operations and make appropriate arrangements for
spill contingencies. PHMSA will not authorize restart until we have
analyzed adequate data without undue reliance on the results of data
collected on the in-service segment of the Western line.
Given recent progress with the terms of the amendments to our
CAO, we are hopeful that smart pigging of the 60 percent of the 22
miles of low stress pipelines that have not been tested will be started later
this fall.
PHMSA will maintain the high level of oversight needed to enforce
compliance.
III. DOT'S REGULATION OF LOW STRESS LINES
The BXPA lines that failed on the North Slope were unregulated by
DOT/PHMSA. On August 31, PHMSA proposed new safety
requirements that would bring these lines under regulation. Our proposed
rule applies to facility operators of hazardous liquid gathering and low
stress pipelines in rural areas. We already regulated low stress lines in
populated areas and crossing commercially navigable waterways.
We have taken a risk-based approach - we intend to protect all lines
that, in the event of a failure, could spill into an unusually sensitive area,
or USA, a term we have already defined in our regulations. We have
determined these to be low stress lines within a � mile of a USA and of a
diameter of 8 5/8 inches or more. Our assessment of which lines to
regulate is based on how they can impact a USA, based on the pressure
of the line and the volume of product that could be spilled. Based on
data provided to us by operators of rural low-stress pipelines, spills from
these types of lines have not traveled beyond a quarter of a mile from the
pipelines, and three quarters of those spills have traveled no more than
about 100 feet.
The proposal addresses the need to provide additional and robust
integrity protection to areas where oil pipelines in rural areas could affect
drinking water resources, endangered species and other ecological
resource concerns. This proposed rule will enhance corrosion protection
by including cleaning and continuous monitoring, integrity assessment,
and leak detection. It would require operators of these lines to follow
safety rules for design, construction, testing, and maximum operating
pressure. In addition, the proposal would require operators to protect the
lines from corrosion and excavation damage, install and maintain line
markers, establish operator qualification and damage prevention
programs, provide public education, and report accidents and safety-
related conditions.
Most low stress lines in the lower 48 States of the U.S. bear little
resemblance in their diameter to the low stress lines that BPXA operates
on the North Slope. Most of the lines in the lower 48 States are very
short in length and small in diameter. We believe that most operators of
unregulated crude oil low stress lines have programs in place to regularly
clean and test their pipelines. We believe the regulation we have
proposed will better protect rural environmental areas. We have asked a
number of questions in the notice of proposed rulemaking to get the best
possible information to complete the proposal, including whether we
should extend protections beyond the � mile area, whether if we should
require all unregulated lines to report spills, and whether implementation
time frames are appropriate, and other questions. We can modify the
regulatory proposal as needed based on the information that becomes
available on the docket.
IV. THE U.S. PIPELINE INFRASTRUCTURE IS SOUND
As unfortunate as the recent Alaska incidents are, they are not a
bellwether for the health of the majority of the energy pipeline
infrastructure. It is in much better shape. PHMSA has designed and is
implementing a strong risk-based systems approach to ensure the safety
and reliability of our nation's energy pipeline infrastructure. Our
regulation is having positive results. The number of serious incidents in
which people or the environment are harmed is steadily declining,
particularly on oil pipelines.
Our data shows the integrity management program on hazardous
liquid pipelines is working. Comparing the five year periods before and
after integrity management programs were implemented on hazardous
liquid pipelines, spill frequency dropped 18 percent and volumes spilled
dropped 35 percent.
The leading causes of failure on hazardous liquid transmission
pipelines are down nearly 50 percent since the integrity management
programs were put in place in 2000.
Operators have a better understanding of the condition of their
pipelines and the pipelines are in better condition. Safety programs are
improving to sustain improved performance in the future. PHMSA
closely monitors operator-specific performance and flags companies
whose performance is falling for more intense oversight and inspection.
We had flagged BP as one of those companies, prior to the accident in
March. We have several enforcement actions in place against BPXA
affiliate BP Pipelines (Alaska) Inc. for shortcomings in its integrity
management on regulated lines in Alaska. We have taken actions in
recent years against BP North America for compliance issues in the
lower 48 States. We intervene with operator executives to prevent
accidents, usually before they happen, not just respond after the fact, and
make full use of all our enforcement options, including civil penalties at
the higher level authorized under the Pipeline Safety Act of 2002.
V. LET'S NOT LOSE SIGHT OF THE MOST PRESSING
SAFETY PROBLEM
In the past few years, PHMSA has taken a hard look at incidents,
their causes and what can be done to prevent them. One thing is clear-the
leading cause of incidents (42 percent of total) in which people are hurt
or killed is construction-related damage causing an immediate rupture or
damage that later grows to failure. This occurs most often on the
distribution systems that run through the neighborhoods where people
live and work.
Unfortunately, since 1996, incidents of construction-related damages
on distribution systems have clearly increased as much as 49 percent, and
this in areas where people are most likely to be hurt.
This part of the pipeline system, the distribution network, is almost
entirely under the jurisdiction of States, our foremost partners in pipeline
safety. These incidents are almost entirely preventable. We need to help
States do more, and we need new authority to make this happen.
The Secretary of Transportation recently submitted to Congress the
Administration's legislative proposal to reauthorize and improve pipeline
safety and protection for the environment, and also to enhance
infrastructure reliability. The proposal, the "Pipeline Safety and
Reliability Improvement Act of 2006" aims to build on our progress in
achieving the mandates of the 2002 Act by placing more emphasis on
damage prevention and enhancing state programs' oversight of pipelines.
Our progress on completing recent and past mandates and
recommendations is attached.
These reauthorization concepts have been generally supported across
our stakeholder community, including the Federal and State family, and
we are pleased to see many of the same priorities reflected in the
Committee's proposal.
VI. Conclusion
I assure the members of this Subcommittee, that the Administration,
Acting Secretary Cino, and the dedicated men and women of PHMSA
share your strong commitment to improving safety, reliability, and public
confidence in our Nation's pipeline infrastructure.
Like you, we understand the importance of our mission to the safety
of our citizens and the energy security and continued economic growth
of our great Nation.
Thank you.
I would be pleased to answer any questions you may have.
###
Attachments:
PHMSA Mandate Progress Chart
PHMSA Mandate Progress Graph
MR. BURGESS. Thank you. Without objection, your written
statement will be submitted for the record. We will now hear from Mr.
Fredriksson for 5 minutes.
MR. FREDRIKSSON. Mr. Chairman, members of the subcommittee,
thank you for the opportunity to testify before the subcommittee
regarding your review of BP's recent crude oil transmission pipeline
failures on Alaska's North Slope. My testimony today will focus on the
Alaska Department of Environment Conservation's responsibilities for
oil spill prevention and response in Alaska.
To begin, I want to emphasize to the subcommittee that a thorough
fact-finding investigation of BP's management of the North Slope oil
field is being conducted by my department and the Alaska Department of
Law. As part of the ongoing investigation, I have served subpoenas on
BP and other holders of the Prudhoe Bay leases to preserve all
documents related to this occurrence and pipeline corrosion going back
to 1996. After the State's investigation is complete, appropriate legal
action will be taken to protect Alaska's interests.
The mission of my department is to protect public health and the
environment. Alaska's legislature has provided the department with a
very broad and comprehensive authority to carry out this mission. As the
department's commissioner, I have a duty to adopt and enforce
regulations for controlling the release of pollution to Alaska's air, land
and water. I take very seriously the department's duty to prevent and
respond to the unauthorized release of oil and hazardous substances.
Prevention of spills is a major topic for today's hearing. However,
it is important that I briefly describe the department's role in spill
response. Under Alaska law, any person causing an oil spill must immediately
clean up and contain the spill to the State's satisfaction. If the
department determines the response to a spill is not adequate, it may
undertake the cleanup itself. The response by BP and others to the
Gathering Center 2 and Flow Station 2 pipeline spills has been
exemplary. The spills were quickly contained, oil removed, damage to
health and wildlife prevented and impact to the environment minimized.
The Alaska Department of Environmental Conservation is also
authorized to adopt and enforce spill prevention regulations for pipelines.
Since 1992, the department has enforced regulatory leak detection
requirements on crude oil transmission lines. There are currently no
State corrosion control requirements for crude oil transmission lines. At
this time there are also no State regulatory requirements for corrosion
control or leak detection on flow lines. However, that is about to change
as I will describe later in my testimony.
