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Thursday, August 10, 2006 FULL SHOW | HEADLINES | NEXT: Lebanon Facing its Worst Environmental Disaster Ever: Oil...
2006-08-10

Did BP Purposefully Allow its Alaska Pipeline to Corrode in Order to Shut it Down and Boost Oil Prices?

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North America’s largest oilfield remains shut down for a fourth day and it could remain shut down for several months. The oil company BP closed the oilfield on Sunday after discovering what it described as "unexpectedly severe corrosion" of the oil pipeline. Questions are now being raised about whether BP purposely allowed the pipeline to become corroded. We speak with longtime oil industry watchdog, Chuck Hamel. [includes rush transcript]

North America’s largest oilfield remains shut down for a fourth day and it could remain shut down for several months. Up until this week, the Prudhoe Bay oilfield in northern Alaska produced 400,000 barrels of oil a day.

The oil company BP closed the oilfield on Sunday after discovering what it described as "unexpectedly severe corrosion" of the oil pipeline.

The price of oil surged three percent upon the news of the shutdown. Questions are now being raised about whether BP purposely allowed the pipeline to become corroded.

Two years ago, a longtime oil industry watchdog named Chuck Hamel warned BP about corrosion problems. But his warning appears to have been ignored.

In 2004 he wrote a letter to the BP Board of Directors that said workers at Prudhoe Bay were concerned about safety, health and threats to the environment at the oilfield.

Hamel wrote that the workers "seek to see the corrosion problem addressed and corrective action undertaken without further delay and before any of their colleagues at Prudhoe are harmed."

Chuck Hamel joins us in our studio in Washington. He is a former oil industry executive who now advocates for workers in the oil industry.

  • Chuck Hamel, long-time oil industry watchdog who has been working with concerned oilfield operators working at the BP Prudhoe Bay in Alaska.

Transcript

This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: Chuck Hamel joins us now in our studio in Washington, D.C., former oil industry executive who now advocates for workers in the oil industry. We welcome you to Democracy Now!

CHUCK HAMEL: Amy, nice to hear from you again, see you again.

AMY GOODMAN: It’s good to have you with us. Can you lay out what has happened and why you believe BP Prudhoe Bay has closed the pipeline?

CHUCK HAMEL: Well, Amy, since 1999 I have been tracking the corrosion control program by BP for that thousands of miles of flow line that they have. They have been cutting corners, budget problems. And the first document that came to my hands from the workers was in 1999, that they were not injecting the sufficient amount of chemical inhibitors to prevent the rusting. It’s like the radiator in your car. You have to have — the antifreeze has chemical components that prevent the rusting. Just picture part of the months of the year you switch over to plain water. Your radiator’s going to rust. It’s very simple. It’s not very complicated. There’s so much water in the system up there that comes out of the ground, out of the formation with the oil when they separate it out, but along the way it rusts the pipes.

JUAN GONZALEZ: Now, BP has had a long-running series of problems, had been fined — on several occasions, some very large fines — for failing to properly keep up its lines there. Could you talk about that?

CHUCK HAMEL: Correct. But in this instance, it wasn’t just — when you consider oilfield workers, I’m talking about engineers, BP engineers, BP corrosion experts, who have left the company because they wouldn’t participate in their corrupt corrosion program. Everyone who didn’t want to be part of it, those that didn’t, were independently coming to me — I’m sort of their outlet — anonymous complaints through me, to back to the company, and when the company doesn’t do the right thing, then I have to go public. I’m not getting paid for this. This dime — I can’t get a cup of coffee at Starbucks. But I’m a prisoner of these concerned individuals, and they’re not just — they’re engineers, they’re corrosion experts, who fear for the lives of their former colleagues and who work in the process centers, which are very volatile. And that’s what I’ve been involved with. Whether I like it or not, I have to help them, for fear that they’re going to roll themselves up.

AMY GOODMAN: Chuck Hamel, you have a long history watching BP, over, what, more than 15 years. In fact, you settled a case with them, when they — did they hire Wackenhut to investigate you?

CHUCK HAMEL: BP, who was running the Alaska pipeline, engaged the Wackenhut security company, five undercover women, who — and men, but other men — to surveil my wife and me, in trying to discredit me, hidden cameras in hotel rooms. And all five of the ladies realized that I wasn’t the bad person that they tried to make me out to be to discredit me, and they all came over to our side. I think 60 Minutes called them "Chucky’s Angels." But where we’re getting down to, Amy, is they were discovered, and then they attacked me. $18 million worth of legal activities going on around me. A van in front of my home, picking off our phones, picking up our trash. And all that, you know, I can live with, but trying to discredit me with women, that hurt. I mean, that going in BP fashion, but a little too far.

AMY GOODMAN: We invited a representative from BP to appear on the program, but they didn’t respond to our request.

CHUCK HAMEL: May I ask who you invited?

AMY GOODMAN: Well, BP America Chair Bob Malone did release a statement Tuesday that read in part, quote, "Our priorities moving forward are to assure the safety and integrity of our operating infrastructure, minimize impact on the environment, continue the cooperative working relationship with the relevant agencies, and restore production as soon as it is safely — and I reinforce safely — possible." Again, those the words of BP’s CEO.

