May 2006 News Stories
Financial Times
May 31, 2006
http://news.ft.com/cms/s/18d4335a-ef05-11da-b435-0000779e2340.html
International
companies: Big profits and big troubles
By Thomas Catan
Published: May 29 2006 13:34 |
Last updated: May 29 2006 13:34
Amid soaring energy prices, international oil companies are making unprecedented
profits.
ExxonMobil posted the largest annual profit in corporate history this year. BP,
Royal Dutch Shell and the other “supermajors” are having a difficult time
working out what to do with the money.
Over the past two years, the largest oil companies have returned well over
$120bn to shareholders through dividends and share buybacks. Exxon alone is
returning more than $2bn to investors each month.
But beneath the surface, these are uncertain times for the international oil
companies. The first, and perhaps largest, problem they face is getting access
to new resources. About three-quarters of the world’s oil and gas reserves are
off limits to them because governments such as Saudi Arabia do not allow them to
participate.
Meanwhile, many assets in places such as the Gulf of Mexico and the North Sea
are past their peak, requiring billions of dollars of investment to extend their
lives. Costs in the industry are skyrocketing amid a global squeeze on skilled
labour and materials.
More problems come from such conspicuous success. Governments are increasing
taxes on oil companies and politicians have turned them into scapegoats for
rising energy costs. Even the oil-friendly Bush administration in the US has
announced investigations into alleged “price gouging” by oil companies despite
an almost total lack of evidence.
“The sharp rise in oil and gas prices is a double-edged sword,” says Fadel Gheit,
oil analyst at Oppenheimer & Co. “On the one hand it gives oil companies record
profits, on the other hand it made doing business much more difficult.”
Countries from Russia to Venezuela have been tightening their grip on their oil
industries, pushing to get a greater share of export earnings. Venezuela
unilaterally imposed tough contracts on the companies operating in the country
this year and increased taxes on them. The populist government of Hugo Chavez is
threatening to increase those taxes still further.
Bolivia nationalised its gas industry on May 1, surrounding key installations
with soldiers and using fiery rhetoric against the oil companies. They have been
given 180 days to renegotiate their contracts or leave the country. Even the UK
has repeatedly raised taxes on companies operating in the North Sea.
“Despite the growing opinion that the integrated [oil companies] can only
benefit from the current momentum behind global commodity prices, history would
suggest otherwise,” wrote Bernstein Research in a recent report, Evolve or Face
Extinction.
Even in sustained periods of high oil prices, returns have been eroded by cost
inflation, windfall taxes and increased nationalisation, Bernstein notes. It
believes returns in the industry will peak this year and decline thereafter,
regardless of whether prices remain high.
Bernstein outlines a number of significant challenges faced by the oil majors.
“The integrated oil company operating environment is in a state of transition at
the moment, and the strategic directions taken by the majors over the next few
years will be critical for the longer-term survival of the players,” it notes.
What is the outlook for the oil industry? And how can individual companies
succeed?
Countries such as Saudi Arabia no longer need the oil majors to extract
easily-accessible reserves of “conventional” oil. They can get much of what they
need direct from oil services companies such as Halliburton, Baker Hughes or
Schlumberger. That means the majors must offer services those companies cannot.
That is driving the majors into more difficult areas such as “unconventional” in
Venezuela and Canada, into liquefied natural gas and newer markets such as
synthetic fuels created using “gas-to-liquids” (GTL) technology. It is also
forcing them to go to “frontier” parts of the world such as the Arctic or very
deep water that national oil companies cannot access themselves.
That move brings its own difficulties. Shell’s giant LNG project in Sakhalin has
been plagued by construction delays and cost over-runs. The price has risen from
$10bn to $20bn, and some say it could rise further.
The companies that perform best will be those able to bring such giant projects
into existence on budget and on time.
Of the largest oil companies, ExxonMobil has the most impressive record in this
regard. Smaller companies such as BG have also managed new projects well.
They must also be the canniest dealmakers, adept at negotiating with host
governments that control resources.
BP has recently had the most success, gaining access to highly sought Russian
oil by buying into TNK.
The company is also pursuing innovative deals with national oil companies in
places such as China and India.
Shell has performed badly on both fronts of late. But it has managed to carve
out leading positions in many of the potential growth areas of the future: LNG,
GTL and Canadian oil sands.
With several decades of development behind it, few would dispute LNG is an
attractive market, and Shell’s position is the envy of its competitors.
Whether oil sands and GTL can become as established will be central to the
company’s fortunes in coming years.
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Wall Street Journal
May 27, 2006
OSHA To Investigate BP Ohio
Refinery Incident
By JESSICA RESNICK-AULT
May 26, 2006 2:25 p.m.
Of DOW JONES NEWSWIRES
HOUSTON -- The U.S. Occupational Safety and Health Administration Friday opened
an investigation into BP Plc.'s (BP) Toledo, Ohio refinery after a contract
worker suffered severe burning over 60% of his body.
"We have opened an investigation," OSHA Spokesoman Brad Mitchell said Friday.
OSHA's investigation follows on the heels of a $2.4 million April fine from the
federal agency that the oil giant is contesting for alleged violations in Ohio.
OSHA also fined BP a record $21.3 million following a March 2005 blast at a BP
Texas refinery that killed 15 and injured 170. Progresive investor groups have
expressed growing concern over the accidents at BP, which has enjoyed greater
favor with this segment than most of its competitors in Big Oil.
BP's latest refining accident occured when a contract worker was scalded while
emptying the collection tank on a vacuum truck, BP spokeswoman Sarah Howell
said. The vacuum truck had first removed water from a storage tank at the
refinery, which was part of the routine cleaning procedure, she said.
The worker was airlifted to St. Vincent's hospital, where he is in "serious"
condition, with second- and third-degree burns on his hands and lower body, an
Oregon, Ohio Fire Department spokeswoman said.
BP will investigate in cooperation with the contracting company and any
government agencies, Howell said. She could not identify which company the
contractor worked for.
BP's U.S. refining operations have come under intense scrutiny following the
2005 Texas explosion. The April fine came after OSHA found 39 violations at the
Ohio refinery, including locating people in vulnerable buildings among the
processing units. Placing workers in vulnerable locations was also a key factor
in the Texas City calamity.
Howell said Thursday's accident was in no way connected to the potential
problems OSHA identified at the Ohio plant.
-By Jessica Resnick-Ault, Dow Jones Newswires; 713-547-9208;
jessica.resnick-ault@dowjones.com
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Anchorage Daily News
May 25, 2006
http://www.adn.com/money/industries/oil/story/7763412p-7675802c.html
Tank welds at Valdez
get federal look
ALYESKA: EPA, FBI interviews follow former analyst's allegation.
The Associated Press
Published: May 25, 2006
Last Modified: May 25, 2006 at 02:39 AM
FAIRBANKS -- Welding procedures used for repair of storage tanks at the
trans-Alaska oil pipeline terminal in Valdez four years ago have drawn the
interest of two federal agencies.