In the late 1990s, discussions between the State of Alaska, BP and
ARCO as part of the BP-ARCO merger led to a charter agreement for
development of the Alaskan North Slope that included several
environmental commitments, one of which addressed pipeline corrosion.
Under the provisions of the charter agreement, BP committed to report
annually to my department on their current and projected corrosion
monitoring, maintenance and inspection practices to assess and to
remedy potential or actual corrosion and other structural concerns related
to North Slope pipelines. Corrosion performance management reports
have been submitted by BP annually since 2000. Each report has been
independently reviewed by Coffman Engineers Incorporated, a nationally
recognized independent engineering firm under contract with my
department. Based on information provided by the charter agreement,
the department joined with other governmental and non-governmental
stakeholders in 2004 to review and update Alaska's spill prevention
regulations. This review led the department to propose new corrosion
control regulations for flow lines. The State placed a high priority on
proposing corrosion control regulations for the flow lines because they
carry a highly corrosive mixture of oil, gas and water, they have a history
of leaking, and because they represent the vast majority of the pipelines
on the North Slope of Alaska. Relatively speaking, the crude oil
transmission pipelines were considered a much lower risk. The flow line
regulations were 2 years in the making and were ready for adoption at
the time of the GC-2 crude oil transmission pipeline spill which occurred
in March of this year. The department immediately considered adding
crude oil transmission lines to the regulatory package at the time of the
GC-2 spill but decided against their inclusion because it would delay
implementation of the flow line regulations. We also wanted to complete
the investigation into the cause of the GC-2 pipeline failure so that our
regulations would benefit from the lessons learned from that incident.
Although information is still being generated and investigations such as
this hearing are ongoing for the GC-2 and FS-2 incidents, it is apparent
that the current corrosion management programs for crude oil
transmission lines should be revised and expanded so as to be able to
detect the effects of previously unrecognized corrosion mechanisms that
could adversely impact the future safe operation of the infrastructure on
the North Slope. A separate State regulatory proposal for crude oil
transmission lines remains under consideration pending further review of
the actions recently proposed by the U.S. Department of Transportation's
Pipeline and Hazardous Materials Safety Administration.
Pipeline corrosion issues are technically complex and the State's
resources must be matched to the appropriate level of oversight.
Following the GC-2 spill in March of this year, the Alaska Department
of Environmental Conservation created an interagency Arctic Pipeline
Technology Team with the Alaska Department of Natural Resources and
the Alaska Oil and Gas Conservation Commission to coordinate the
State's oversight of North Slope pipeline integrity. The Pipeline
Technology Team is planning to hold a pipeline integrity conference in
Alaska this winter to examine the latest pigging technology and best
practices for corrosion management, monitoring and inspection for
pipelines in Arctic climates.
To summarize, BP has accepted responsibility for correcting their
pipeline failure and the governor has directed the Department of Law and
my department to ensure that they are held accountable. Once
discovered, the spills were contained and cleaned up with minimal
environmental damage. Some of the best industry and government
engineering experts are working the problems. The defective pipelines
will be replaced. The State flow line regulations are expected to be in
effect by the end of the calendar year, and we will be reviewing the
rulemaking proposed by the Pipeline and Hazardous Materials Safety
Administration to determine what additional actions the State should
take.
Thank you for the opportunity to testify before the subcommittee. I
would be happy to answer any questions.
[The prepared statement of Kurt Fredriksson follows:]
PREPARED STATEMENT OF KURT FREDRIKSSON, COMMISSIONER,
ALASKA DEPARTMENT OF ENVIRONMENTAL CONSERVATION
Good morning. My name is Kurt Fredriksson, and I am the
Commissioner of the Alaska Department of Environmental Conservation
(ADEC). Thank you for the opportunity to testify before the
Subcommittee regarding your review of BP's recent crude oil
transmission pipeline failures on Alaska's North Slope.
Hearings like this should provide assurances to the people of the
United States that Congress and the State of Alaska are diligent and
vigilant in overseeing the responsible development of Alaska's important
natural gas and oil resources.
My testimony today will focus on the Alaska Department of
Environmental Conservation's responsibilities for oil spill prevention
and response in Alaska. As requested by the Subcommittee, I will
address the question of what went wrong with BP's pipeline spills, and
explain what I also believe went right with these events.
To begin I want to emphasize to the Subcommittee that a thorough
fact-finding investigation of BP's management of the North Slope oil
field is being conducted by my department and Alaska's Department of
Law. As part of the ongoing investigation, I have served subpoenas on
BP and other holders of the Prudhoe Bay leases to preserve all
documents related to this occurrence and pipeline corrosion going back
to 1996 (enclosure 1). After the State's investigation is complete,
appropriate legal action will be taken to protect Alaska's interests.
The mission of ADEC is to protect public health and the
environment. Alaska's legislature has provided the Department with
very broad and comprehensive authority to carry out this mission. As the
department's Commissioner, I have a duty to adopt and enforce
regulations for controlling the release of pollution to Alaska's air, land,
and water.
I take very seriously the department's duty to prevent and respond to
the unauthorized release of oil and hazardous substances.
Prevention of spills is a major topic for today's hearing, however, it's
important that I briefly describe ADEC's role in spill response.
Under Alaska law any person causing an oil spill must immediately
contain and cleanup the spill to the satisfaction of ADEC. If ADEC
determines the response to a spill is not adequate it may undertake
cleanup itself. The spiller is also strictly liable for the state's costs
incurred to respond to, and oversee the cleanup.
The response by BP and others to the Gathering Center-2 and Flow
Station-2 pipeline spills has been exemplary. The spills were quickly
contained, oil removed, damage to health and wildlife prevented, and
impact to the environment minimized.
In addition to its responsibilities for spill response, ADEC is also
authorized to adopt spill prevention regulations for pipelines. Because of
the complex and sometimes conflicting pipeline nomenclature in use by
various state and federal agencies let me start by clarifying ADEC
pipeline regulatory terminology.
There are many different types of pipelines operating on the North
Slope carrying many different types of liquids and gas for many different
purposes. For purposes of this testimony I will focus on aboveground
pipelines on the North Slope that are subject to the state's spill
prevention authorities (enclosure 2). Pipelines that carry crude oil, water
and gas from the wellhead to a processing facility are called flow lines.
Flow lines carry the most corrosive fluids and make up the majority of
the pipelines on the North Slope. Seawater injection and produced water
pipelines are included in our definition of flow lines.
Pipelines which carry crude oil from the separation facility are
defined as crude oil transmission pipelines. These are single phase
pipelines which carry crude oil that has been processed to remove the
water and gas carried by the flow lines.
Since 1992, the department has enforced regulatory leak detection
requirements on crude oil transmission lines. There are currently no state
corrosion control requirements for crude oil transmission lines. At this
time there are also no state regulatory requirements for corrosion control
or leak detection on flow lines. However, that is about to change as I
will describe later in my testimony.
The original Plan of Development for the Prudhoe Bay reservoir
projected a 42% recovery of crude oil or approximately 9.6 billion
barrels. Based on these estimates Prudhoe Bay was not expected to be
producing oil after 1997. Fortunately, advancements in oil field recovery
technology extended the life of the Prudhoe Bay field. In the late 1990's
discussions between the State of Alaska, BP and ARCO as a part of the
BP/ARCO merger, led to a "Charter Agreement" for development of the
Alaskan North Slope that included several environmental commitments
(enclosure 3).
With extended crude oil production from Prudhoe for another
generation in mind, the State negotiated seven environmental
commitments in the Charter Agreement with the Prudhoe Bay operators
including a specific commitment concerning corrosion that specifies;
BP and ARCO will, in consultation with ADEC, develop a
performance management program for the regular review of BP's
and ARCO's corrosion monitoring and related practices for non-
common carrier North Slope pipelines operated by BP or ARCO.
This program will include meet and confer working sessions
between BP, ARCO and ADEC, scheduled on average twice per
year, reports by BP and ARCO of their current and projected
monitoring, maintenance and inspection practices to assess and to
remedy potential or actual corrosion and other structural concerns
related to these lines, and ongoing consultation with ADEC
regarding environmental control technologies and management
practices.
