November News Stories

Houston Chronicle
November 30, 2006

http://www.chron.com/disp/story.mpl/business/4368017.html

Victims say BP not doing its part
Trial sought after delay in payment of medical bills
By SHANNON BUGGS
Copyright 2006 Houston Chronicle

Three survivors of the BP refinery explosion that killed 15 people want a judge to review how the oil giant is meeting its legal obligations to pay their past and and future medical bills.

And if state District Judge Susan Criss of Galveston finds in a hearing Friday that BP can't prove it has complied with its settlement agreements with Alisa Dean, Tracy Donaie and Enrique Rivera, the trio want their lawsuit against BP to go to trial in January.

"Our clients are very reluctant to rely on BP's promises," said Pat Shackelford, an attorney for the contractors who were burned and severely injured in the 2005 blast at the Texas City refinery.

BP said an "inadvertent administrative delay" slowed down payment of the workers' medical bills between March 23, 2005 the day of the explosion and Aug. 1, 2005.

"We have addressed those several matters, and we have taken steps to improve the system," the company said in a written statement. "The delay in paying some of these past bills was unfortunate, but no medical care to any person was affected by this circumstance."

Shackelford said it's unknown whether her clients' health and treatment had been compromised as they battled for more than a year to get BP to pay the medical bills and workers' compensation debts the company agreed to cover in the settlement agreement.

During that time, they have received numerous past-due notices from physicians and hospitals demanding payment, including the University of Texas Medical Branch, which sought to collect $1 million owed to it by filing liens against each of the workers, Shackelford said.

UTMB released the liens this October after the trio filed the lawsuit, Shackelford said.

In addition to arranging for payment of past bills, the settlement also commits BP to maintain medical-expense trust funds for Dean and Donaie that will pay for all future treatment of the injuries sustained in the explosion.

But the lawsuit says the two "are concerned that BP will similarly refuse to live up to its agreement to replenish funds in their medical trusts to make future contingent payments."

BP said the settlements were primarily composed of cash payments.

Both the trusts for Dean and Donaie and "those aspects of the settlements have been fully implemented and are working as designed to pay all current and future medical expense for these three claimants," BP said.

italicshannon.buggs@chron.com

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November 27, 2006

http://www.chron.com/disp/story.mpl/special/05/blastarchive/3486021.html

Horror in trailer bonds BP blast survivors
Victims help each other cope, but the blast that killed 15 others still haunts them
By ANNE BELLI
Copyright 2005 Houston Chronicle

Sitting in a coffee shop, his foot in a cast and stretched out on a chair, Kristof Harris is having a hard time thinking of himself as a fortunate man.

He admits there's no rational explanation for why he didn't die with co-workers in a construction trailer obliterated in the March explosion at the BP Texas City refinery.

The same blast that instantly killed 15 left Harris, 37, buried in a protective cocoon under several feet of rubble, able to breathe and escape fires until rescuers freed him.

Still, "I can't feel lucky that I lost so many friends," he says. "Too many good people lost their lives."

All of the 15 workers killed that day were either in or very near the double-wide trailer that served as offices for Harris and several others.

But a dozen others inside and several more nearby somehow survived.

Now, eight months later, those who lived through ground zero of the most deadly U.S. refinery accident in at least two decades remain nonetheless trapped by physical and emotional debris that may never be lifted.

Several, including Harris, reluctantly agreed to be interviewed by the Houston Chronicle for the first time about that day and their struggles to put their lives back together since then.

Some lost limbs or the ability to have children or the chance of ever walking normally again.

Some were severely burned on the outside of their bodies, others literally on the inside.

Some have years, if not lifetimes, of physical therapy ahead.

Some can't sleep, remain deeply depressed or need medication to function normally.

Some blame BP for their injuries. Some don't. Many are just trying to move on.

"You can't keep looking at all the bad," said Alisa Dean, 32, who not only lost her father in the blast but also suffered severe burns and other injuries that kept her hospitalized for four months. "Because all you are going to do is be depressed."

To help each other, the so-called trailer survivors have formed tight bonds, keeping in touch with one another and getting together for monthly dinners to talk about their lives.

'A healing get-together'

Included in the gatherings are spouses and some rescue workers the often forgotten victims whose lives also were forever changed that day.

"I like getting together with those people," said Dean's husband, Ralph, the construction foreman who was the first rescuer to make it to the trailer wreckage and widely credited with saving several lives.

Added Harris, who organizes the gatherings, "It's almost like a healing get-together. You get to see everybody and realize that we're all going to live through this, we're all going to get on with our lives."

Just 121 feet from the unit that exploded, the trailer served as temporary offices for BP employees and JE Merit contractors assigned to work on another unit across the street.

Within days of the blast, the trailer's location so close to a process unit particularly during a dangerous start-up operation was strongly criticized. Federal investigators and BP officials now agree that had the trailer been parked farther away, there would have been far fewer deaths, if any.

Witnessing tragedy

Harris, Alisa Dean and nearly two dozen others were getting back to their offices in the trailer after lunch March 23 when, unknown to them, operators attempting to restart the nearby isomerization unit were rapidly overflowing it with dangerous hydrocarbons.

Pat Nickerson, a BP project engineer, was driving his Jeep about 150 feet away and heading toward his office in the trailer when he began seeing liquid spewing out of the unit's vent stack and vapors forming on the plant grounds below.

Seconds later he saw a flash, likely the ignition of the highly flammable materials. Then his windshield shattered.

"And that's when I was sitting there waiting for pain to hit me," he said.

Instead, he blacked out.

Meanwhile, Ralph Dean was operating a forklift about 200 yards away when he heard a blast coming from the isom unit. He turned and saw the trailer where he had just left his wife. A second blast detonated it.

"I knew exactly what had happened, and I knew exactly where Alisa was," he said.

A concussion wave knocked him out of the forklift, but he rushed to his feet and began running toward the trailer to find his wife, he said. Those inside the trailer had little warning.