The Environmental Protection Agency and the FBI this month interviewed an
employee of the Joint Pipeline Office about welding procedures, said pipeline
office spokeswoman Rhea Dobosh.
"Whether that constitutes an investigation I don't know," Dobosh said. The Joint
Pipeline Office, a state and federal agency based in Anchorage, oversees
pipeline operations.
A spokesman for Alyeska Pipeline Service Co., which operates the line, said the
company is not aware of any investigation.
"Is it an investigation or is it an inquiry by others within the government?"
said Mike Heatwole. "That's the immediate question that comes to mind."
FBI agent Eric Gonzalez in Anchorage said he could not deny or confirm an
investigation. John Pavitt, an EPA environmental protection specialist in
Anchorage, said the agency does not comment on investigations.
The state Department of Environmental Conservation investigated similar
allegations about improper welding and dismissed most of them in April 2003, the
Fairbanks Daily News-Miner reported Tuesday.
The allegations resurfaced this month. A former Alyeska financial analyst, Glen
Plumlee, who took a buyout package in April, has filed a complaint against the
company with the U.S. Department of Labor. He claimed he was told to "move on"
after he cooperated in December with federal investigators.
Plumlee said he had been contacted by a current pipeline office employee who
believes Alyeska and the pipeline office in 2003 covered up welding problems
from the year before and that the welds could fail and allow oil to escape into
Port Valdez.
Plumlee passed the allegation to Chuck Hamel, a former shipping broker from
Virginia who frequently publicizes information from whistleblowing employees in
Alaska's oil industry.
Hamel forwarded Plumlee's concerns to the Prince William Sound Regional
Citizens' Advisory Council, a group set up after the 1989 Exxon Valdez oil spill
to monitor industry operations.
A citizens' council employee contacted the pipeline office for information and
sent an e-mail summary of what she'd learned to other employees and Hamel.
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Financial Times
May 25, 2006
http://news.ft.com/cms/s/c9312786-eb8a-11da-823e-0000779e2340.html
Safety of Alaska oil
tanks questioned
By Sheila McNulty in Houston
Published: May 25 2006 03:00 | Last updated: May 25 2006 03:00
The safety of massive oil tanks in Alaska is being questioned this week as the
House of Representatives prepares to debate opening more of the state's
environmentally protected areas to oil exploration.
The tanks, owned by Alyeska Pipeline Service - a company owned by oil giants BP,
Exxon and ConocoPhillips - were investigated several years ago and deemed fit
for service. But this month a member of the Joint Pipeline Office (JPO), which
combines federal and state regulators to ensure the safety of Alaska's oil
industry, approached Glen Plumlee, a former senior financial analyst at Alyeska,
to discuss the situation again, Mr Plumlee said.
Mr Plumlee detailed the concerns of the JPO employee in a letter to Chuck Hamel,
a former Alaska oil worker who brings whistleblower complaints to regulators.
The letter revives the earlier claims of faulty welding, saying regulators under
the JPO agreed to permit the work despite the risk posed to the environment.
"Catastrophic failure of even one Valdez tank could endanger the entire
terminal, pollute Prince William Sound on the order of the 1989 Exxon Valdez
spill, as well as stop a substantial portion of the entire domestic US crude oil
supply while the terminal is repaired and the spill contained," Mr Plumlee said.
The letter states that if even one tank, each of which holds 510,000 barrels of
oil, should give way, the environmental impact would be disastrous. The Exxon
Valdez spill, the largest ever in the US, leaked 260,000 barrels of oil.
Rhea DoBosh, JPO spokeswoman, said a JPO employee was contacted by an
Environmental Protection Agency investigator a week ago to discuss employee
concerns about the tanks. The JPO employee, who has asked for anonymity, told
the FT that he would have to get permission from the agents before discussing
the issue and referred further questions to Ms DoBosh.
Both the JPO and Alyeska deny any problem with the welding, as they did
previously.
"There is no integrity risk regarding the crude oil storage tanks at the Valdez
Marine Terminal,'' said Mike Heatwole, Alyeska spokesman. "The issues we've been
discussing are old issues that have been thoroughly reviewed - internally and
externally.''
Regardless of how the matter unfolds, the allegations are likely to renew
concerns about Alaska's oil industry in the House debate. The industry has
recently been criticised for a big spill and corrosion issues at Prudhoe Bay,
north America's largest oil field, which is co-owned by Alyeska's owners.
People in Alaska have expressed their own concerns. "We don't want a full tank
of oil coming down the hill into our water," said Stan Stevens, president of the
Prince William Sound Regional Citizens' Advisory Council, a congressionally
mandated group charged with environmental oversight of oil terminals and tankers
in the area.
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Fairbanks News Miner
May 24, 2006
http://www.news-miner.com/Stories/0,1413,113~7244~3317328,00.html
Feds looking into
tank welds
By SAM BISHOP News-Miner Washington Bureau
Wednesday, May 24, 2006
WASHINGTON--The Environmental Protection Agency and FBI both are looking at
allegations that incorrect welding procedures were used four years ago during
repair of storage tanks at the trans-Alaska oil pipeline terminal in Valdez.
EPA and FBI representatives interviewed an employee of the Joint Pipeline Office
about the welding procedures earlier this month, according to JPO spokeswoman
Rhea Dobosh.
"Whether that constitutes an investigation, I don't know," Dobosh said. The JPO,
a state-federal agency based in Anchorage, oversees pipeline operations.
"We're not aware of any investigations," said Mike Heatwole, spokesman for
Alyeska Pipeline Service Co., which operates the line. "Is it an investigation
or is it an inquiry by others within the government? That's the immediate
question that comes to mind."
FBI Agent Eric Gonzalez in Anchorage said he could neither confirm nor deny the
report of an investigation. John Pavitt, an EPA environmental protection
specialist in Anchorage, said the agency does not comment on whether it is
investigating.
The state Department of Environmental Conservation investigated similar
allegations about improper welding and dismissed most of them in April 2003, the
News-Miner reported Tuesday.
The allegations resurfaced in early May through a former Alyeska financial
analyst, Glen Plumlee. Plumlee, who took an buyout package in April, has filed a
complaint against the company with the U.S. Department of Labor alleging he was
denied a consulting job and told to just "move on" after he cooperated in
December with federal investigators.
Plumlee said he had been contacted by a current JPO employee who believes
Alyeska and JPO covered up the welding procedures problem in 2003 and that the
welds could fail and allow oil to escape into Port Valdez.
Plumlee passed the allegation to Chuck Hamel, a former shipping broker from
Virginia who frequently publicizes information from whistleblowing employees in
Alaska's oil industry.
Hamel forwarded Plumlee's concerns to the Prince William Sound Regional
Citizens' Advisory Council, an Alyeska-funded group set up after the 1989 Exxon
Valdez oil spill to monitor industry operations.