Corrosion performance management reports have been submitted
annually since 2000 and are independently reviewed and audited by a
nationally recognized independent engineering firm. The reports are
technically oriented, and intended to ensure a corrosion management
program is in place for the life of the North Slope oil fields. The annual
reports are available on the department's website at:
www.dec.state.ak.us/spar/ipp/corrosion/index.htm.
The engineering review process and reporting metrics for the annual
reports were developed during the first year of the agreement to promote
the free exchange of engineering viewpoints through report drafts, meet
and confer sessions, and technical meetings to clarify questions, agree on
metrics for reporting, review the application of various engineering
standards, and analyze a host of complex technical matters. The process
allows all parties to offer their judgment and criticism and opposing
viewpoints.
Based on information provided by the Charter Agreement, the
department joined with other governmental and non governmental
stakeholders in 2004 to review and update Alaska's spill prevention
regulations. This review led the department to propose new corrosion
control regulations for flow lines.
The rationale and documented basis of need for regulating flow lines
is described in the summary document for the rule making (enclosure 4).
In essence, state corrosion control regulations were developed for the
flow lines first because they carry a highly corrosive mixture of oil, gas
and water; because they have a history of leaking; and because they
represent the vast majority of the pipelines on the North Slope of Alaska.
Relatively speaking, the crude oil transmission pipelines were considered
a much lower risk. The flow line regulations were two years in the
making and were ready for adoption at the time that the GC-2 crude oil
transmission pipeline spill occurred in March. The department
immediately considered adding crude oil transmission lines to the
regulatory package at the time of the spill but decided against their
inclusion because the additional time required to re-public notice and
conduct a hearing would unnecessarily delay implementation of the flow
line regulations which were otherwise ready for adoption. We also
wanted to complete the investigation into the cause of the GC-2 pipeline
failure so that our regulations would benefit from the lessons learned
from that incident. A separate state regulatory proposal for crude oil
transmission lines remains under consideration pending further review of
the actions recently proposed by the U.S. Department of Transportations
Pipeline and Hazardous Materials Safety Administration.
Although information is still being generated and investigations are
ongoing for the GC-2 and FS-2 incidents, it is apparent that the current
corrosion management programs for crude oil transmission lines should
be revised and expanded so as to be able to detect the effects of
previously unrecognized corrosion mechanisms that could adversely
impact the future safe operation of the infrastructure on the North Slope.
Pipeline corrosion issues are technically complex and the state's
resources must be matched to the appropriate level of oversight.
Following the GC-2 spill in March of this year, ADEC joined the Alaska
Department of Natural Resources, and the Alaska Oil and Gas
Conservation Commission in creating an interagency Arctic Pipeline
Technology Team to coordinate the state's pipeline integrity oversight.
The purpose and structure of the team is described in the Memorandum
of Agreement between the three agencies (enclosure 5). Funding for the
team leader, agency support costs, and technical consulting assistance is
provided under the Charter Agreement. In addition, the department has
directed $500,000 from the Charter Agreement be invested in a Pipeline
Integrity Conference held in Alaska this winter to examine the latest
technology and best practices for corrosion management, monitoring and
inspection, and leak detection for pipelines in arctic climates.
To summarize, BP has accepted responsibility for correcting their
pipeline failure and the Governor has directed the Department of Law
and my department to ensure they are held accountable. Once
discovered, the spills were contained and cleaned up with minimal
environmental damage. Some of the best industry and government
engineering experts are working the problems. The defective pipelines
will be replaced. The state flow line regulations are expected to be in
effect by the end of the calendar year and we will be reviewing the rule
making proposed by the Pipeline and Hazardous Materials Safety
Administration to determine what additional actions the state should
take.
The good news for America is that production from Prudhoe Bay did
not end in 1997 with 9.6 billion barrels. Approximately 11.3 billion
barrels has now been recovered from Prudhoe Bay with expectations of
pumping yet another 2 billion barrels. Extracting more oil from existing
fields helps meet the nation's energy needs. Pipes can be fixed and
production can be restored because Prudhoe Bay is not out of oil.
Lessons will be learned from the state and federal investigations of these
pipeline failures and technical review by our Arctic Pipeline Technology
Team. Extended production from the Prudhoe Bay field will continue to
supply the nation's energy needs with an enhanced level of safety and
oversight.
MR. BURGESS. Thank you, Mr. Fredriksson. We will get to
questions in just a moment. Ms. Gerard, we are willing and able to take
your 5-minute testimony now--very well.
Admiral Barrett, thank you for your testimony. How would you
describe the condition of BP's Prudhoe Bay transmission lines at the
time the Pipeline and Hazardous Materials Safety Administration issued
the corrective action order in March of 2006?
VICE ADMIRAL BARRETT. I would say they fundamentally didn't
understand the condition of the lines, and if you look at our order, it was
directed at accomplishing two things. It was clearly to understand the
correction of the lines, ordering additional inspections to again better
understand the actual conditions on those lines, and then directing
appropriate safety controls, and we are still working that process
forward, but I would say fundamentally, the condition of the lines is
evidenced by the two leaks, one on the western side and one on the
eastern side, and the basic underlying problems is, those conditions were
not understood.
MR. BURGESS. Well, if I may ask, what explanation has BP given
for the failure of the western operating line that resulted in the March
2006 leak?
VICE ADMIRAL BARRETT. They haven't given us a satisfactory
explanation of the corrosion modeling on that line. As you know, the
likely cause, although it is still being investigated, was pitting, if you
will, or biologically induced or promoted corrosion in a low spot on the
line, and that spot was simply not identified. The pigging--I heard some
of the earlier testimony. That line was--that spot on that line was not
picked up as a problem area and was not assessed using ultrasound or
other means to accurately pin down that the problem existed.
MR. BURGESS. We heard earlier described ultrasound as being
rather a tedious way to go about pipeline inspection. Is that correct, or
can ultrasound be done in an expedient fashion?
VICE ADMIRAL BARRETT. It is an effective tool. Typically what
happens, if you look at how the internal corrosion issues are assessed, is
a couple of things. One is, the lines are typically swept by maintenance
or cleaning pigs to keep the line clean, keep sludge from building up on
the sides of the lines, allow your corrosion inhibitors to work on the side
of the line, and once the sludge or the scale is cleaned, then you would
want to run the cleaning, the sensor pigs down the line and get a picture,
and the sensor pig will indicate where there are possible problems on the
line. You might--it might show risk of wall loss to some degree, maybe
50 percent or 20 percent or 70 percent. On the eastern lines, some spots
it exceeded 80 percent when they ultimately ran it. But typically then
you go out with tools like the ultrasound to get a much more accurate
detailed picture at the sites, the specific sites where the sensor indicates
you may have a problem. So it is not really designed to run a whole line
but it is very effective at getting a better picture on a particular spot,
about a 12-inch site on a line.
MR. BURGESS. On the eastern side, what explanation has BP given
for the problems with the eastern operating line that caused BP to shut
that line down in August?
VICE ADMIRAL BARRETT. What they said basically was they their
corrosion modeling completely failed. They had no explanation of what
might have caused the seeps and weeps. The inline inspection was done
because we ordered it on that line. Once it turned up these sites, they
went out and looked at it, but fundamentally, they had no explanation as
to what could have caused that, and also, the lines are different. On the
western side, it is a line with many more frequent elevation changes. On
the eastern side, it is much more straight pipe, so to the extent they had
an explanation on the western side that said it was a low spot, maybe
water collected, maybe it wasn't swept out enough, on the eastern side it
is pretty much straight line and the same explanation would not apply,
and what I would also add is, and I haven't seen it and perhaps you have
it in your records, but I have seen this discussion about 16--when that pig
run came back, about 16 spots with significant wall loss, but if you
looked a little broader, you would see, I think the number I saw was
about 187 spots with wall loss approaching 50 percent. This was not an
isolated couple of spots. This was a number of spots where you had a
substantial problem, and frankly, they had no explanation.
MR. BURGESS. What were some of the major program weaknesses
that the Department of Transportation found?