Harris said he was attending a weekly safety meeting with several others when the trailer began to shake from the first blast. He stood up, and seconds later another, much larger explosion hit.

"I don't know how long I was out," Harris said.

About 15 minutes later, he estimates, he regained consciousness and realized that although he was trapped under debris, he was still alive.

His friend and boss, BP employee Andy McWilliams, was trapped just a few feet above him, his legs crushed in the rubble.

McWilliams was screaming in pain and Harris tried to comfort him, but in his heart he wasn't sure whether either would survive, he said.

"Smoke just covered the whole area, and I couldn't see the sky anymore," he said. "I thought my life was over."

He reached for his beloved Louisiana State University cap, which had been blown off, and clutched it to his chest.

He put on his safety goggles and waited to either die or be rescued.

Dean, 45, recalled that "everything was on fire, and the trailer was flat.

"There were all kinds of things coming out of the air. Balls of fire. Pieces of pipe. Wood. Pure destruction. It was like someone had made a bomb run on us."

Screams for help

He made it to what was left of the trailer and, over the noise of raging fire in the isom unit, heard the horrified screams of survivors buried alive.

He began digging, he said. But when a truck exploded in a lot just yards away, flames began beating down on the trailer debris and he worried that survivors would be burned to death.

So he mounted a forklift and moved the truck out of harm's way.

As he did so, however, more vehicles exploded. He couldn't keep up, he says, so he "forked" all of them and shoved them aside.

Back at the rubble, Dean found BP worker Jack Skufca, who was lying on top of another survivor and whose chest had been crushed by office equipment. Seconds later, Dean made a grim discovery.

"We found another guy, and it turned out to be Pop," he said, referring to his father-in-law, Larry Thomas.

Pausing and fighting back tears, he added, "He had already passed."

A husband's relief

Two other workers, Steve Wilde and Eric Papaleo, found Harris and McWilliams and freed them, Dean said.

Each time he encountered another survivor he battled the frustration of not being able to get to his wife, he said.

"I wanted to let them die," he said. "God save my soul, I just wanted to find my wife. But I couldn't do it."

He finally did find her, crumpled underneath the remains of a bookshelf in her office, burned and severely injured.

Moments later she was boarded onto a Life Flight helicopter that took her to the University of Texas Medical Branch.

Skufca and McWilliams also were taken to UTMB. Harris, knowing he was not as severely injured, gave up his spot on the helicopter and asked instead to be taken by ambulance to the Mainland Medical Center.

Among the 15 killed was 28-year-old Ryan Rodriguez, a JE Merit engineer who shared an office with Pat Nickerson and was like a son to him.

Nickerson, 55, who had regained consciousness in his truck and helped looked for survivors in the trailer, found Rodriguez lying just yards away. He was alive but badly injured and did not live long enough to make it to the hospital, Nickerson said.

"I thought about why I wasn't severely injured or even killed," Nickerson wrote in a diary he supplied to the Chronicle.

"Ryan was just 28 years old and ... he had everything ahead of him. Why him and not me?"

Shock and disbelief

In addition to Thomas and Rodriguez, there were Kimberly Smith, Larry Linsenbardt, Morris King, Daniel Hogan, Eugene White, Rafael Herrera, Glenn Bolton, Jimmy Hunnings, Susan Taylor, Linda Rowe, James Rowe, Lorena Cruz-Alexander and Arthur Ramos.

"I remember standing there still looking in disbelief that there were so many innocent people dead," said Nickerson, who worked at the refinery for 28 years.

Like many others, he suffers today from the classic signs of post-traumatic stress disorder fear, difficulty sleeping, anxiety, inability to return to work.

His grandchildren still ask him whether he's going to die, and he worries that his retirement plans are ruined.

Shortly after the blast he returned to work for seven weeks, but emotionally it was too difficult. Now he's not sure he'll ever be able to return to work at the refinery.

"I'm concerned about my safety and that of others," said Nickerson, adding that he takes antidepressants and sleep medication.

Skufca, who declined to be interviewed but offered comments via e-mail, describes a life haunted by dark memories.

"I remember everything about that day," he wrote.

"I think about it every day and each night I lay sleepless in bed."

Lives changed forever

He remembers trying to call for help while trapped in the rubble but being unable to do so.

"I remember praying to God to keep me alive for my family's sake," he said. "I remember the pain that is indescribable and unimaginable."

Like others, the love and support of family and friends is helping him cope, Skufca said.

"This accident has totally screwed up mine and my family's lives," he said. "We all have seen counseling ... I go to bed with pain and wake up with pain."

Nickerson and the Deans blame BP for running an unsafe refinery. And they say the company's actions since, including agreeing to a record $21 million fine by federal regulators, have done little to reassure them that change is on the way.

"That place was built on evil ground," said Ralph Dean. Added his wife, her burned arms still wrapped in bandages and coughing from emphysema, "They just need to level it and walk away."

Both say they will never return to work for BP. For now, they spend most of their time traveling back and forth each week from their home near Corpus Christi to the Texas Medical Center, where Alisa Dean receives physical therapy.

Among her injuries were a head fracture, broken neck, broken ribs, burned lungs and numerous other internal wounds. She has had to learn again how to walk, talk and use her arms and legs. She's been told she'll never be able to have children.

"There are children out there that need parents," she said with a faint smile.

"She'll never be 100 percent again," Ralph Dean said.

Long road to healing

He said the couple reached a sizable settlement with BP for their injuries, but he said he'd return "every nickel" if he could get back his wife's health and her father.

For his part, Harris has recently had his 11th operation, this one on his right foot, which was crushed. His knees also were severely injured, and he, too, is predicting years of physical therapy. To control anxiety attacks at night, he takes antidepressants and other medications. Watching rescue efforts from earthquakes, hurricanes and other natural disasters on the news brings back memories of being buried alive.