After learning of the allegation, a citizens' council employee contacted JPO for
information and then sent an e-mail summary of what she learned to other
employees, with a copy to Hamel.
"There are also two federal investigations going on right now of this issue by
EPA and the FBI," wrote Donna Schantz, programs director in Valdez. "Because of
this JPO is unable to release information in the investigation file."
Dobosh, the JPO spokeswoman, said Tuesday that all information the agency has on
the allegations is public, with the possible exception of information in a
personnel file.
"There might be more in the employee file. I'm not privy to that information,"
she said. She said she doesn't know whether the FBI or EPA requested the file.
Dobosh said neither does she know who in her office talked with Plumlee or why.
No one in the agency is trying to find out, she said. The agency is focused on
responding to the allegations, which it believes were thoroughly addressed three
years ago, she said.
The DEC report in 2003 dismissed all the allegations except two involving welds
on Tank 55, a 40,000-barrel diesel storage tank. Records show some welds were
completed before a procedure for doing so had been approved, the DEC said. Also,
Alyeska failed to keep records on how welders monitored heat on two welds.
Heatwole, the Alyeska spokesman, said welders on Tank 55 initially were using
procedures for metal of the wrong thickness. After stopping the work, an
inspector determined the welds had nonetheless satisfied standardized American
Petroleum Industry procedures, so the work continued and was done properly,
Heatwole said. There is no risk of failure from the welds, he said.
Schantz, in her e-mail, said a JPO employee explained to her that an independent
inspector had stopped the work on the Tank 55 welding. "The welding engineer
then rewrote Alyeska's procedures, and the inspector OK'd them as meeting the
API 653 standard," Schantz relayed.
Plumlee, the former Alyeska analyst who worked as inspector earlier in his
career, said Tuesday that such after-the-fact revisions of welding procedure
violate industry standards. "That's not acceptable anywhere in the world," he
said.
He said Alyeska's own practice, in his experience, was to remove any welds that
didn't follow procedures. "They chose another course this time, which is not
appropriate," he said.
Plumlee said he believes, based on what the JPO employee told him, that proper
procedures also weren't followed when Alyeska welded back in place a door hole
cut in the 510,000-barrel Tank 5.
The DEC report found no such problem with the work on Tank 5.
Washington, D.C., reporter Sam Bishop can be reached at (202) 662-8721 or
sbishop@newsminer.com .
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Wall Street Journal
May 24, 2006
U.S. Probes Alaska Pipeline Repairs
EPA, FBI Check Allegations
Of Improper Repair Work
On Two Big Storage Tanks
By JIM CARLTON
May 24, 2006; Page A8
Federal investigators are looking into allegations that workers contracted by
oil companies that manage the Trans-Alaska Pipeline improperly repaired two
giant storage tanks used by the pipeline, potentially putting the structures at
risk, according to an agency charged with overseeing the 800-mile line.
Federal officials -- including criminal investigators from the Environmental
Protection Agency and the Federal Bureau of Investigation -- are also looking
into whether company and government officials in charge of overseeing the
facility falsified records to make it appear the welding was done correctly,
according to a former analyst for the consortium of oil companies that run the
pipeline.
The inquiries come amid increased scrutiny of energy-infrastructure issues in
Alaska and their consequences for both energy reliability and the environment. A
separate informal criminal probe by the EPA began earlier this year over BP
PLC's management of pipelines at the Prudhoe Bay field on Alaska's North Slope.
The pipeline is run by Alyeska Pipeline Service Co., a consortium that includes
BP, Exxon Mobil Corp. and ConocoPhillips, and is overseen by the Joint Pipeline
Office, a state-federal agency that also oversees the two tanks, which are near
Valdez, Alaska.
Each tank can hold 500,000 barrels of oil. Critics say a breach could dump oil
into nearby Prince William Sound and disrupt oil shipments to the continental
U.S. Alyeska officials say the tanks sit behind dikes that would contain a
spill.
An EPA spokesman declined to comment. FBI officials declined to confirm or deny
an investigation was under way. JPO spokeswoman Rhea DoBosh said an employee of
her agency was questioned by investigators of both federal agencies.
Ms. DoBosh added that her agency isn't aware of any wrongdoing and that it
previously looked into complaints of faulty welds made during repair work on the
tanks but failed to substantiate them. She also said she was unaware of an
inquiry into alleged falsification of records.
Officials of Alyeska said they weren't aware of the federal inquiry and that
they, too, had looked into the matter after complaints about the welds surfaced
several years ago but found no problems.
The welding allegations originated with an employee of the joint-pipeline
office, according to Glen Plumlee, who recently retired as a strategic planning
coordinator at Alyeska. In an interview this week Mr. Plumlee said that shortly
before he retired in April he was contacted by the employee about the
allegations. Neither Mr. Plumlee nor the joint-pipeline office disclosed the
identity of the employee.
Mr. Plumlee said that after retiring he notified the EPA and FBI about the
allegations, which he said stemmed from welding done in 2001 and 2002.
Mr. Plumlee this month also sent a letter outlining the allegations to Charles
Hamel, who has long served as a conduit for safety-related complaints by Alaskan
oil-industry workers.
Write to Jim Carlton at jim.carlton@wsj.com
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Fairbanks News Miner
May 23, 2006
http://www.news-miner.com/Stories/0,1413,113~7244~3316490,00.html
Oil tank welding
probe renewed after allegations of cover-up
By SAM BISHOP News-Miner Washington Bureau
Tuesday, May 23, 2006
WASHINGTON--State environmental officials dismissed allegations of improper
welding procedures used on massive oil tanks at Valdez three years ago, but a
recent anonymous complaint of a cover-up has prompted a Prince William Sound oil
industry watchdog group to probe the issues again.
Alyeska Pipeline Service Co.'s marine terminal manager Tom Stokes, in a recent
letter to the Prince William Sound Regional Citizens' Advisory Council, noted
that the state reviewed the welding procedures and found virtually no problems
in 2003.
Even if the welds failed, concrete containment dikes would hold the oil, Stokes
said in his letter.
Stan Stephens, the citizens' council president, and John Devens, the group's
director, met with Alyeska President Keven Hostler last week to discuss the
resurrected allegations.
Stephens and Devens haven't reached any conclusions, according to council
spokesman Stan Jones.
"Like you, we've seen both sides of the documents," Jones said Monday. "We're
not sure what to make of it so we are hiring an expert on tank welds."
The citizens' council is a 19-member watchdog group created after the 1989 Exxon
Valdez oil tanker spill. Alyeska pays for the council's budget.
Mike Heatwole, Alyeska spokesman, said the company has a "very, very robust,
thoroughly reviewed" tank maintenance program.
"There is absolutely no risk to the Valdez Marine Terminal" from the welds, he
said. Even so, the company is doing another review to reconfirm that everything
had been addressed, he said.