VICE ADMIRAL BARRETT. Well, I think again to walk back through
it, fundamentally you have to understand the condition of the line both
externally and internally from a corrosion point of view, and the
fundamental problem was, they were simply not running cleaning pigs,
they were not running inline inspection tools. Some of the aspects of
their program are perfectly fine for the limited purpose. You heard
discussion about the coupons, managing--you know, they give an
indication of progressive wall loss. That is perfectly acceptable but it
wouldn't get at the type of pitting and biologically induced corrosion you
have here. Now, the operators up there on the North Slope, the fact you
may have biological corrosion as well as chemical corrosion is well
known. You are injecting water into the wells, frequently seawater, so
you get biological organisms in there and despite the production process,
some of them can stay in your product and migrate down the line. So
you have to manage against that risk, and BP did not have an effective
way of doing it. And again, we are investigating and we will pin down
as exactly as we can what went on with a view towards preventing this in
the future, but for example, they had--they inject corrosion inhibitors.
That would be a fairly common practice. As near as I could tell, they
weren't measuring the effectiveness of those corrosion inhibitors down
the line and they were not taking into account the fact that those
inhibitors may have been held off the pipe wall by the buildup of sludge
as you have heard.
So that is a long answer, but fundamentally, some answers of their
program were fine. Basically it was not comprehensive and it was not
comprehensive enough to address the risks, the corrosion risks on that
line.
MR. BURGESS. Well, do you think some of these problems are not
just limited to BP but they are more of an industry-wide problem?
VICE ADMIRAL BARRETT. No, sir, I don't. Frankly, the problems
we see on these lines are not replicated elsewhere, even in Prudhoe Bay
or elsewhere in the industry. The standard of care generally used--you
heard Mr. Hostler from Alyeska talk earlier about the fact that they run
maintenance pigs down the TAPS about every 14 days. Well, each line
is different. There are different sizes. They run different products. The
product coming out of the western--onto the western lines is different
than the product coming out of fields on the eastern side. But typically
up on the North Slope and generally in the industry, you would see
maintenance pigs every couple of weeks, certainly every couple of
months, but not never on lines of this type.
MR. BURGESS. Ms. Gerard, if I could ask you, is it true that BP has
strongly resisted the Department of Transportation's efforts to put all 100
miles of its federally regulated lines in Alaska into the integrity
management program?
MS. GERARD. That is certainly true.
MR. BURGESS. What justification did BP give for refusing to put all
of its 100 miles of regulated pipelines in Alaska into the integrity
management program?
MS. GERARD. By their risk assessment, they didn't think that a leak
would hurt the species that live in the area that are intended to be
protected by law.
MR. BURGESS. Was there a similar justification for the effect on the
human population?
MS. GERARD. There was. In that case, it was the employees of the
company had been trained in emergency response procedures and
therefore they didn't need to have the benefit of the integrity and
protection.
MR. BURGESS. Well, what then was the ultimate outcome when we
had the leaks as described?
MS. GERARD. These lines that I am describing are 96 miles of the
regulated high-pressure lines, not the low-stress lines, and eventually we
had to order them to comply with the integrity management
requirements.
MR. BURGESS. As a result of that, was it necessary to order anyone
else into the integrity management program?
MS. GERARD. No. In fact, quite the opposite. We had originally
estimated that about 25 percent of the high-pressure transmission miles
would be determined to be necessarily protected by integrity
management requirements and the actual amount the other companies
besides BP put in was about 80 percent.
MR. BURGESS. Thank you. Admiral Barrett, are you satisfied with
the pace of BP's repairs to Prudhoe Bay transmission pipelines in the
wake of the events in March and August?
VICE ADMIRAL BARRETT. Right now, BP is progressing and doing
some of the things we thought should have been done a long time ago.
In general terms, their actions prior to the March spill were a
disappointment. Initially after we issued our initial order, the response
and actions to implement that order in my view were too slow. That is
one of the reasons I went up there in July, and right now they are doing
things in compliance with our order and--
MR. BURGESS. Have they made every conceivable effort to meet
with the deadlines and requirements set forth in your corrective action
order?
VICE ADMIRAL BARRETT. I wouldn't speculate but we have
reserved all our enforcement actions or options on that. I mean, I would
say going back from March through today, I would say no, they were
moving slower than I thought they could have moved, and that was one
of the reasons we went up and met with them.
MR. BURGESS. And we appreciate you doing so. Now, BP filed a
petition with PHMSA on June 6 stating it would be unable to comply
with several of the deadlines in the corrective action order for reasons
"outside of its control." Do you know what some of those reasons were?
VICE ADMIRAL BARRETT. I don't want to speculate, but I don't
accept that argument. If you look at what is going on up there now, for
example, we have ordered them to pig the lines. The obstacle to pigging
that BP--they had to manage the solids to Alyeska. That is a crucial
issue. Safety of the Trans Alaska Pipeline is a major concern of mine,
and what is going on up there now is, they are running bypass lines. You
heard discussion of the taking bypass from skid 50 into tank 110. These
actions are happening now. Why they couldn't have happened months
ago eludes me frankly.
MR. BURGESS. Thank you, and I appreciate your candor. I now
recognize the Chairman of the--I am sorry--the Ranking Member of the
full committee, Mr. Dingell.
MR. DINGELL. Mr. Chairman, you are most gracious. Thank you.
On page 20, Admiral, of your statement, I read these words:
"PHMSA closely monitors operator-specific performance and flags
companies whose performance is falling for more intense oversight and
inspection. We had flagged BP as one of these companies prior to the
accident in March. We have several enforcement actions in place against
BPXA affiliate BP Pipelines Alaska, Inc. for shortcomings in its integrity
management on regulated lines in Alaska." What does that mean? What
are you telling us?
VICE ADMIRAL BARRETT. Mr. Dingell, that is the same issue that
Ms. Gerard alluded to a few minutes ago, that on the 100 other miles of
pipeline that they have up there that are subject and have been subject to
DOT regulation, the high-stress lines, getting all of those lines under the
integrity management program, which we feel is essential to effective
risk management and safety, frankly was resisted by BP right up until
after the March spill, and so it is the type of thing that again would have
caused us to question their commitment. We actually issued an order
directing amendments to make them bring those lines into the full-up
integrity management program, and subsequent to the spill in March and
the actions we took then, they have now done so, but that went on over a
2 or 3 year period.
MR. DINGELL. Ms. Gerard, do you have any comments to add?
MS. GERARD. The key safety action that they were resisting was
pigging, smart pigging.
MR. DINGELL. I wanted to get to this. Admiral, Ms. Gerard, do
these matters relate to pigging, not pigging, improper pigging or anything
else related to that kind of action either with regard to maintenance
pigging or with regard to the kind of pigging that you do with smart
pigs?
VICE ADMIRAL BARRETT. The integrity assessment program which
is part of the integrity management program would require them to take
those actions, the smart pig.
MR. DINGELL. Ms. Gerard?
MS. GERARD. Specifically, smart pig. We did not specify cleaning
pigs in the integrity management rule.
MR. DINGELL. Okay. We will probably be sending you a letter to
ask for additional information on these matters. Mr. Barrett, the current
regulations governing hazardous liquid pipelines exempt certain
pipelines operating at low stress from DOT regulation. That is correct, is
it not?
VICE ADMIRAL BARRETT. Yes, sir, they do. That is what we have
just proposed.
MR. DINGELL. In fact, the lines that failed in Alaska fell under this
exemption. Isn't that true?
VICE ADMIRAL BARRETT. Yes, sir, it is.
MR. DINGELL. Can you explain to the committee why these lines
were exempt from regulation? Was it a result of DOT action or
something the Congress ordered the department to do?
VICE ADMIRAL BARRETT. Sir, we had been working for the 2 years
previously to bring these lines under regulation. Frankly, our highest
priority in the agency over the past several years was life safety, getting
on high-stress liquid and gas lines that run in populated areas that
threaten, you know, as you would expect, communities where people
live, that threaten schools, that took on a higher priority within the
agency. But clearly these low-stress lines in unusually sensitive areas
were identified as an area that needed to be brought under regulation and
the agency was going through the process to develop--
MR. DINGELL. Admiral, as I understand this matter, your regulations
control which pipelines are under regulation and which are not. Low-
pressure pipelines are under regulation or not?
VICE ADMIRAL BARRETT. Certain low-pressure pipelines that run in
populated areas and that run near navigable waters are already regulated
and so the lines we are talking about not regulated are those that operate
in rural areas and ones in--
MR. DINGELL. Now, why were these not regulated?