"I just think to myself, 'Keep digging,' " he said. "There are people under there. Keep digging."

As for his employer, Harris remains supportive and loyal to BP, where he has worked for 12 years. And he views the accident as an anomaly in an otherwise safe plant.

"I think this was something that just went horribly wrong," he said. "My plan is to go back to work for them."

Whatever their views and whatever their futures hold, those who lived through one of the nation's worst industrial accidents will always be tied through their common tragedy.

"Even if we didn't talk to each other for 10 years, there will always be a connection," Ralph Dean said.

anne.belli@chron.com

Wall Street Journal
November 29, 2006

BP Accidents Continue To Hit Contract Workers
DOW JONES NEWSWIRES
November 29, 2006 7:31 a.m.
(This article was originally published Tuesday)
By Jessica Resnick-Ault
Of DOW JONES NEWSWIRES

HOUSTON (Dow Jones)--Although they occurred thousands of miles apart from each other, BP PLC's (BP) latest two fatalities have a common trait that also characterizes BP's deadly 2005 Texas refinery explosion: The victims were contract workers.

The two most recent incidents, which occurred in mid-November, but became public this week, involved contract workers who sustained fatal head injuries while working on drilling procedures in Oklahoma and Alaska. Contractors - not full-time BP employees - also accounted for all 15 deaths in the major Texas City fatality in March 2005. Since Texas City, there have been two other fatalities at U.S. refineries - again involving contract workers.

BP officials say the company is striving to improve safety for all workers, whether company employees or contractors.

Company spokesman Scott Dean pointed to data that suggest that, with the exception of Texas City, BP operations have improved since 1999 notwithstanding the recent high-profile problems. This year, all of the contractor fatalities globally have been associated with maintenance, construction and vehicle accidents - not with core processes, Dean said. Some contract workers are more vulnerable to injury because of the physical demands of their jobs, he added.

"Any fatality is unacceptable to BP and our goal is zero fatalities among BP employees and contractors," Dean said.

But Lauren Compere, director of shareholder advocacy for Boston Common, a socially responsible investor group, said she is distressed by the apparent pattern. She questioned BP's effectiveness in managing its contractors.

"We want to make sure that they're doing the same level of training for their contract employees as they're doing for their regular employees," said Compere. "It's just a good risk management tool. Maybe some of these accidents might not have happened."

More Drilling Means More Drilling Accidents

The two latest fatalities come at a difficult time for BP, as it struggles to right its operations after a series of high-profile problems. Besides Texas City, the company also had to partially shut its giant Prudhoe Bay oilfield earlier this year due to pipeline corrosion. The oil giant's U.S. trading wing faces a number of probes related to alleged market manipulation.

BP's new U.S. chief, Bob Malone, alluded to these struggles in a Nov. 22 letter to U.S. employees that noted the November fatalities and reminded workers of the need for safety.

"Special accident investigation teams have begun their work, and we will share their findings when it is complete," Malone said of the Alaska and Oklahoma incidents. "While we have made many challenges during the past year at BP America, we have also made a lot of progress," he wrote.

Globally, BP had 27 deaths in 2005, all but one of which were contract workers. In 2006 so far, the company has had eight deaths, all of which have been contract workers, according to data supplied by BP.

Despite the incidents, BP maintains that its recordable injuries, days away from work injuries, and fatalities are all on a decline, with the exception of the major explosion at Texas City. For example, BP's 2004 fatalities were 65% lower than the 1999 number, Dean said.

"Our safety performance is improving," Dean said.

To try to halt accidents BP introduced a new organizational structure, effective Nov. 1, which included a new role of senior group vice president for safety and operations. The company established two additional group vice president positions focusing on safety responsibilities, and has pledged additional spending on safety.

BP's latest fatalities come amid an industry-wide surge in drilling accidents, according to industry data. Experts reviewing these measures suggest that the problem lies not with contractors, explicitly, but with the level of training the workers receive.

Inexperienced workers are far more likely to get hurt, according to an annual survey conducted by the International Association of Drilling Contractors, a trade group. In 2005, 70% of injured workers had been on the job for less than a year.

With refining, Compere and other socially conscious investors are looking for insights from an independent report on BP's U.S. refineries by a commission led by former Secretary of State James Baker.

"We know they're investing huge amounts of money in employee training and safety training," Compere said of BP. But until the panel releases its report, Compere said her firm will remain in a wait-and-see mode.

(Brian Baskin in Houston also contributed to this article)
-By Jessica Resnick-Ault, Dow Jones Newswires; 713-547-9208; jessica.resnick-ault@dowjones.com

Wall Street Journal
November 28, 2006

BP Confirms Two Recent Contractor Fatalities In US
DOW JONES NEWSWIRES
November 28, 2006 8:52 a.m.
(This article was originally published Monday.)
By Jessica Resnick-Ault
Of DOW JONES NEWSWIRES

HOUSTON (Dow Jones)--In yet another blemish to its accident-marred U.S. division, BP PLC (BP) Monday confirmed that two contract workers at its U.S. drilling operations died in on-the-job accidents in mid-November.

The first fatality occurred on the Alaskan North Slope on Nov. 13, when a worker walking across a drill pad apparently fell, striking his head, said BP spokesman Ronnie Chappell.

The second man died Nov. 17, after the drilling of a well in Eastern Oklahoma had been completed. That contract worker was helping to prepare the rig to be moved when he also sustained a fatal head-injury.

The two accidents, which haven't been previously reported, follow a long chain of recent problems that include a major refinery explosion and a pair of major oil spills in Alaska.

"We're still in the process of investigating two unrelated fatality incidents," Chappell said, adding that the two accidents occurred thousands of miles apart.

"Both of these incidents involved people suffering head injuries in the course of normal work activities," Chappell said.

The company has come under fire from U.S. regulators in the past two years for a series of violations across its chain of U.S. operations.