The issue arose in early May when Glen Plumlee, a former Alyeska inspector and
financial manager, wrote to Chuck Hamel, a Virginia resident and former shipping
broker with a history of conflict with Alaska's oil companies.
Plumlee said an employee at the Joint Pipeline Office, a state-federal agency
that oversees the pipeline, told him of the alleged welding problems. The
employee, who Plumlee did not identify, also said JPO and Alyeska "colluded" to
cover up the problems.
Plumlee took an early retirement from Alyeska in April. He said he was asked to
leave because he cooperated with criminal investigators. He has filed complaints
against the company with the Department of Labor.
Hamel passed on the welding allegations to Stephens, who forwarded them to
Alyeska for a response.
Rhea Dobosh, spokeswoman for the Joint Pipeline Office, said her agency helped
investigate the welding concerns several years ago and found them to be
groundless.
"I don't know where that allegation could possibly have come from," she said.
She said numerous agencies and people were involved in the investigation, making
it impossible for JPO and Alyeska to "collude" on anything.
"It would be like buying off a whole town," she said. The JPO's documents and
actions in the initial investigation are public, with the exception of a review
of a personnel issue linked to the inquiry, she said.
The state Department of Environmental Conservation received reports in the fall
of 2002 that Alyeska had not followed the welding standards on three tanks. On
April 23, 2003, the DEC wrote a detailed letter relaying its findings to
Alyeska.
"The letter, with the exception of two issues involving Tank 55, concludes that
all work was done in accordance with (American Petroleum Industry) Standard
653," Stokes noted in his recent letter to the council.
Plumlee's letter said the tanks in question were numbers 5 and 10. "It is my
understanding that the incorrect welding procedure specification was used in the
lowest rings of both these tanks, perhaps inadvertently," Plumlee wrote. The
welds should have been redone, he said. If a lower ring failed all at once, the
oil could slosh over the containment dike into Port Valdez, he said.
Heatwole said Alyeska is confident in the dikes. Each surrounds two tanks and
can hold 110 percent of the volume of both at once, he said.
Stokes, in his response to Stephens, said the major oil tanks repaired in 2002
were actually numbers 5 and 16. Each can hold just over a half-million barrels
of oil.
Alyeska had to cut a door into Tank 5 to install a new floor. The DEC report
found no flaws in the procedures used to weld the piece back in place and
replace the floor.
In Tank 16, Alyeska made minor floor repairs and moved a sump. Neither required
a door to be cut in the tank wall, so "the type of work performed on the tank
could not lead to the type of failure suggested in Mr. Hamel's letter," Stokes
said. DEC didn't address any concerns about Tank 16 in its report.
The DEC review also covered tanks 93 and 55, though.
The work on Tank 93, which holds up to 430,000 barrels of ballast water, had no
problems, the agency said.
The work on Tank 55, a 40,000-barrel diesel tank, required cutting a door in the
wall. According to dates on tracking reports, DEC said, Alyeska welded the door
back in place a few days before some welding procedures were approved--the
reverse of the proper order. Alyeska also did not have records on how it
monitored heat levels on two welds, DEC said.
Heatwole said the problem on Tank 55 arose when welders discovered they were
using criteria designed for a different metal thickness. Alyeska evaluated the
work they had done and determined it had satisfied criteria for the actual metal
thickness, he said. No issue remains, he said.
Washington, D.C., reporter Sam Bishop can be reached at (202) 662-8721 or
sbishop@newsminer.com
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Wall Street Journal
May 22, 2006
BP Chief Says Firm's Energy Focus
In Alaska Will Shift to Natural Gas
By JIM CARLTON
May 22, 2006; Page A2
Natural gas will eventually supplant oil as the dominant source of energy
production in Alaska, said John Browne, chief executive officer of BP PLC,
signaling confidence that a long-contemplated gas pipeline in the state finally
will be built.
Lord Browne said gas reserves on the Alaskan North Slope are huge but largely
untapped, while known oil reserves there have been in decline for years. He
added that BP, one of the world's largest energy concerns, plans to operate in
Alaska for another half-century, assuming a pipeline is built to transfer gas
now stranded on the North Slope to energy-hungry consumers in Canada and the
lower 48 U.S. states.
"The growth for us in Alaska is gas," Lord Browne said on a recent business stop
in San Francisco. "Oil will continue, but gas will flip over and replace oil as
the economic driver."
Lord Browne's comments come as officials in Alaska and Canada are considering an
industry proposal to build a 2,130-mile gas pipeline that would run along the
existing, oil-carrying Trans-Alaska Pipeline and then branch off through western
Canada to the rest of the U.S.
The pipeline, which is expected to cost as much as $25 billion, would carry
about four billion cubic feet of natural gas a day.
One sticking point in getting the project approved is a debate among Alaska
state legislators on how much long-term oil and gas taxes companies like BP
should pay in the future.
BP, of London, is a longtime operator of the giant Prudhoe Bay oilfield and a
member of a consortium of North Slope producers that includes Exxon Mobil Corp.
and ConocoPhillips. Those three producers recently submitted a plan to Alaskan
state officials to construct the gas pipeline, which Mr. Browne said has been
under consideration for more than 20 years.
Until their run-up in recent years, low natural-gas prices were a factor in
keeping the pipeline from being built, because companies were concerned they
wouldn't recoup construction costs. Lord Browne said demand for energy is now so
strong that he is confident a pipeline will be built, with gas deliveries to the
lower 48 states beginning in as soon as 10 years.
Once the pipeline is approved, he added, "This will say now we can look 50 years
forward."
If the pipeline is approved, Lord Browne said, BP would raise its annual
spending in Alaska from about $600 million this year to $1.5 billion over a
10-year period.
For Lord Browne, BP's Alaska business is personal. One of his first jobs at BP
was as an engineer at Prudhoe Bay, and Mr. Browne said Alaska has figured
closely in BP's operations ever since.
Despite recent allegations from some workers that BP hasn't been performing
proper upkeep on aging pipelines in Alaska, Lord Browne called the company's
maintenance program "very thorough," but added that there is always room for
improvement.
The Environmental Protection Agency is conducting a criminal investigation into
BP's management of pipelines at the Prudhoe Bay field, including the discovery
in early March of one pipeline that state officials say ruptured and spilled
134,000 to 267,000 gallons of crude.
"The gap between perfection and where we are is something we need to fill up,"
Lord Browne said.
Write to Jim Carlton at jim.carlton@wsj.com
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Anchorage Daily News
May 14, 2006
http://www.adn.com/opinion/story/7727526p-7639011c.html
BP needs to do
better
Pipeline maintenance falls
short of what Alaska should demand
Published: May 14, 2006
Last Modified: May 14, 2006 at 03:36 AM
What did BP have to say when federal pipeline watchdogs last month criticized
the company's maintenance on the Prudhoe Bay crude oil feeder line that leaked
earlier this year?