VICE ADMIRAL BARRETT. Well, again, we were moving to--
MR. DINGELL. Because of the regulation. So you were moving to
adopt a regulation--
VICE ADMIRAL BARRETT. Yes, sir.
MR. DINGELL. --which covered these rather than just putting them
under control because you had--
VICE ADMIRAL BARRETT. Yes, sir. We had to put them under
control because we--
MR. DINGELL. --to function under an existing regulation. Is that
right?
VICE ADMIRAL BARRETT. That is correct, sir.
MR. DINGELL. Can you tell us when you would expect to complete
that regulation?
VICE ADMIRAL BARRETT. Sir, we issued the regulation on the 31st
of August as a proposed rulemaking.
MR. DINGELL. On the 31st of?
VICE ADMIRAL BARRETT. August of this year.
MR. DINGELL. Of this year?
VICE ADMIRAL BARRETT. Yes, sir. It is open for 60-day comment.
We obviously are open to suggestions--it is a proposal--as to the scope of
the rulemaking and the requirements that are included in it, and at the
conclusion of that 60-day period, we will assess any comments or input
we get and then issue a final rule.
MR. DINGELL. Now, Admiral, I wonder, does DOT currently
regulate other lines in the Prudhoe Bay field?
VICE ADMIRAL BARRETT. Absolutely, yes, sir.
MR. DINGELL. Which ones?
VICE ADMIRAL BARRETT. We operate--we regulate all the high-
stress lines up there operated by BP and other operators on the field,
about 400 miles of lines up there actually.
MR. DINGELL. But you don't--do you regulate any other low-stress
or low-pressure pipelines up there in the field?
VICE ADMIRAL BARRETT. Not until this rule is issued.
MR. DINGELL. Until the rule is issued?
VICE ADMIRAL BARRETT. Yes, sir.
MR. DINGELL. You haven't gotten around to regulating any of them,
have you?
VICE ADMIRAL BARRETT. It would be the same situation as the BP
low-stress lines. There are other low-stress lines up there that--
MR. DINGELL. Now, prior to the spill, was the department
concerned that it didn't have any information on the two key transit lines
in America's largest-producing oil field?
VICE ADMIRAL BARRETT. Yes, sir, we were, of course we would be.
In fact, we had inspectors check the lines occasionally to make sure that
they were being operated at low stress. In other words, if they--
MR. DINGELL. Would you give us the dates on which those
inspections took place?
VICE ADMIRAL BARRETT. Sir, I would be pleased to provide that for
the record.
MR. DINGELL. And if you please, would you also tell us what the
inspectors reported.
VICE ADMIRAL BARRETT. Absolutely.
MR. DINGELL. So we have an understanding of that. Now, can you
tell us what your concerns were?
VICE ADMIRAL BARRETT. As indicated, and I believe there was
some discussion earlier, these lines in order to be considered low stress
and exempt from our oversight had to operate at less than 20 percent of
the maximum rated strength on the line, and so if they ran above 20
percent of the maximum rated strength, they would have come under the
full oversight applied to high-stress lines. The western area line I believe
was rated at about 850. It was being operated down around 80, I believe,
but we would have had inspectors check to make sure that the line in fact
was being operated as a low-stress as opposed to a high-stress line.
MR. DINGELL. Are you telling us that you need reporting and
disclosure and maintenance authority on these lines or do you have that
authority now?
VICE ADMIRAL BARRETT. We do have the authority and that is--we
are using that authority to both--
MR. DINGELL. So you don't need any authority in these areas:
reporting, disclosure or--
VICE ADMIRAL BARRETT. No, sir. We have the authority to issue
the regulations or to do it by order as we have done with BP over the past
several months.
MR. DINGELL. Now, the department though took no action on the
concerns that you had with regard to this field. Is that right? You had
concerns and you had concerns enough to send inspectors out to take a
look at the field but you didn't take, as I gather, any regulatory action.
Am I correct in assuming that you didn't respond because your own--
because the absence of regulations controlling or regulating those
pipelines were not on the books. Is that right?
VICE ADMIRAL BARRETT. Correct, sir. The--
MR. DINGELL. All right. Now, is it safe to say that if the DOT had
concerns with these transit lines in Prudhoe Bay, the department
wouldn't have been able to act on these concerns absent an accident
because of the department's own regulatory exemption. Is that a fair
statement?
VICE ADMIRAL BARRETT. Yes, sir. We would have required an
imminent hazard, which we--which took place in March with the spill,
but under our requirements, our ability to act absent a regulatory regime
would have required an imminent threat to safety or health and--
MR. DINGELL. All right. Now, is it true that your current proposed
rules on low-stress lines leave some 4,300 miles of low-stress lines
completely unregulated without requirements to report accidents or to
manage for corrosion?
VICE ADMIRAL BARRETT. That is--yes, sir, that is an estimate but
the--one of the questions we asked in the rulemaking proposal was
whether even absent a regulatory oversight, additional reporting
requirements ought to be imposed with respect to those lines. That is one
of--
MR. DINGELL. It kind of looks to me like you may have another
spill coming down the road at you in some of these 4,300 miles of
unregulated line because, remember, not only do you not regulate them,
but you don't have reporting and you don't have disclosure and you
don't have maintenance authority under your own regulations. What are
you going to do about that?
VICE ADMIRAL BARRETT. A lot of these lines are overseen at the
State level by States. They are for the most part much smaller than the
type of lines BP is operating up here. We are talking 30- and 34-inch
lines. Most of the lines that would fall outside the scope of our proposal
are down below probably 16 inches at most. They are much smaller
lines, carry less product.
MR. DINGELL. The line that--the two lines that you shut down were
unregulated by you. Were they regulated by the State?
MR. FREDRIKSSON. Congressman Dingell, no they were not. They
were regulated to the extent that we had leak detection on the--
MR. DINGELL. Well, why are you so comfortable then that these
lines that you are not going to regulate in this 4,300 miles are regulated
by the States?
VICE ADMIRAL BARRETT. Well, we looked at the spill history on the
lines and the risk the lines posed, and again, we are capturing lines that
affect or could affect unusually sensitive areas, not everywhere that the
lines run, and usually the sensitive areas, we have defined them in the
proposal to include areas where there are threatened or endangered
species or a community water supply--
MR. DINGELL. I am curious, Admiral, which is a sensitive area and a
line which traverses a sensitive area?
VICE ADMIRAL BARRETT. Again, I--
MR. DINGELL. I think--
VICE ADMIRAL BARRETT. --I want to--
MR. DINGELL. --here you might have told me and BP might have
told me that none of these lines that we are addressing today where you
have had the accident would have been transiting across a sensitive area.
VICE ADMIRAL BARRETT. Well, we obviously didn't agree with
BP's assessment of that and we have mapped the unusually sensitive
areas so they can be identified.
MR. DINGELL. Well, I think--
MR. BURGESS. The gentleman's time has expired.
MR. DINGELL. I do thank you, Mr. Chairman.
MR. BURGESS. And I apologize to the Ranking Member of the
subcommittee, Mr. Stupak.
MR. STUPAK. No problem.
MR. BURGESS. I should have recognized him first. I violated
protocol, but Mr. Stupak, you are now recognized.
MR. STUPAK. Admiral, you said that on the eastern pipeline there,
BP said there was 16 spots of concern. You said there is more like 187.
VICE ADMIRAL BARRETT. Yes, sir. I have seen the report. There
were 16 very serious spots where there was wall loss, in some cases up
over 80 percent, but if you are looking at the risk profile there, we would
be looking at wall losses in locations where you might have only seen it,
say, down at 50 percent, might not require--it might not be as serious but
it is still indicating a problem.
MR. STUPAK. Well, you said you had seen the report. Do you know
the date of that report?
VICE ADMIRAL BARRETT. I can get that information and provide it
for the record.
MR. STUPAK. Was it this year?
VICE ADMIRAL BARRETT. It is the result of the pigging--it is a result
of the ILI, the pig run.
MR. STUPAK. That has been done after the--
VICE ADMIRAL BARRETT. And the follow-up ultrasounds based on
the areas identified, but we could certainly provide that for you.
MR. STUPAK. When did Department of Transportation first learn
that major solids, amounts that could not easily be pigged, were in the
eastern operating area line, and so when does--when did you first learn
that? Again, this year?