We’re going to go to break, and we’ll come back to speak with Chuck Hamel, longtime oil industry watchdog, about the closing of the BP oil pipeline and the rise in oil prices. Stay with us.

[break]

AMY GOODMAN: Our guest in the Reuters studio in Washington, D.C. is Chuck Hamel, longtime industry watchdog, who’s been working with concerned oilfield operators, engineers, working at the BP Prudhoe Bay in Alaska. Now, the BP pipeline is corroded, shut down. Oil prices are going up. Chuck Hamel, you’ve been talking about the issue of what has gone on at BP for a long time. Can you explain what "pigging" is?

CHUCK HAMEL: Pigging is when you run a device through the flow lines that cleans up debris, sludge that accumulates, like in the radiator of your car. And they have not run the maintenance pigs that picks up this sludge at the flow line that ruptured this past March that the media is all excited about. Wait 'til you see what's coming. There are thousands of miles of piping up there that have not been adequately cared for, for cost-cutting benefits, because they’ve had budgetary problems. And once you’ve pigged, or maintenance pigged, the pipeline, then you run a smart pig through there, and a smart pig measures the wall thickness of the pipe so that you can find little weaknesses before they rupture, as happened in March. And it happened a couple of days ago, last Sunday, in another flow line.

So, if you don’t — in this case, I’ve known for two years that the line that ruptured in March could not be pigged, maintenance pigged, because it would cause some holes in the pipe. But I was sort of whistling in the dark a little bit. I went public with that, but nobody wanted to hear from me on that. I was in the oil business, you remember, before. Lord John Browne, the Chairman of the Board of BP, will tell you that we were friends when I was in the business. The last time we met was in 1999 in the BP headquarters on a very friendly lunch, etc. Times have changed, of course, and they’ve cut too many corners.

JUAN GONZALEZ: Well, Chuck Hamel, you mentioned budgetary problems. The oil industry is in the midst of record profits and record revenues, so how could there be budgetary problems? That would be one question that I have for you. But also, you mentioned this oil spill in March. There have been actually several oil spills in recent months, and isn’t there a grand jury right now conducting a criminal investigation of what BP did in relationship to those spills earlier this year?

CHUCK HAMEL: Well, there’s two issues there. I’d like to do one at a time and repeat the second one. The second one — I’ll go backwards here. Yes, there’s grand jury proceedings going on now. I instigated the investigation last March, when the government special agents contacted me. They knew that something was wrong from elsewhere about the corrosion program and that all of the persons who knew about it, twelve of them, had come to me, independent of each other, each not knowing that the other was coming to me for help. All they wanted is to safeguard the lives of the people they left behind. So, that’s one answer, for one matter. And I can’t discuss what I know about what’s going on, except that my witnesses are all subpoenaed and testifying in that grand jury.

The second question, I —- sorry -—

JUAN GONZALEZ: The first one was about the budgetary problems.

CHUCK HAMEL: Well, yeah, this is sort of a dichotomy here. You see, BP last year made, I call it, windfall profits of $2 billion at Prudhoe Bay. However, the way they operate is, every year they have an annual budget, and the workers — the supervisors are each given a budget to live with. If you operate below your budget, you get a bonus. And if you don’t, you don’t get your bonus. And one way of operating within the budget is, when something is not budgeted for, but you’ve got to run the pipeline, a certain valve ruptures on you, then you’ve got to be able to get a new one. It costs money, lots of money. This is big money is involved here. So you got to do something different.

The worst, what you would call, rupture and spill in Prudhoe Bay was about a year ago or so, where 500 barrels of very toxic produced water, as we call it, out of the formation was spilled onto the tundra with a little oil on it. The produced water is more toxic than oil to the tundra. You can always regurgitate, but not with produced water. It’s acidic. So I, on behalf of the workers, went public at that occasion and said that they used a ten-inch — big one — secondhand valve from the scrapyard. When I mean scrapyard, I mean to be scrapped. And that was used, because it was a produced water line, a new one, and they were lacking one. So they didn’t buy a new one, they used that. And eleven months later, it ruptured.

So, of course, the political problem for BP was to deny that it was from the scrapyard, except that it was reconditioned and hydro-tested and all that good stuff, and thousands of dollars —- it’s in the Financial Times and, I think, other newspapers. So that shot that down, what I was trying to say. I waited a while. I’m very patient. And after I knew that they would have had to give a special report of what happened and deny my contentions to the ADEQ, the state agency, and EPA -—

AMY GOODMAN: Chuck Hamel, we just have one minute to go.

CHUCK HAMEL: They falsified the report. And 72 pages. And total, total falsehood. That’s how things operate in Prudhoe. It’s sort of an unregulated oilfield.

AMY GOODMAN: In all of this, is BP going to make money with the oil prices going up, even with closing the pipeline?

CHUCK HAMEL: I’m not an expert there, but I don’t see how they’ve ever lost before. You and I are going to still buy our gas, and whatever the price is, we’re going to pay for it. They’ve lost their image, of course. It’s going to finally catch up to them.

AMY GOODMAN: Well, I want to thank you very much, Chuck Hamel, for joining us, longtime oil industry watchdog, from Exxon to BP, hounded by BP, investigated by Wackenhut, ultimately won millions of dollars as a result of their going after this environmental whistleblower.

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