BP spokesman Daren Beaudo told the Fairbanks Daily News-Miner:
"We're going to improve on what we thought was already a very effective system
-- one that is supported by the fact that in the 30-year history of operations,
prior to the GC-2 transit line spill, no one can remember a leak occurring on a
Prudhoe Bay crude oil transit line."
And until the Exxon Valdez tanker spill proved otherwise, North Slope producers
said they had an effective system to prevent and clean up oil spills in Prince
William Sound. The spill proved that history wrong.
So it's good to see BP is learning that history is not always a guarantee of the
future.
BP's corroded oil line leaked more than 200,000 gallons as the leak went
undetected for several days. There was an electronic spill detection system, but
it was only installed four years ago and only under pressure from government
regulators. The detector went off, but workers dismissed the warnings as false
alarms. The spill finally was detected when a worker traveling along the line
smelled the oil.
One suspected cause of the spill is corrosion made worse by sludge that had
accumulated in the bottom of the pipeline. Production from older fields and
heavier oil from new fields carry more sediment and higher water content than
the cleaner oil that flowed out of Prudhoe Bay two decades ago.
And because the 34-inch feeder line is carrying one-third as much oil as it was
built to move, the reduced flow allows more sediment and water to separate out
and drop to the bottom of the pipe. That's not a good thing for steel.
Turns out the line hadn't been cleaned with a scraper "pig" in eight years. Some
Lower 48 lines are cleaned every week or two, according to federal pipeline
watchdogs, though BP and state of Alaska officials point out the frequency
depends on a lot of factors. And they also note that scraping clean the pipe is
just one of several maintenance procedures used on the North Slope, under an
approved corrosion management system required by state law.
As for the sludge in the BP line that leaked, there's so much of it sitting in
the pipe that scraping it off and sending it farther down the line could create
major problems at the first pump station on the 800-mile main line to Valdez.
This does not sound good, nor does it sound like a "very effective system."
At least BP realizes it had better not roll the dice again and lose. It
announced May 8 it would shut two feeder lines on the North Slope so they can be
treated for corrosion.
Financially speaking, that's a painful move for the company and for the state
treasury. The closed lines handle about 22,000 barrels of daily production,
worth about $1.5 million a day at current high prices. Shutting the lines also
accelerates the worrisome decline in Alaska's daily oil production. At 825,000
barrels a day, what Alaska pumps is barely two-fifths the peak level reached in
1988.
Still, the precautionary move to shut the two North Slope lines is the right
call. If BP and other oil companies can't pump Alaska's oil without spilling,
they'll have to turn the pumps off until they can give Alaska's environment the
level of protection it deserves.
BOTTOM LINE: BP's newfound caution in closing corrosion-prone lines is a welcome
change.
Xxxxxxxxxxxxxxxxxxxxxxx
Anchorage Daily News
May 9, 2006
http://www.adn.com/money/story/7710070p-7621531c.html
BP acts on fear of
leaks
NORTH SLOPE: Corrosion puts two pipelines out of service.
By WESLEY LOY
Anchorage Daily News
Published: May 9, 2006
Last Modified: May 9, 2006 at 02:33 AM
JUNEAU -- BP said Monday it is shutting down two North Slope oil pipelines
because of internal corrosion damage, halting the flow of 22,000 barrels of
crude daily.
The shutdown follows the March 2 closure of a major Prudhoe Bay oil field
pipeline that sprang a leak and spilled an estimated 201,000 gallons, or 4,790
barrels, of oil onto the tundra. Corrosion was blamed for eating a hole through
the inner pipe wall, leading to the largest oil spill ever on the Slope.
The leak, which has drawn scrutiny from federal pipeline regulators, members of
Congress and criminal investigators, prompted BP to conduct a flurry of extra
inspections in the vast pipeline web across the North Slope oil fields.
However, those inspections were not what led to discovery of corrosion problems
in the two additional pipelines BP is shutting down, said Maureen Johnson, a BP
senior vice president.
Rather, it was BP's regular, long-term corrosion monitoring along the two pipes,
each of which has well-documented corrosion problems and had deteriorated
despite aggressive and expensive chemical treatments that add a protective
coating to the steel pipe inner walls, Johnson said.
One of the damaged pipelines is in the Lisburne oil field, which BP runs on
behalf of itself and other owners including Exxon Mobil and Conoco Phillips. The
line is 24 inches in diameter, is nearly five miles long and carries 20,000
barrels of oil per day, said BP spokesman Daren Beaudo.
The other pipe is in BP's Milne Point field and is 14 inches in diameter, nearly
3 1/2 miles long and carries 2,000 barrels of oil a day, he said.
Neither pipe leaked any oil, and that's the goal of the company's corrosion
monitoring program, Johnson said.
But corrosion in one segment of the Lisburne line is extensive and was getting
worse, despite increased use of chemical treatments costing $2.5 million a year,
she said.
"It's highly likely that the ultimate solution will be replacing the line.
There's enough damage," Johnson said.
The Lisburne and Milne Point pipelines carry oil from wells toward processing
plants that remove water and natural gas that come out of the ground mixed with
the crude.
They're likely to be closed down for some weeks, idling wells and interrupting
the flow of oil worth $1.5 million a day at Monday's closing West Coast price of
$68.17 a barrel.
The oil outage represents a small fraction of total North Slope production of
about 825,000 barrels a day.
BP plans to test the lines to see if they can be safely operated pending
permanent repair or replacement decisions, Johnson said.
The pipeline leak discovered March 2 in the giant Prudhoe Bay field, which BP
also operates, involved a 34-inch pipeline and a production loss of up to
100,000 barrels of oil per day.
That pipeline remains shut down, but BP is using a bypass pipeline to restore
85,000 barrels of the lost production, Johnson said.
Federal pipeline regulators gave BP an order to test and fix the Prudhoe line,
as well as two other major North Slope pipes, before restarting it.
The Lisburne and Milne Point lines BP is closing were not among the lines cited
in the federal order, Johnson said.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Houston Chronicle
May 8, 2006
http://www.houstonchronicle.com/disp/story.mpl/business/energy/3845870.html
BP investigating
accuracy of pollution figures
Toxic emissions from Texas City refinery
tripled in '04, company's data show
By DINA CAPPIELLO
Copyright 2006 Houston Chronicle
BP's Texas City refinery, which already has been fined for safety violations
that led to a deadly March 2005 explosion, is now investigating whether it has
been accurately reporting pollution to the federal government.
The query stems from the latest emissions data from the U.S. Environmental
Protection Agency. In 2004, BP reported releasing three times more toxic
pollution than it released in 2003, primarily formaldehyde and ammonia, at its
Texas City plant, a number that makes the facility far and away the most
polluting refinery in the U.S.