VICE ADMIRAL BARRETT. It would have been this year after the
spill when we put inspection teams up on the lines, and we spoke also
with Alyeska Pipeline. There were concerns, significant concerns, and I
actually went out and looked at Alyeska and met with them to discuss
that, but it would have been subsequent to the March spill
MR. STUPAK. Do you have any idea--or when do you believe that
BP would have learned of this blockage?
VICE ADMIRAL BARRETT. I can't speak to when they would have
learned. I can provide you exactly when they would have identified the
issue to us, which would probably have been back in late March or early
April.
MR. STUPAK. When should they have learned of the blockage?
VICE ADMIRAL BARRETT. Again, our assessment was they should
have been regularly maintenance pigging the lines to prevent that from
coming up.
MR. STUPAK. And they didn't regularly pig the lines, so you and
Ms. Gerard were talking about they resisted the integrity management
program over a period of 2 to 3 years?
VICE ADMIRAL BARRETT. Yes, sir.
MR. STUPAK. And when I say "they" I mean BP. Well, who would
enforce the integrity management program?
VICE ADMIRAL BARRETT. We would, and we issued orders to BP to
ensure that they brought that program to bear.
MR. STUPAK. So for 2 to 3 years, was it a negotiation with BP then?
I mean, I just can't understand why DOT would not just say hey, look,
we have been going at this for a year, let us just put forth an enforcement
rule.
VICE ADMIRAL BARRETT. We did, but it is a little more complicated
in the sense that they would have--once you bring them in, they would
have to bring forward with that a plan to assess the condition of the lines,
but, you know, I can't speak to all the decisions there, maybe Ms. Gerard
can, but from my point of view, it probably took too long.
MR. STUPAK. Well, did they ever bring forth a plan to check this
line then?
VICE ADMIRAL BARRETT. Eventually they did but as I--
MR. STUPAK. When was that?
VICE ADMIRAL BARRETT. It was after the March spill.
MR. STUPAK. Everything seems to be after March.
VICE ADMIRAL BARRETT. Yes. Maybe Ms. Gerard, do you have
any amplifying data there? We can provide the data we have--
MR. STUPAK. Go ahead, Ms. Gerard.
MS. GERARD. Just to clarify, the initial enforcement action is called
a notice of amendment, which is an enforcement tool used to make the
company modify their plans. They are entitled to due process and
hearings and--
MR. STUPAK. Sure.
MS. GERARD. --they brought forth information arguing with us
about the fact that they couldn't possibly affect the threatened
endangered species and so we went back and forth for a while until we
said enough is enough, we are ordering you, directing you, used a
tougher tool, order directing amendment.
MR. STUPAK. So when was that order directing amendment? Any
idea?
MS. GERARD. April.
MR. STUPAK. After March. Okay. So if you have to go through this
and the State, right, Mr. Fredriksson, doesn't have any enforcement on
this risk management program?
MR. FREDRIKSSON. That is correct, Congressman Stupak. Our
authority is over leak detection and the actual spill itself.
MR. STUPAK. Mr. Fredriksson, let me ask you this. In 2001, were
you, Commissioner Michelle Brown and Larry Dietrich warned by your
staff that BP's pipeline leak detection system had been out of compliance
since 1997?
MR. FREDRIKSSON. No, sir.
MR. STUPAK. In 2001, did BP request a waiver from your
department to avoid installing leak detection systems on the Prudhoe Bay
pipelines?
MR. FREDRIKSSON. Not that I am aware of, no, sir.
MR. STUPAK. In 2001, did your department staff recommend
enforcement against BP for failure to install the required leak detection
system?
MR. FREDRIKSSON. I would have to check the records on that,
Congressman Stupak. I do recall there was an incident that did fall
within the leak detection, not moving forward on that. We took action to
ensure that that moved ahead expeditiously. We took enforcement--
MR. STUPAK. Well, that was all 2001, so what did you do to make
sure it moved forward expeditiously?
MR. FREDRIKSSON. It is my understanding that--I would have to
check the records. I just can't speak to it in absolute terms. But I do
know the leak detection system was put in place and tested and--
MR. STUPAK. Do you know when leak--
MR. FREDRIKSSON. I don't have the date, no.
MR. STUPAK. Before the spills though, right?
MR. FREDRIKSSON. Before the spills.
MR. STUPAK. And how come it didn't work if it was put in place
and tested and everything? How come it didn't work?
MR. FREDRIKSSON. Congressman Stupak, the State's leak detection
requirement is 1 percent of the throughout in a 24-hour period. This
flow, this leak from this particular incident on GC-2 was too small to
trigger an alarm with that leak detection sensitivity.
MR. STUPAK. Well, if you remember that, then let me go back and
ask you the first couple questions. Were you, Commissioner Michelle
Brown or Larry Dietrich warned by your staff that BP pipeline leak
detection systems had been out of compliance since 1997?
MR. FREDRIKSSON. I don't have any recollection that those specific-
-
MR. STUPAK. But if someone told us that or reported that to this
committee, you wouldn't be surprised or you couldn't dispute it, could
you?
MR. FREDRIKSSON. I would be surprised to learn that the department
management had been warned that BP was out of compliance for--I
believe that is a 4-year period.
MR. STUPAK. Right, and did--my second question that you didn't
have any knowledge of, let me ask you again. Did BP request a waiver
from your department to avoid installing leak detection systems on the
Prudhoe Bay pipelines?
MR. FREDRIKSSON. I can't speak definitely. I can't recall.
MR. STUPAK. Did your department receive complaints from
individuals that BP was out of compliance with the integrity management
system or program, I should say?
MR. FREDRIKSSON. The department has received a number of
complaints over the years with respect to BP operations from a number
of different sources.
MR. STUPAK. How many complaints? Would you know?
MR. FREDRIKSSON. I would not know offhand.
MR. STUPAK. Do you know how many complaints were on
corrosion or concerning corrosion problems?
MR. FREDRIKSSON. I don't have the exact number, no.
MR. STUPAK. More than two?
MR. FREDRIKSSON. With respect to corrosion? I wouldn't be
surprised if it was more than two and less than a half dozen.
MR. STUPAK. Between two and six then. Okay. In 2001, did your
staff warn you that Prudhoe Bay pipelines lacked appropriate equipment
to evacuate oil out of the line in the event of a pipeline failure and
recommended that BP be required to add pumps and tanks to be able to
rapidly evacuate the pipelines?
MR. FREDRIKSSON. I don't have a recollection of that, no.
MR. STUPAK. Okay. Did the Alaska Department of Environmental
Conservation staff present you, Commissioner Michelle Brown and
Larry Dietrich with photos of sagging pipelines, poor pipeline
maintenance practice and other inspection deficiencies at BP facilities?
MR. FREDRIKSSON. I--let me speak to the sagging pipelines. I don't
have any recollection on the other topics. I know I provided staff with a
photograph of a sagging pipeline from a trip I took to the North Slope
and asked them to follow up on it.
MR. STUPAK. And did they follow up on it?
MR. FREDRIKSSON. To my knowledge, they did.
MR. STUPAK. They did?
MR. FREDRIKSSON. I delivered the message down to the industry
preparedness program to have them look into that.
MR. STUPAK. Well, wouldn't staff report back since you are the guy
who is providing the photos of sagging pipelines?
MR. FREDRIKSSON. I assumed it was taken care of. I don't recall if
there was a report back, to be honest.
MR. STUPAK. Well, did you, Commissioner Michelle Brown or
Larry Dietrich require BP to take any action to improve the oil spill
prevention measures for their pipelines as a result of your staff warnings?
MR. FREDRIKSSON. Then-Commissioner Brown, I was then deputy
commissioner, Larry Dietrich was the director of spill prevention
response, the actions we took with respect to corrosion were
characterized best in the charter agreement. In 1999, recognizing ARCO
and BP were going to merge, we identified a number of issues that we
wished the oil companies to address on the North Slope, seven to be
exact, one of which was with respect to corrosion.
MR. STUPAK. That was 1999 and you made seven
recommendations. Did you follow up? Did the Alaska Department of
Environmental Conservation follow up to see if those seven were
implemented?
MR. FREDRIKSSON. Yes, we did, sir.
MR. STUPAK. And were they implemented?
MR. FREDRIKSSON. They were implemented.