The company's Texas City, Texas refinery was the site of a major explosion in March, 2005, which killed 15 and injured over 170. The company came under additional regulatory heat when the same refinery had a fire the following summer.

Two of BP's other four refineries in the continental U.S. have been fined by the U.S. Occupational Safety and Health Administration for having safety violations. The Anglo-American Oil Giant's refinery near Toledo, Ohio was fined $2.4 million, while its Whiting, Indiana refinery has been fined $384,000 for a series of lesser violations.

The company's U.S. refineries are currently the subject of a review led by former U.S. Secretary of State James Baker III. Baker's 11-person-commission is scheduled to give its 500-page report on Dec. 19.

The company's exploration and production operations have also encountered their own problems.

In March 2006, the company's Alaskan pipeline had a major leak, which was followed by a second leak in August, leading to a partial shutdown of the company's Prudhoe Bay production facility, the largest oilfield in the U.S.

The company is complying with regulators in investigations into the latest pair of fatalities, Chappell said. Although these incidents come on the heels of the company's other woes, he suggested that they were unrelated industrial accidents occurring thousands of miles apart.

-By Jessica Resnick-Ault, Dow Jones Newswires; 713-547-9208; jessica.resnick-ault@dowjones.com

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UPDATE:
Conoco, Anadarko Start 2nd Alpine Satellite Field
DOW JONES NEWSWIRES
November 27, 2006 4:14 p.m.
(Updates with background on ConocoPhillips' operations in Alaska)

HOUSTON (Dow Jones)--ConocoPhillips, Inc. (COP) and Anadarko Petroleum Corp. (APC) have begun production on the Nanuq oil field along Alaska's North Slope, ConocoPhillips said in a statement released Monday.

The companies expect the field, a satellite of the Alpine oil field, to hit peak production of 15,000 barrels of oil a day in 2008. Alpine, the third-largest field in Alaska, produces about 120,000 barrels a day.

ConocoPhillips and Anadarko plan to drill 19 wells at Nanuq.

Nanuq was discovered in 2000, and is the second Alpine satellite, after the 20,000 barrel-a-day Fiord field. Together, the fields represent a $675 million investment.

ConocoPhillips Alaska, Inc. owns 78% of Alpine, Nanuq and Fiord, while Anadarko owns 22%.

Houston-based ConocoPhillips said it was pursuing state, local and federal permits for additional Alpine satellite developments, including a recently announced reservoir known as Qannik.

Conoco, which operates the Alpine and the Kuparuk fields in Alaska's North Slope and owns about 36% of BP PLC (BP)- operated Prudhoe Bay, is the largest oil and gas producer in Alaska. The company obtains 17% of its annual energy production from the state, according to a report on the company's Web site.

Alaska's North Slope crude production has suffered interruptions in recent months. Trans-Alaska Pipeline operator Alyeska Pipeline Services Co. curtailed ANS output for a few days last week as bad weather hampered tanker loadings at the line's terminus in Port Valdez.

The Prudhoe Bay field, the largest in the U.S., experienced a partial shutdown in August due to pipeline corrosion.

-By Brian Baskin and Angel Gonzalez, Dow Jones Newswires; 713-547-9202; brian.baskin@dowjones.com

Anchorage Daily News
November 21, 2006

http://www.adn.com/money/industries/oil/story/8428749p-8323078c.html

Fate of gas field worth billions weighed
POINT THOMSON: State ponders reassigning leases to spur development.
By WESLEY LOY
Anchorage Daily News
Published: November 21, 2006
Last Modified: November 21, 2006 at 02:36 AM

Oil companies have been "stalling" for decades on developing the Point Thomson oil and gas field, and now the state should strip them of their leases on the property, former Gov. Wally Hickel and others said Monday.

Executives for Exxon Mobil, BP and Chevron, however, urged state Natural Resources Commissioner Mike Menge to approve Exxon's latest plan for developing the long-dormant field -- a plan that contains no sure date for production to begin.

The comments came during a hearing Menge convened to consider whether to uphold a 2005 state ruling that the oil companies are in default on Point Thomson.

The event in the Atwood Building downtown marked what has become a growing showdown over the field, which despite its enormous riches has yet to yield a single barrel of oil or molecule of natural gas decades after it was discovered.

Point Thomson is the North Slope's second largest natural gas field, after Prudhoe Bay.

Oil companies led by Exxon, the largest Point Thomson owner, long have contended that developing the field isn't economic due to its technical challenges and the lack of a North Slope gas pipeline.

But critics including Hickel and the Alaska Gasline Port Authority, a coalition of local governments pushing a pipeline proposal in competition with one from a trio of oil companies, insist Exxon is "warehousing" a public resource as it pursues other gas projects around the world.

Point Thomson figures heavily into any plan for a pipeline, as the field accounts for about a quarter of the estimated 35 trillion cubic feet of known gas in all North Slope fields.

After Monday's hearing, Menge declined to say when he might render a decision, or even whether he would rule before the end of Gov. Frank Murkowski's administration in two weeks.

The incoming governor, Sarah Palin, joined Hickel and others Monday in saying that, ideally, Menge would leave the decision to the next administration.

If Menge does rule, Palin vowed to immediately direct her new natural resources commissioner to reconsider his decision.

"As I have always done throughout my whole career, I'll do what's in the best interests of Alaska," Menge said.

Three of Menge's top staffers in the Department of Natural Resources already have made up their minds on Exxon's plan. In an Oct. 23 memo to Menge, the department's leasing, commercial and resource-evaluation chiefs hotly urged the commissioner to reject it.

They wrote it is "in the state's vital interests ... that we not allow Exxon to flout their obligations and previous commitments" by approving a plan that "offers no near-term or concrete commitment to develop Point Thomson resources."

If Exxon won't commit to moving Point Thomson forward, it's time to lease the field to someone who will, the three sections chiefs added.

Oil company executives, flanked by lawyers in a room packed with about 45 onlookers, kept their comments brief Monday.