The increase in emissions at BP was so large it distorted the data for
refineries nationwide, according to the EPA. The Texas City plant accounted for
the bulk of a 15 percent increase in emissions in 2004 that drove refinery
pollution to its worst level since 2000, based on the agency's data.
But the company is unsure whether the estimate it submitted to EPA's Toxics
Release Inventory, which tracks releases of nearly 650 toxic chemicals to air,
water and land, is correct. BP reported 10.25 million pounds of pollution to the
TRI in 2004, compared with 3.3 million pounds the year before. Company spokesman
Neil Geary attributed the sharply higher figure to a change in the way BP
calculated emissions from heaters at the plant.
"These were on-paper calculations not based on real measurements through valves
or stacks," Geary said. "We have initiated an enhanced (systemwide) review ...
to improve the accuracy of our TRI reporting ... to ensure that the reports
reflect actual operations and are as accurate as possible."
The outcome of the investigation, which will include actual measurements of
emissions and a review of the calculations used to estimate them, could prompt
the EPA to penalize the company if the numbers prove inaccurate. Fines can reach
$32,500 per violation.
Cleanup ramifications
BP already is facing a record $21.3 million fine from the
U.S. Occupational Safety and Health Administration for 300 safety and health
violations found at its Texas City plant after an explosion last year there
killed 15 workers.
But the pollution review also could have ramifications for the Houston region's
efforts to clean up smog, plans based, in part, on emission estimates provided
by companies to the government. If BP's estimate to the EPA turns out to be
correct, the additional and previously undocumented pollution could be enough to
influence the state's plan to reduce the region's smog, experts said.
The eight-county Houston-Galveston area is in violation of the federal health
standard for ground-level ozone and has until 2010 to comply. By June 2007, the
state must submit a plan outlining the measures it will take to get there.
Formaldehyde is an important precursor of ground-level ozone, the main
ingredient in smog. Ammonia, also a gas, can form soot. Both can irritate the
eyes, nose and throat, depending on the degree of exposure.
Big differences in a year
According to the Toxics Release Inventory, BP estimated its Texas City plant
emitted nearly 2 million pounds of formaldehyde in 2004. The company reported no
formaldehyde emissions in 2003.
The company also estimated 4.1 million pounds of ammonia were released from its
plant in 2004, more than twice the 1.6 million pounds it reported the previous
year.
"In trying to figure out how we deal with smog, we need to understand what
emissions are best to control, and that depends on us knowing what is going into
the atmosphere in the first place," said David Allen, director for the Center
for Energy and Environmental Resources at the University of Texas at Austin.
The Texas Commission on Environmental Quality said it was too early to speculate
about the accuracy of the company's figures. And TRI numbers, which are
assembled for use by the public, are not the basis for its regulatory decisions.
Instead, the state relies on its own emissions inventory, which also is based on
estimates provided by companies. But the state data differ from the TRI, because
the numbers focus solely on air pollution and cover additional pollutants. From
2003 to 2004, the state data show that pollution at BP declined.
The TCEQ is investigating the discrepancy and said the results of BP's probe
could lead to revisions in the federal pollution numbers, the state's, or both.
"Their reporting to TRI was much, much higher than their reporting to the state
for 2004," agency spokesman Terry Clawson said of BP's numbers. "It is our
understanding that they are looking very hard at those differences and how they
happened."
He added, "Basically, it means the TRI data was skewed by a huge increase in
reported emissions, not actual emissions, from BP Texas City."
Environmental advocates, however, say it is too early to dismiss what BP
reported as simply pollution on paper.
"It's real, it just never got reported before," said Eric Schaeffer, an ex-EPA
staffer who now runs the Washington, D.C.-based Environmental Integrity Project.
"You can argue it's not an increase, but the next sentence has to be 'we've
always been bad.' "
Erroneous estimates of pollution from the industry are not new. In 2000, as part
of the Texas Air Quality Study, researchers found that companies in the Houston
area were underreporting emissions of certain chemicals by as much as three to
10 times. That finding prompted the state to rethink how it planned to address
the region's smog problem, requiring deeper cuts of those underestimated
compounds.
In 2004, a report from the EPA's inspector general concluded that the government
was not ensuring that the nation's refineries were reducing emissions, despite a
court order to do so. Part of the problem, according to the report, was that the
agency was not monitoring pollution to double-check the industry's numbers.
Just last year, Shell's refinery in Deer Park reported to the TCEQ that it
released six times more 1,3-butadiene, a chemical that has been linked to
cancer, in 2004 than it did in 2003. The reason behind the increase was a small
change 1.5 percent in how well the plant's flares burned off the chemical when
emissions were calculated.
A different approach
In BP's case, a consultant recommended using new calculations to estimate
emissions of ammonia and formaldehyde from combustion, an approach other
refineries appear to have not used.
When all pollution is taken into account, BP says emissions from its Texas City
plant have dropped by 40 percent since 2000.
"We went with it because we felt there was no better, more accurate way," said
Geary, who added that the calculations were based on a formula "different from
what other refineries, or even other BP refineries, appear to have used."
EPA methodology optional
The EPA said the use of its methodology, which was issued by the agency's
Emissions Inventory Improvement Program, was not required.
"EPA recommends direct, continuous emissions monitoring of the pollutant of
concern," spokeswoman Jessica Emond said.
The company already has recalculated its ammonia pollution and expects to shave
1.2 million pounds of ammonia off the 4.1 million pounds it reported for 2004
when it resubmits its corrections.
Whatever the outcome, some experts say, for the sake of clean air, the math
needs to be closer to reality.
"It's incredible that they were that far off. That's a huge increase in
formaldehyde," said Matt Fraser, an associate professor in civil and
environmental engineering at Rice University. "It just shows you how little
attention is being paid to getting emissions numbers right. And since all of our
air-quality control strategies are based on that data, it makes you wonder."
dina.cappiello@chron.com
Xxxxxxxxxxxxx
Houston Chronicle
May 7, 2006
http://www.chron.com/disp/story.mpl/front/3845870.html
Toxic emissions from Texas City refinery tripled in '04, company's data show
By DINA CAPPIELLO
Copyright 2006 Houston Chronicle
EPA Ranking Graphic:
http://www.chron.com/gfx/p1/a0507toxic.html
Link to BP Texas City Coverage:
http://www.chron.com/content/chronicle/special/05/blast/index.html
BP's Texas City refinery, which already has been fined for safety violations that led to a deadly March 2005 explosion, is now investigating whether it has been accurately reporting pollution to the federal government.
The query stems from the latest emissions data from the U.S. Environmental Protection Agency. In 2004, BP reported releasing three times more toxic pollution than it released in 2003, primarily formaldehyde and ammonia, at its Texas City plant, a number that makes the facility far and away the most polluting refinery in the U.S.
The increase in emissions at BP was so large it distorted the data for refineries nationwide, according to the EPA. The Texas City plant accounted for the bulk of a 15 percent increase in emissions in 2004 that drove refinery pollution to its worst level since 2000, based on the agency's data.