MR. STUPAK. Okay. Then can you explain to me then how the
Coffman Engineering November 2001 report to you stated, and I am
quoting, "External corrosion is the most immediate threat to pipeline
integrity for BPXA." Were there four pipeline leaks during the 2000-
2001 at BP facilities due to external corrosion?
MR. FREDRIKSSON. I don't have the record. I would not be
surprised that there would be.
MR. STUPAK. Well, if in 1999 they did the seven things you told
them to do, how come 2 years later you have four pipeline leaks in not
even a year after this agreement was agreed to?
MR. FREDRIKSSON. With respect to the corrosion program that we
were investigating, we needed to learn what in fact ARCO and BP
merger would do with respect to their corrosion program. We needed to
understand how the ARCO corrosion management policy dovetailed with
the BP corrosion monitoring policy. We needed to see--we needed to
learn what steps BP now was taking to manage corrosion.
MR. STUPAK. But if you had to learn all this stuff you said in 1999,
you gave them a list of things to do.
MR. FREDRIKSSON. That is correct. The agreement was signed in--
MR. STUPAK. So you learned these things before 1999, right, and
these were the things you wanted done?
MR. FREDRIKSSON. Congressman Stupak, the department was
concerned about corrosion before 1999. We recognized there was an
aging oil field. We recognized that BP and ARCO were going to merge.
Both companies had corrosion monitoring programs, inspection control
programs. We wanted to learn how those--how that was going to
dovetail through the merger. We required through the agreement a
commitment that BP make to the State to pursue a corrosion monitoring
program and to report annually to the department. It has done so. That
corrosion monitoring reporting has resulted in rules that the department
has now adopted for corrosion regulation on flow lines. The vast
majority of the pipelines on the North Slope are flow lines. High
corrosivity--
MR. STUPAK. That is fine, and I agree with all that stuff, but if no
one is enforcing it, it means absolutely nothing. So--
MR. FREDRIKSSON. The regulations--
MR. STUPAK. --let me ask my last question because my time is up.
What real, measurable improvements has the Alaska Department of
Environmental Conservation required BP to take t0 improve oil spill
prevention on their pipeline systems in the last 5 years?
MR. FREDRIKSSON. Through the charter--
MR. STUPAK. The last 5 years, yes.
MR. FREDRIKSSON. Congressman Stupak, through the charter
agreement, one, we have negotiated a charter agreement. Within that
charter agreement, we have a number of spill prevention and response
elements, one specific to corrosion. With respect to the corrosion, the
corrosion evaluation that has resulted from that charter agreement has led
the department to adopt through rulemaking regulations that will soon be
in effect and we fully expect to enforce those rules with respect to
corrosion on flow lines.
MR. STUPAK. Sure, that is all stuff on paper. I asked for real,
measurable improvements.
MR. FREDRIKSSON. I--
MR. STUPAK. There has been none, has there?
MR. FREDRIKSSON. Congressman Stupak, if you want to measure it
in terms of equipment, if you want to measure it in terms of spill
response, research, there has been a lot of work done over the last 5 years
with respect to spill response preparedness and spill response research.
There has been a tremendous amount of work done on cleanup of the
North Slope from abandoned drums. There has been a tremendous
amount of work by cleanup of contaminated sites, all of which was done
under the charter agreement.
MR. STUPAK. That is great, but I want to know about this pipeline,
not abandoned barrels and things like that. So it sounds like the State is
asleep at the switch here, or what?
MR. FREDRIKSSON. I think just the opposite. Congressman Stupak,
the regulations are not adopted overnight. Those regulations that we
have adopted, corrosion control, need to be done carefully, they need to
be based on the best science and they need to involve the public all along
including the Federal agencies that are affected in this particular issue.
Spending 2 years to, one, assimilate the information we had with respect
to corrosion into a regulatory package which then goes through the
rulemaking process for adoption, I don't consider it to be a stand back
and do nothing exercise. I am proud of the fact that we got those
regulations in effect. I expect them to be enforced. I expect them to
show a measurable improvement in the situation with respect to flow
lines.
MR. STUPAK. I agree, and when I asked for measurable
improvements, you couldn't give me any, so okay. Nothing further, Mr.
Chairman.
MR. BURGESS. The gentleman's time has expired. The Chair
recognizes Mr. Markey from the full committee.
MR. MARKEY. I thank the Chair very much.
MR. BURGESS. I would like to recognize you for 5 minutes but he
told me I had to recognize you for 10. You are recognized.
MR. MARKEY. Meaning it is bad news for you at the table. He was
trying to say that very delicately.
Admiral Barrett, the Department of Transportation has recently
proposed a draft rulemaking to regulate some low-stress pipelines. How
many miles of currently unrelated low-stress pipelines would be subject
to regulation by your department under that proposed rule?
VICE ADMIRAL BARRETT. This rule would bring about 1,300 miles
of additional lines, low-stress and gathering lines, under our oversight.
MR. MARKEY. When BP's negligence has shown us that pipelines
that are regulated are far better maintained than those that are not, why
has the Department of Transportation proposed to allow DOT to regulate
less than 14 percent of the 5,000 miles of currently unrelated low-stress
pipelines like the ones up in Prudhoe Bay?
VICE ADMIRAL BARRETT. The lines--our estimate--a lot of these
lines are not currently mapped so we are using an estimate but in general,
the risks posed by many of these lines--many of these lines are much
smaller and don't affect unusually sensitive areas. That is areas where
there is an endangered or threatened species. We already regulate lines
like this that operate in populated areas or in navigable waters so simply
the risk assessment and the impact--these are very small lines in many
cases, a mile or two, much smaller than the BP lines for the most part.
BP's are 30-, 34-inch. These lines are down at the 8-inch to 16-inch size,
and frankly, the risks and the benefit equation is not as large. We look
closely--
MR. MARKEY. It is not as large but why wouldn't you regulate, you
know, if you know that the regulation itself serves as a deterrent to
negligence?
VICE ADMIRAL BARRETT. Well, there is a cost to complying with
these regulations--
MR. MARKEY. A cost to BP?
VICE ADMIRAL BARRETT. Not to BP. BP would be covered by
these regulations clearly.
MR. MARKEY. It is a cost to whom?
VICE ADMIRAL BARRETT. I thought your question was, if we
brought more of these lines under--
MR. MARKEY. I am sorry. The cost runs to whom?
VICE ADMIRAL BARRETT. The operator of the line, in many cases
small businesses where the cost burdens would be significant.
MR. MARKEY. Okay. So you are saying that they are basically
given a small-business exemption?
VICE ADMIRAL BARRETT. I am sorry, and what I would also say is
this is a proposal and we are soliciting comments, and if stakeholders or
the public feel that we should cover more or less lines, that the scope of
the rule is too narrow, too broad or that the requirements should be more
or less stringent, we are happy to take that data and input, consider it and
if appropriate, adjust. It is a proposal.
MR. MARKEY. Did your department do an estimate of what the cost
to big oil companies would be if you were to regulate low-stress
pipelines under their control?
VICE ADMIRAL BARRETT. We do have a cost estimate in the notice
and I don't recall it offhand but I would be glad to provide that.
MR. MARKEY. Is that a different cost-benefit analysis when you
have a large, large company that has low-stress pipelines?
VICE ADMIRAL BARRETT. The cost benefit of the rule is looked at as
a package but we are also required--
MR. MARKEY. I understand where it might be different for a small
business but how about for a big oil company? When companies are
making $25, $30 billion a year, it is--
VICE ADMIRAL BARRETT. Again, the large companies like BP, the
type of lines we are talking about on the North Slope would be covered.
MR. MARKEY. Don't you think, Admiral, that when BP made $7.27
billion in profits during the last quarter of this year that they and other
big oil companies can afford to pay to ensure that there is not a similar
case of negligence, spill or shutdown elsewhere?
VICE ADMIRAL BARRETT. Well, I would come at it this way, sir, is
that our obligation and our commitment is to ensure that pipelines
operate safely, and if you are going to be in a business, you have to make
the--the first responsibility for safety rests with the operator, and if you
are going to be in this business, you have to make the investment
necessary to operate your lines safely, and that is our responsibility to
make sure that happens.
MR. MARKEY. Admiral, is there any requirement under these
proposed regulations that companies must use internal inspection devices
such as smart pigs and other pigs?