Richard Owen, Exxon's Alaska manager, asked Menge to approve the company's latest Point Thomson development plan -- the 22nd submitted over the years. The plan includes a promise to drill one well in 2009 to better map the extent of the field, which was discovered in 1977. If Exxon fails to drill the well, the Point Thomson leaseholders will pay the state $40 million, the plan says.

Exxon also has agreed to give back 20,000 acres on the fringes of the main Point Thomson field and pay the state $20 million to settle prior, unfulfilled commitments.

Doing most of the talking at Monday's hearing were representatives of the Alaska Gasline Port Authority, a coalition that includes the city of Valdez and the Fairbanks North Star Borough.

The Port Authority has papered the state in recent months with ads touting its idea for a pipeline to Valdez. The Murkowski administration has fired back, contending the authority's project is hollow and would provide less of a payoff to the state.

Mark Cotham, a Houston, Texas, attorney for the Port Authority, told Menge that Point Thomson's oil and gas are worth perhaps $50 billion -- way more than the $36 billion Alaska Permanent Fund. He argued the oil companies have spent relatively little toward developing the field and appear to be holding the leases on speculation.

Daniel Johnston, a New Hampshire oil and gas consultant for the Port Authority, said he's sure the Point Thomson acreage would draw "robust and aggressive" bids if the state offered the field for lease.

Bill Walker, an attorney for the Port Authority, said the Point Thomson gas alone would be sufficient to support construction of his organization's pipeline project, which would involve piping gas to Valdez, superchilling it into a liquid and loading it aboard tankers bound for the West Coast.

Among listeners Monday were Vic Fischer, a signer of the state constitution, and Jack Roderick, who wrote a history book on Alaska's oil and gas industry called "Crude Dreams."

They agreed it's time to let other companies have a crack at Point Thomson.

Many worry that trying to take back the Point Thomson leases might ignite a long legal battle with Exxon and the other companies. But Roderick said the state shouldn't be too fearful of that. After all, he said, what's a couple of years in court compared to nearly 30 years of waiting for Point Thomson production?

Daily News reporter Wesley Loy can be reached at wloy@adn.com or 257-4590.

Wall Street Journal
November 21, 2006

BP US Refinery Review Panel Delays Report
DOW JONES NEWSWIRES
November 21, 2006 7:30 a.m.
(This article was originally published Monday)

HOUSTON (Dow Jones)--A commission set to report on BP PLC's (BP) five U.S. refineries has delayed the release of its report until next month.

The commission had expected to release its report on Nov. 29 but set a new date of Dec. 19.

"The complexities involved with compiling the type of voluminous report that panel members intend to release require a few additional days of preparation," the commission said in a press release issued late Monday.

BP formed the Independent Safety Review Panel to assess process safety management across its U.S. refineries, following an urgent recommendation from the U.S. Chemical Safety and Hazard Investigation Board in the wake of a March 2005 explosion at BP's Texas City refinery.

The 11-member panel is led by former U.S. Secretary of State James Baker III. The group has traveled to BP's refineries in Washington, California, Texas, Ohio, and Indiana to conduct public meetings and interview employees.

-By Jessica Resnick-Ault, Dow Jones Newswires; 713-547-9208; jessica.resnick-ault@dowjones.com

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Pipe Repairs At BP Texas City Refinery To Last Until Tue
DOW JONES NEWSWIRES
November 20, 2006 7:24 p.m.
(This article was originally published Monday.)

HOUSTON (Dow Jones)--Repair work on a pipe with a pinhole leak at BP PLC's (BP) Texas City, Texas, refinery is slated to last until Tuesday, according to a report filed with state environmental regulators.

The leak occurred last Thursday, when inspectors measuring the depth of a pit in the pipe accidently pushed the measuring device through the pipe wall, according to the report. Emissions associated with the leak necessitated the report to the Texas Commission on Environmental Quality.

Refinery workers installed a temporary clamp to minimize the leak, but the clamp did not stop the leak entirely. A new, permanent clamp is being designed, and will be installed when built, according to the report.

The report did not say whether the leak was impacting production at the refinery. At full rates, the refinery has the capacity to process 463,000 barrels a day. Currently, the refinery is running about 247,000 barrels a day as it gradually restarts from a long-term shutdown.

-By Jessica Resnick-Ault, Dow Jones Newswires; 713-547-9208; jessica.resnick-ault@dowjones.com

Houston Chronicle
November 19, 2006

http://www.chron.com/disp/story.mpl/business/energy/4345925.html

Rust top cause of pipeline spills
Harris County leads nation in accidents caused by corrosion

Corrosion has become the leading cause of hazardous-
liquid pipeline accidents, causing a quarter of all reported spills in the past six years, and the shutdown earlier this year of one of the nation's largest oil fields, a review by the Houston Chronicle and industry groups shows.

From 2000 to 2005, 217 of the 832 incidents reported to the federal Pipeline and Hazardous Materials Safety Administration were attributed to corrosion. Rusting pipes also spilled the most petroleum products more than 5 million gallons in those six years.

Decaying pipelines have leaked oil, fuel and other volatile liquids at least once in 32 states, led by Texas, Oklahoma, Kansas and Louisiana. Harris County ranked No. 1 in the nation in spills caused by corrosion, with seven.

Corrosion has risen to the top of the list because pipeline accidents triggered by a dozen other causes have declined, particularly "third-party damage" which includes everything from a farm backhoe hitting a pipeline to a hole made by a hunter's bullet.

The consistency of corrosion's role in pipeline incidents has raised questions about how well the industry has worked to maintain the nation's aging pipeline network.

"In 2005, for the first time (since the early 1990s) ... we are seeing corrosion as the leading cause," said Carolyn Kolovich, an engineer and pipeline consultant, who sits on an American Society of Mechanical Engineers committee that looks at the federal data each year.