But the company is unsure whether the estimate it submitted to EPA's Toxics Release Inventory, which tracks releases of nearly 650 toxic chemicals to air, water and land, is correct. BP reported 10.25 million pounds of pollution to the TRI in 2004, compared with 3.3 million pounds the year before. Company spokesman Neil Geary attributed the sharply higher figure to a change in the way BP calculated emissions from heaters at the plant.
"These were on-paper calculations — not based on real measurements through valves or stacks," Geary said. "We have initiated an enhanced (systemwide) review ... to improve the accuracy of our TRI reporting ... to ensure that the reports reflect actual operations and are as accurate as possible."
The outcome of the investigation, which will include actual measurements of emissions and a review of the calculations used to estimate them, could prompt the EPA to penalize the company if the numbers prove inaccurate. Fines can reach $32,500 per violation.
Cleanup ramifications
BP already is facing a record $21.3 million fine from the U.S. Occupational Safety and Health Administration for 300 safety and health violations found at its Texas City plant after an explosion last year there killed 15 workers.
But the pollution review also could have ramifications for the Houston region's efforts to clean up smog, plans based, in part, on emission estimates provided by companies to the government. If BP's estimate to the EPA turns out to be correct, the additional and previously undocumented pollution could be enough to influence the state's plan to reduce the region's smog, experts said.
The eight-county Houston-Galveston area is in violation of the federal health standard for ground-level ozone and has until 2010 to comply. By June 2007, the state must submit a plan outlining the measures it will take to get there.
Formaldehyde is an important precursor of ground-level ozone, the main ingredient in smog. Ammonia, also a gas, can form soot. Both can irritate the eyes, nose and throat, depending on the degree of exposure.
Big differences in a year
According to the Toxics Release Inventory, BP estimated its Texas City plant emitted nearly 2 million pounds of formaldehyde in 2004. The company reported no formaldehyde emissions in 2003.
The company also estimated 4.1 million pounds of ammonia were released from its plant in 2004, more than twice the 1.6 million pounds it reported the previous year.
"In trying to figure out how we deal with smog, we need to understand what emissions are best to control, and that depends on us knowing what is going into the atmosphere in the first place," said David Allen, director for the Center for Energy and Environmental Resources at the University of Texas at Austin.
The Texas Commission on Environmental Quality said it was too early to speculate about the accuracy of the company's figures. And TRI numbers, which are assembled for use by the public, are not the basis for its regulatory decisions.
Instead, the state relies on its own emissions inventory, which also is based on estimates provided by companies. But the state data differ from the TRI, because the numbers focus solely on air pollution and cover additional pollutants. From 2003 to 2004, the state data show that pollution at BP declined.
The TCEQ is investigating the discrepancy and said the results of BP's probe could lead to revisions in the federal pollution numbers, the state's, or both.
"Their reporting to TRI was much, much higher than their reporting to the state for 2004," agency spokesman Terry Clawson said of BP's numbers. "It is our understanding that they are looking very hard at those differences and how they happened."
He added, "Basically, it means the TRI data was skewed by a huge increase in reported emissions, not actual emissions, from BP Texas City."
Environmental advocates, however, say it is too early to dismiss what BP reported as simply pollution on paper.
"It's real, it just never got reported before," said Eric Schaeffer, an ex-EPA staffer who now runs the Washington, D.C.-based Environmental Integrity Project. "You can argue it's not an increase, but the next sentence has to be 'we've always been bad.' "
Erroneous estimates of pollution from the industry are not new. In 2000, as part of the Texas Air Quality Study, researchers found that companies in the Houston area were underreporting emissions of certain chemicals by as much as three to 10 times. That finding prompted the state to rethink how it planned to address the region's smog problem, requiring deeper cuts of those underestimated compounds.
In 2004, a report from the EPA's inspector general concluded that the government was not ensuring that the nation's refineries were reducing emissions, despite a court order to do so. Part of the problem, according to the report, was that the agency was not monitoring pollution to double-check the industry's numbers.
Just last year, Shell's refinery in Deer Park reported to the TCEQ that it released six times more 1,3-butadiene, a chemical that has been linked to cancer, in 2004 than it did in 2003. The reason behind the increase was a small change — 1.5 percent — in how well the plant's flares burned off the chemical when emissions were calculated.
A different approach
In BP's case, a consultant recommended using new calculations to estimate emissions of ammonia and formaldehyde from combustion, an approach other refineries appear to have not used.
When all pollution is taken into account, BP says emissions from its Texas City plant have dropped by 40 percent since 2000.
"We went with it because we felt there was no better, more accurate way," said Geary, who added that the calculations were based on a formula "different from what other refineries, or even other BP refineries, appear to have used."
EPA methodology optional
The EPA said the use of its methodology, which was issued by the agency's Emissions Inventory Improvement Program, was not required.
"EPA recommends direct, continuous emissions monitoring of the pollutant of concern," spokeswoman Jessica Emond said.
The company already has recalculated its ammonia pollution and expects to shave 1.2 million pounds of ammonia off the 4.1 million pounds it reported for 2004 when it resubmits its corrections.
Whatever the outcome, some experts say, for the sake of clean air, the math needs to be closer to reality.
"It's incredible that they were that far off. That's a huge increase in formaldehyde," said Matt Fraser, an associate professor in civil and environmental engineering at Rice University. "It just shows you how little attention is being paid to getting emissions numbers right. And since all of our air-quality control strategies are based on that data, it makes you wonder."
xxxxxxxxxxxxxxxxxxxxxxx
Fairbanks News Miner
May 7, 2006
http://www.news-miner.com/Stories/0,1413,113~7252~3306132,00.html
Pipeline tariffs
handicap independent
developers on the Slope
Sunday, May 07, 2006
While struggling to overhaul the state's petroleum fiscal regime with one eye on
the clock and the other on ephemeral gas line issues, the Legislature needs to
get a better fix on how excessive oil pipeline tariffs hurt independent
developers and how its complicated and far-reaching oil tax proposals would
actually work at relatively low oil prices.
Excessive trans-Alaska pipeline system shipping charges handicap independent
shippers of North Slope oil by about $5.64 per barrel, compared to that for
pipeline owners. The three major pipeline owners--BP, ConocoPhillips and Exxon
Mobil--own 95 percent of the pipeline and control a similar percentage of North
Slope production.
Ignoring these facts, the governor and the Legislature are devising complicated
ways to encourage independent developers to come to the North Slope. But a
significant portion of the giveaways offered at state expense will only
neutralize the pipeline system handicap for independents, while giving the
pipeline owners extra money.
Administration spokesman Chuck Logsdon says the pipeline tariffs can be
renegotiated later. Postponement creates precisely the uncertainty that oil
industry and Murkowski administration representatives decry.