VICE ADMIRAL BARRETT. Yes, sir, but--and this is frequently--and I
have heard some comment misunderstood. Even on many lines, there
are segments of lines where you cannot use an inline inspection device.
You may have telescoping lines, you may have bends and turns in the
lines, and so we expect the company that is regulated with the integrity
assessment program we have to bring forward a program that generally
requires use of smart pigs but also would provide for alternatives,
hydrostatic testing, radiological assessments, ultrasound assessments to
get at areas where smart pigs are simply not feasible. So when you look
at the rules, the language will allow for tools other than smart pigs and it
is--what we do require is a complete understanding of the condition of
the line.
MR. MARKEY. So it doesn't require them the use of smart pigs?
VICE ADMIRAL BARRETT. It generally would require that they have
a program in place to provide--
MR. MARKEY. I understand that, but it is possible, in other words,
for BP to put corrosion inhibitors into the oil using ultrasonic testing,
doing these coupon pulls, all of which have been found to be woefully
inadequate compared to running the pigs through the lines, and BP could
have then deemed what they did to be sufficient under the proposed
regulations even though it is clear that they are inadequate--
VICE ADMIRAL BARRETT. No, sir.
MR. MARKEY. --compared to running the pigs.
VICE ADMIRAL BARRETT. The programs BP had in place up there
would have failed under the regulation we are proposing. We, not BP,
are the ones who make the assessment of the adequacy of the program
and if we feel it is inadequate--
MR. MARKEY. And why would it have failed and how would it have
failed?
VICE ADMIRAL BARRETT. Because the corrosion program they had
in place did not provide a comprehensive picture of the conditions of that
line, specifically, the internal corrosion risks on those lines, and we
would not have accepted that and our program would not accept it.
MR. MARKEY. Mr. Fredriksson, I have been told that BP is
supposed to have in place a fund to ensure that at the end of its useful
life, that these pipelines are safely decommissioned and dismantled
without any harm to the environment obviously for the rest of eternity.
Is that true?
MR. FREDRIKSSON. That is my understanding. That would fall
under the State lease requirements which I am not responsible for so I
can't speak definitely--
MR. MARKEY. Well, just tell me what you do know about it then.
How much money is supposed to be in that program in just ballpark
numbers?
MR. FREDRIKSSON. I have no idea.
MR. MARKEY. Do you know that there is supposed to be such a
program?
MR. FREDRIKSSON. I understand there is a dismantling and removal
provision but I have no understanding--
MR. MARKEY. Can I just--
MR. FREDRIKSSON. --or knowledge of the specifics.
MR. MARKEY. Your title is commissioner, Alaska Department of
Environmental Conservation. Is that right?
MR. FREDRIKSSON. That is correct.
MR. MARKEY. And you are saying that this whole program of
putting together a fund to make sure that these pipelines don't harm the
environment is something that just hasn't come across your desk at all?
You don't have conversations with people about it at all?
MR. FREDRIKSSON. No, that is correct. The actual removal at the
end of the life is a lease arrangement and lease obligation under the
Department of Natural Resources.
MR. MARKEY. It would just seem to me that the Department of
Environmental Conservation has a pretty big, you know, stake at least in
knowing about what is going to happen when these pipelines get
dismantled but I will take you at your word. I am told that there is a
multi-billion-dollar fund which is supposed to be out in place and I have
also been told that BP has not funded it, that there isn't adequate money
in this decommissioning fund and that instead BP is taking the profits
and expatriating it and they are drilling in countries around the world but
they have left this fund that is supposed to be there for the
decommissioning of these pipelines relatively empty, which would seem
to me to follow pretty clearly along the same lines as their lack of
attention to this pipeline safety issue in general. But you are saying that
is nothing you know about?
MR. FREDRIKSSON. Congressman Markey, that does not fall under
the purview of DEC.
MR. MARKEY. It sounds pretty scary to me, in fact, that if this
information that I have been given is accurate in terms of the long-term
protection of the environment up in Alaska. I am going to pursue that,
Mr. Chairman, as a line of independent questioning to the State of Alaska
and to BP through you to the State and to BP.
Admiral Barrett, you say in your testimony that your department
believes that most other unregulated low-stress pipelines in the lower 48
States are operated to a higher standard of care. Since you currently have
regulatory oversight over those lines, what information are you basing
that belief on?
VICE ADMIRAL BARRETT. Sir, in developing--as I indicated--
MR. MARKEY. I am sorry. You have no regulatory jurisdiction over
it. What is the basis for you making that--
VICE ADMIRAL BARRETT. As I indicated, over the past 2 years or
more than 2 years actually, we have been developing this rulemaking to
bring these low-stress and gathering lines under our oversight, and in the
course of public hearings and in the course of developing the record for
that rulemaking, we were in fact asking about maintenance practices on
the lines, what people generally were doing or not doing, and it was part
of the record, and you also have the history of the regulated lines in
places like the North Slope as Mr. Hostler testified.
MR. MARKEY. It sounds to me, Admiral Barrett, that you are relying
upon the representations of companies, the same kind of representations
that was relied upon when BP was saying that they had done the job, and
I just think that at this point, Admiral, that we should discontinue that
reliance upon company assertions that save them money in the short run
while exposing the environment and the public to great risk in the long
run, and I just think it is time for you to end that presumption that I think
has been extended to the industry. Thank you, Mr. Chairman.
MR. BURGESS. I don't think that was in the form of a question, so it
probably doesn't require a response.
Admiral Barrett, if I could be permitted one follow-up question.
Isn't it true that during the 2001 debate on high-pressure lines, it was
estimated that only 22 percent of the lines were covered but 82 percent of
the lines ended up being covered?
VICE ADMIRAL BARRETT. Sir, as we bring any system or piece of
the pipeline system under our regulatory authority, we actually get out on
the ground, inspect the situation, inspect the lines, determine, as I said,
like on the low-stress lines, these are estimates. A lot of these lines are
not mapped. But once this rulemaking is in place, we will get out there,
check those lines, check other lines in the area, and if it seems they fit
within the ambit of the rule, we will bring them under our authority. So
you are exactly correct. We inspect aggressively as well as issue rules.
MR. BURGESS. So the same thing could happen here on the low-
pressure lines?
VICE ADMIRAL BARRETT. Yes, sir, it could.
MR. BURGESS. Thank you very much.
MR. STUPAK. Just one follow-up question.
MR. BURGESS. Sure.
MR. STUPAK. Mr. Fredriksson, I want to go back to the year 2000. I
asked a number of questions about it. And as a result, let me ask you this
question. Did the Alaska Department of Environmental Conservation
recommend that settlement of the enforcement action for BP's failure to
install the required leak detection systems include a requirement to smart
pig these lines, enhance the corrosion control programs and require non-
destructive testing examination?
MR. FREDRIKSSON. Congressman Stupak, I can't answer that
question. I don't know.
MR. STUPAK. Why wouldn't you know? You are the commissioner.
MR. FREDRIKSSON. I am a commissioner where we have many
different settlements arranged through the Department of Law and
enforcement actions. We deal with many enforcement actions. My
recollection of what happened in an enforcement action in 2000 when I
was not a commissioner, I don't have that information. I would be happy
to look it up and get back to the subcommittee on that.
MR. STUPAK. Okay. Maybe I will submit these in writing then
because I think you could go back and look up and see if there were any
enforcement actions for BP during these recent years. Thanks.
MR. BURGESS. Thank you, Mr. Stupak. Do you yield back?
MR. STUPAK. Yes.
MR. BURGESS. Very well. I think that concludes our testimony. I
may have one additional question for Mr. Fredriksson that I will submit
as a written question but it has been a long day. Again, I appreciate
everyone's forbearance on this. It is an important subject. This
committee will stand in adjournment.
[Whereupon, at 4:37 p.m., the subcommittee was adjourned.]
RESPONSE FOR THE RECORD OF STEVE MARSHALL, PRESIDENT, BP
EXPLORATION ALASKA, INC.
RESPONSE FOR THE RECORD OF ROBERT A. MALONE, CHAIRMAN AND
PRESIDENT, BP AMERICA, INC.
RESPONSE FOR THE RECORD OF KURT FREDRIKSSON, COMMISSIONER,
ALASKA DEPARTMENT OF ENVIRONMENTAL CONSERVATION