On average, corrosion is responsible for 36 spills across the country annually, down from an average of 49 between 1993 and 1998. And though the size of the spills tends to be smaller, experts say that incidents caused by corrosion are harder to detect and can cause even more environmental damage.

A March leak along a 34-inch BP pipeline on Alaska's North Slope spilled an estimated 201,000 gallons of crude oil and drowned 2 acres of tundra.

It became the poster child for pipeline corrosion. Months after the incident, BP temporarily shut down other major conduits in the Prudhoe Bay field, which supplies the U.S. with 8 percent of its crude oil supply, because portions were corroded.

BP's incident would not be included in the federal data because the low-pressure line is not yet subject to federal regulations. However, the Chronicle's review shows that four other spills, all bigger than the BP incident, occurred between 2000 and 2005, three of them in Texas.

In March 2000, a 28-inch pipeline running from the Gulf Coast to Indiana broke in rural Hunt County, Texas, spilling enough gasoline to fill 60 tanker trucks and contaminating Dallas' drinking-water supply. The city pulled 25 percent to 30 percent of its water from Lake Tawakoni, which was tainted with a gasoline additive after the accident.

The company, Explorer Pipeline Co., eventually reached an $8 million settlement with the city and paid a $3 million federal fine.

Two years later, in a Navarro County pasture, a 14-inch Chevron pipeline carrying liquefied petroleum gas ruptured and burst into flames, sending smoke and flames about 100 feet into the air, according to newspaper reports. No one was injured.

And in 2003, a propane pipeline owned by BP subsidiary Dome Pipeline Co. caught fire in Barnes County, N.D., burning 9,000 barrels of gas. No one was hurt, but during the repairs, eight families were evacuated when another leak developed.

Closer to home

The fourth-largest spill from corrosion occurred in January 2005 at the Lyondell-Citgo refinery in Harris County. About 219,000 barrels of Venezuelan crude oil seeped from a rusting above-ground storage tank that receives oil from a pipeline connected to a tanker ship. The oil was contained inside the tanks' berm and cleaned up by the company.

Advocates for pipeline safety are questioning why measures enacted by the federal government in 2000 aimed at improving detection have not reduced corrosion's role in accidents.

"I would have thought it would decrease," said Lois Epstein, an engineer for the Cook InletKeeper, an advocacy group dedicated to protecting the Cook Inlet watershed in Alaska. "What I have said about corrosion is that it is complicated; you always have to stay on top of it."

Part of the problem is that there is no silver bullet when it comes to dealing with corrosion. Sometimes it is caused by water; other times, a gas or even bacteria growing in the line starts the rust. The pipe's material, its age and the type of soil in which it sits all play roles, experts say.

Throughout much of the 1990s, third-party damage spilled more product along the nation's 183,000 miles of liquid pipelines than any other cause, according to industry reports.

The recent shift has occurred because, as the percentage of spills from most other causes has declined, the share of accidents from corrosion has remained relatively constant for the past decade.

Today, as in the early 1990s, corrosion still accounts for about 25 percent of all pipeline accidents and about 20 percent of spilled volume, according to the Chronicle's analysis, even though the average number of incidents and the average size of spills has declined.

"By 2000, everyone was still harping on the biggest issue, which was third-party damage. I was saying, 'Here is the data I am looking at, why aren't you doing more on corrosion?' " Epstein said.

The latest numbers from the American Society of Mechanical Engineers show that, in 2005, corrosion accounted for 45 pipeline incidents, or 28 percent of the 161 spills.

Corrosion "is probably the No. 1 thing we think about when we have pipeline incidents, other than people out there with construction equipment," said Eric Meyers, coordinator of the Navarro County Office of Emergency Management, which experienced the largest corrosion incident in the past six years. Jet fuel, crude oil and refined product flow in pipelines lying beneath the county.

Issuing new rules

In 2000, the federal agency in charge of pipeline safety issued new rules requiring companies to keep better tabs on corrosion.

The nation's pipeline-safety administrator said that these regulations have resulted in companies aggressively checking and reporting corrosion.

"Industry is doing a better job on getting on top of that issue; that is partially why you are seeing that number stable," said Adm. Tom Barrett, administrator of the Pipeline and Hazardous Materials Safety Administration.

But Barrett stressed that third-party damage still leads to more injuries and deaths.

A preliminary study of the federal numbers being done for the American Petroleum Institute and the Association of Oil Pipelines actually will show that, in the past five years, corrosion accounts for a bigger share of spills than it has historically, said Cheryl Trench, who studies the numbers for the two groups. The uptick can be explained, in part, by two large spills in Cushing, Okla., and Navarro County, as well as hurricanes in 2004 and 2005, said Trench, president of Allegro Energy Consulting.

Peter Lidiak, director of the pipeline division for the American Petroleum Institute, said that operators continue to make strides in corrosion, and though it remains the leading cause of pipeline incidents, it, like many other causes, is declining.

"Corrosion has to be detected, and the tools for doing that are always getting better, but they are not perfect," he said.

Some experts say that corrosion has remained a problem because the industry has not dealt with the changing composition of the material sent through pipes. As oil fields get older, wells produce more water, which can lead to more rust.

"The pipeline companies have not kept up with the changes in oil," said Don Deaver, an independent pipeline consultant and an expert witness for many plaintiffs suing pipeline operators. Deaver worked for 33 years for Exxon Mobil Pipeline Co.

He said corrosion is like a spreading fungus: "Once it starts, you are going to have a heck of a time cleaning it out."

dina.cappiello@chron.com

Guardian Unlimited
November 16, 2006

http://business.guardian.co.uk/story/0,,1949027,00.html

From ethical champion to rogue interloper - BP's American nightmare
Accidents and allegations of market fixing destroy environmentalist image
Andrew Clark in New York
Thursday November 16, 2006
The Guardian

BP's tie-up with its United States rival Amoco was supposed to create an ethical champion at the top of the global oil industry. Negotiated by Lord Browne over a bottle of Puligny-Montrachet in a London restaurant, it was one of the biggest mergers in history. But eight years on, BP's US arm is becoming America's most accident-prone business.