Dr. Logsdon also ignores the history of the 1985 pipeline tariff agreement that
has handicapped North Slope competition and cost the state billions of dollars
in reduced royalty and tax payments. Ironically, the Department of Law advocated
that settlement to end uncertainty.
Twenty years later, the state still pays for that bad call.
In 2002, in a blockbuster decision that capped a five-year administrative
hearing, the Regulatory Commission of Alaska ruled that during the first two
decades of the pipeline's operation, the 1985 settlement allowed pipeline owners
to overcharge shippers by approximately $10 billion. That reduced state royalty
and severance payments by approximately $2 billion.
The commission ordered that the pipeline shipments under its jurisdiction should
be set at $1.96 per barrel. That amount, the commission said, included a just
and reasonable profit.
RCA tariffs only apply to in-state shipments. The Federal Energy Regulatory
Commission sets rates for more than 90 percent of the pipelines' shipments.
Today, the pipeline's owners, using the 1985 settlement formula at FERC, charge
approximately $3.98 per barrel--more than twice the RCA tariff.
Today, the pipeline tariff excess costs the state approximately $0.30 per
barrel, while the independent shipper is handicapped by $5.64 per barrel,
compared to the pipeline owners, who get to recover all costs and keep the
excess.
Pipeline tariffs become increasingly important at low prices. Long before its
merger with Phillips in 2002, Conoco was the only company other than a major
Alaska pipeline owner to run a North Slope field. But in 1993, during a period
of low prices, Conoco pulled the plug and left the state. BP acquired Conoco's
Milne Point and immediately began expanding it.
Conoco President and CEO Archie Dunham later said, "It broke my heart to trade
Milne Point, but we had to do it. All the value of that property was taken away
from us in the pipeline tariffs." In 1998, I estimated that when it pulled the
plug in 1993, Conoco was financially under water on the North Slope by
approximately the amount the company was paying to the pipeline owners in
profits.
Will credits and deductions aimed at sharing low-price risk work to encourage
development if the pipeline handicap isn't fixed?
Particularly at low prices, cash-flow is critical to any developer. The 1998
price collapse caused ARCO's sudden demise. Phillips Petroleum acquired ARCO's
share of the North Slope, including a portion of the pipeline. (Phillips later
merged with Conoco, and Dunham, with his heart healed, returned to Alaska.)
Despite its commendable effort to grapple with petroleum revenue issues, the
Legislature has ignored the advice of its expert consultants, who caution that
changes in the petroleum tax regime should recognize that oil prices can fall
suddenly. Before offering tax credits and deductions, it is important to know
this: At what price is help needed? After all, at low prices, the state still
has to pay for schools and pave potholes.
On April 10, BP confounded this issue with a misleading claim that the company
loses money at oil prices below $22.50 per barrel. The BP presentation
conveniently forgot many things, including pipeline profits. I estimate that at
$22.50 per barrel, BP in fact earns more than $5 per barrel.
These are the kind of questions requiring careful consideration and more
detailed analysis--something a preoccupied Legislature in the throes of
session-end compromises is ill-equipped to give.
That is why, for the sake of future generations, a special session is needed.
Richard Fineberg, an independent petroleum analyst from Ester, helped formulate
and execute state oil and gas policy as an adviser to Alaska Gov. Steve Cowper
during the late 1980s.
xxxxxxxxxxxxxxxxxx
Anchorage Daily News
May 4, 2006
http://www.adn.com/news/government/legislature/story/7691302p-7602521c.html
BP pays workers' way to Juneau
INFLUENCE? Participants say they are volunteers and not given scripts.
By WESLEY LOY
Anchorage Daily News
Published: May 4, 2006
Last Modified: May 4, 2006 at 02:22 AM
JUNEAU -- The halls of the Alaska state
Capitol usually are populated with lawmakers, their aides, lobbyists and a few
reporters. But on Wednesday, a troop of oil field workers came through, most of
them clad in BP company vests and carrying bright yellow folders full of papers.
They're part of BP's Citizen Action Program, which sends employees to Juneau on
the company tab to talk politics.
Such visitors have shown up in Juneau in years past, but Capitol denizens say
they've seen more oil men than usual this year. It's a sign of the high stakes
as lawmakers consider legislation that could extract billions of extra tax
dollars from the industry.
The workers generally talk the company line -- that excessive taxes could turn
oil companies off Alaska and send them elsewhere to drill, to develop oil and
gas fields and to build pipelines.
Pending legislation would change one of Alaska's main oil taxes to give the
state more revenue when oil prices are high and less when they're low. Some
studies say that overall the change would make Alaska more attractive to the oil
industry.
The BP workers in Juneau on Wednesday acknowledge that some Alaskans, including
some lawmakers, might not believe what the oil companies are saying.
"That's why we're here," said Mike Anthony, a technician who works at a BP plant
at Nikiski. "People tend to trust working guys."
Anthony was among a foursome of BP workers parked in chairs in the hall outside
the office of Rep. Pete Kott, R-Eagle River.
They spent a lot of time waiting Wednesday as lawmakers tried to wedge them in
between committee meetings and floor sessions.
The workers said BP paid for their expenses to come to the remote state capital,
including airfare. But taking part in the Citizen Action Program is voluntary,
and participants are given no script to press with legislators, they said.
"This is so critical," said Mike Taylor, speaking of the pending tax
legislation.
Taylor is a safety specialist for BP. He lives in Gustavus, just a short plane
ride from Juneau, but he works in the giant Prudhoe Bay oil field -- two weeks
on, two weeks off. He said he was using one of his off days to come to the
Capitol.
He's got a son who's trying to break into the oil industry, and he'd like to
stay in Alaska assuming the industry can keep investing here.
"Otherwise he's gonna have to go to Texas or Angola or something like that,"
Taylor said. Minutes later, he dashed down the Capitol steps, past a group of
school kids visiting from Wasilla, to try to connect with another legislator.
Top oil company executives, including BP's Alaska president Steve Marshall and
Conoco Phillips Alaska president Jim Bowles, have been seen commonly in Juneau,
walking the same halls as their workers.
Lawmakers for weeks have mulled complex numbers that, with a tweak here or
there, could cost or save the oil and gas producers hundreds of millions of
dollars in taxes. It's crunch time now, with six days left until the Legislature
is scheduled to adjourn.
Kott said it's fine to see the BP workers, but he's not sure of their influence.
"Does it do anything? Probably not," he said.
Rep. Ethan Berkowitz, an Anchorage Democrat and the House minority leader,
agreed with Kott that the BP workers aren't likely to make much difference.
Berkowitz is among lawmakers pushing for a higher tax rate in light of record
oil company profits, and he sees the visiting oil field workers -- about 14
appeared Wednesday -- as another part of a slick lobbying campaign.
"To see these kinds of numbers, it's clearly the result of a well-organized,
well-financed operation," Berkowitz said.
Daily News reporter Wesley Loy can be reached at
wloy@adn.com or 257-4590.