Federal regulators have accused BP of price gouging. Its corroded pipelines have been leaking in Alaska. A BP oil spill has polluted the coast of California. Civil rights activists are picketing its petrol stations.

To cap it all, a young woman, Eva Rowe, has forced a humbling apology from the company for shocking safety lapses that caused its Texas City oil refinery to explode last year, killing her parents and 13 other people. BP's yellow sunburst logo and its eco-friendly "Beyond Petroleum" slogan, which once won cautious admiration even from the green lobby, now leave a sour taste in the mouths of many Americans. BP's public image is at rock bottom and the company is seen by some as a rogue foreign interloper.
"If you drew up a list of companies that Americans are most disappointed in, BP would definitely feature," said James Hoopes, professor of business ethics at Babson College, Massachusetts.

For a while, he says, BP's talk of ethics and sustainability overcame a grand old American tradition of hating big oil companies.

"Expectations had been raised so high that people's feelings have been crushed," said Prof Hoopes. "The predominant feeling about BP is, 'Oh no, fooled again.'" Others take a blunter line. Athan Manuel, director of lands protection at the Sierra Club, a North American environmental network, said: "Their reputation is pretty much in the toilet."

It is difficult to identify the point at which things began to fall apart for BP in the US. But the day when a problem became obvious to the world was March 23 last year, when workers overfilled a 50-year-old blowdown drum with chemicals at the Texas City refinery, causing a huge blast in which flaming liquid showered nearby accommodation trailers.

It was the worst US industrial accident for a decade. Safety officials found that antiquated equipment was on site, that trailers were too close to flammable materials, that eight previous incidents had happened at the blowdown drum and that a cost-cutting culture permitted "catastrophic safety risks".

BP's reaction to the disaster drew criticism. Ms Rowe says she got a letter a few days later apologising for the death of her father, James. But it appeared to be a form letter intended for a bereaved wife, rather than for a daughter who had also lost her mother. "It was hurtful," she said. "Those were my parents - my mum and dad. It wasn't just anybody."

Although tragic, a single incident could have been seen as a one-off caused by rogue management at a refinery. But at the other end of America, cracks began to appear in the BP facade. On March 2 this year, a worker driving along a gravel road in Alaska smelt oil. He discovered the largest leak on Alaska's North Slope, as the equivalent of more than 200,000 barrels of oil gushed into the snow. BP's automated leak detection system had failed.

Worse was to follow as the company discovered worrying signs of corrosion, forcing it to shut much of its Prudhoe Bay oilfield, which produces 400,000 barrels of oil a day.

A congressional inquiry established that the company had failed to perform routine inspections by sending a maintenance "pig" through the pipe. In a hearing in September, Joe Barton, chairman of the House energy and commerce committee, thundered: "This comes from a company which prides itself in their ads on protecting the environment. Shame! Shame! Shame!"

Washington is taking a sharp interest in BP. Over the summer, the Justice Department said it had begun criminal and civil investigations into whether BP traders manipulated crude oil and unleaded petrol markets. During 2003 and 2004, the company's staff are alleged to have bought huge quantities of propane to establish a dominant market position.

That scandal has attracted the attention of the civil rights leader Jesse Jackson, whose Rainbow/Push Coalition is targeting BP's filling stations, accusing the company of ripping off the public and failing to employ any black senior executives.

Butch Wing, director of the coalition, says BP is guilty of price gouging, safety lapses, environmental crimes and racial discrimination. "We want a dialogue with them," he said. "BP has a major, major problem in the US."

Other issues have added to the impression of an organisation in crisis. In the Gulf of Mexico, BP's Thunder Horse platform, damaged during Hurricane Katrina, is proving very difficult to repair. In California, pipeline experts are looking at how BP managed to spill 1,000 barrels of a refined petroleum product in the port of Long Beach.

BP's official line is that there is nothing to link any of the individual setbacks it has suffered in America. A spokesman, Ronnie Chappell, says: "These are all very different in terms of the nature of the incidents and the circumstances that surround them. While we see no direct connection between them, we can understand why people would connect the dots in the way you have."

However, questions are being asked about whether BP took a firm enough grip on its US management after mergers with Amoco in 1998 and Arco in 2000.

The Sierra Club's Athan Manuel says: "It's hard not to come to the conclusion that it's systemic. I think the folks at the top are enlightened and understand where the company should be. They want to make it progressive. But from an operations point of view, that hasn't filtered down to the people on the ground."

BP has responded with a slew of changes. A veteran BP troubleshooter, Robert Malone, was appointed in June to a new post chairing BP solely in the US. The top executives in Texas City and Alaska have been replaced. The company has asked a retired judge, Stanley Sporkin, to act as an independent ombudsman for any whistleblowers. BP has also called in the former US secretary of state, James Baker, to chair a panel examining its safety culture.

BP's spokesman says its commitment to renewable energy is unchanged. The company has invested heavily in solar and wind power, while a carbon sequestration project is under way in California to generate electricity from petroleum coke. "You'd have a hard time finding another company making a similar level of commitment," he said.

However, scepticism about BP runs deep in America and the company may never recapture the optimism inspired by its environmentally aware makeover. Pratap Chatterjee, director of California-based CorpWatch, says: "This is a company that says it cares about the community and society, but it's not repairing its own pipelines and refineries."

Yet there is a degree of sympathy, even in unlikely quarters. Lois Epstein, senior engineer at Cook Inletkeeper, an Anchorage organisation monitoring the Alaska oil industry, says: "I give them some credit for apologising and saying they were wrong. It takes some guts, some realisation to do so. It's unusual to see that in America. Maybe they did it because they're a British company."

Expansion in US

· America represents 40% of BP's overall business. After a series of mergers with Amoco, Arco, Burmah Castrol and Vastar, by 2001 BP had become the largest oil and gas producer in the United States and one of the largest petrol retailers.

· The company has 37,000 employees in the US.

· It sells 15bn gallons of fuel every year to motorists at 14,000 petrol stations.

· BP's five US refineries produce 1.5m barrels of crude oil per day.

· The company holds a fifth of all proven oil and gas reserves in the country.

Kodiak Daily Mirror
November 16, 2006

http://www.kodiakdailymirror.com/?pid=19&id=4020

Corrosion crisis shows need for citizen
oversight at Prudhoe Bay
Article published on Wednesday, November 15th, 2006
By JOHN DEVENS
Guest Opinion

In 1989, I was mayor of Valdez when Exxon spilled 11 million gallons of crude oil 25 miles from my doorstep. Today, I head the Prince William Sound Regional Citizens’ Advisory Council, set up to make sure there’s never another Exxon Valdez. But that doesn’t include oversight of the Prudhoe Bay oil field. We’re limited to oil tankers traveling the sound and the Valdez terminal where they load.

Yet, when BP announced plans to shut Prudhoe down because of widespread pipeline corrosion, I got calls from news people around the world. Why would reporters want our perspective? We think it’s because they understand something that still eludes the oil industry and its regulators: Citizen oversight could help prevent environmental disaster on the North Slope, too.

Industry and regulators have incentives to behave prudently. But regulators are subject to political interference, budget squeezes and industry lobbying. Industry must seek to maximize profits. These pressures can push them to disregard the public interest and sometimes, it would appear, their own interest.

How would citizen oversight help? Citizen volunteers, unlike regulators, aren’t subject to lobbying or political interference. Unlike industry, citizens aren’t shackled to the bottom line. A citizen group’s sole mission is to prevent environmental catastrophe by advising regulators and industry on how to do their jobs and avoid lapses like we’re seeing on the North Slope. Properly constituted citizen oversight is largely immune to the pressures that often cloud the judgment of industry and regulators.

We believe our efforts in Prince William Sound have vastly reduced the chances of a rerun of the Exxon spill and the ludicrously inept cleanup effort that ensued.

A few examples: We helped persuade Congress to require double hulls on oil tankers; we led the technical studies that brought about the powerful rescue tugs that escort tankers through the sound; and we spearheaded the development of a radar system to detect glacial icebergs that could rupture a tanker’s hull.

The Prudhoe crisis is still under investigation, but it seems evident that BP and its regulators, left largely to themselves on the remote Arctic region tundra, suffered a profound breakdown of basic standards of professional oil field oversight and operation.

Reporters have asked how citizen oversight would work on the North Slope. Unlike Prince William Sound, Prudhoe Bay has no permanent local population. That’s true, but it’s also true the Slope is dotted with Inupiat villages whose residents take a keen interest in the oil fields. That kind of citizen involvement, plus the technical expertise an adequately funded oversight group can bring to bear, works in the sound and it could work at Prudhoe.

Take, for example, the issue now confronting BP and its regulators. The first move of a North Slope citizen oversight group would likely be to demand that BP develop and publish a comprehensive plan for preventing, detecting and correcting pipeline corrosion. The citizen group would go over the plan with a microscope and with the help of expert consultants recommend any revisions needed to make it work. Once the plan was in place, the citizens would make sure it was followed, zealously monitoring mandatory reporting on its implementation.

Are inspections including smart pigging done on schedule? When problems show up, are they promptly addressed? As experience exposes flaws in the plan, is it quickly amended through another public process? The citizen group, purely advisory, would have no power to make these things happen. It could only bring deficiencies to light and demand action. That’s what we do, and it has proved to be remarkably effective. The force of professional technical analysis, combined with public opinion, is nearly irresistible. The new Congress, the oil industry, and its regulators should immediately charter an independent, amply funded, multi-stakeholder, citizen oversight group for America’s biggest oil patch.

We don’t propose that role for ourselves. We have plenty to do in our own back yard. But we’d be happy to help launch the North Slope Citizens’ Advisory Council by sharing what we’ve learned from 17 years of experience in Prince William Sound.

John Devens is executive director of the Prince William Sound Regional Citizens’ Advisory Council.

Bellingham Herald
November 14, 2006

http://www.bellinghamherald.com/255/story/41119.html

Pipeline fines turn Whatcom County greener
$22 million to enhance area
BELLINGHAM HERALD
KATIE N. JOHANNES
THE BELLINGHAM HERALD

Tucked behind a business park and between neighborhood dead-end streets, streams roll through bending channels and pool around downed logs.

Weather-bleached snags rise out of the little urban forest in the middle of Bellingham. The eastern faces of the tall, dead trees are black, reminders of the 1999 gasoline pipeline explosion and fire that took three young lives and scorched more than a mile of the Whatcom Creek corridor, from Whatcom Falls Park nearly to Interstate 5.

Seven years after the disaster, the results of more than $22 million in federal penalties reserved for environmental improvements, parks and open spaces are becoming visible in Bellingham and Whatcom County.

The money is a portion of more than $188 million paid by fuel companies for criminal and civil settlements with the government and victims’ families.

It doesn’t include the emergency cleanup and restoration paid for by the pipeline companies immediately after the explosion, a number the fuel companies were unable to estimate.

The money for restoration work was tied up in court proceedings for years, after Olympic Pipe Line Co. filed for bankruptcy in 2003 and settled in 2004.

The city didn’t see its first payment until June 17, 2005, and it didn’t break ground on its largest project nearly $1 million of stream and habitat restoration at the end of Meador Avenue behind Haskell Business Park until this summer, on July 15.

Clare Fogelsong, Bellingham’s environmental resources manager in the Public Works Department, said keeping a portion of the money in the local area and using it for environmental improvements have been priorities since the disaster.

While the environmental work doesn’t address the pain suffered by

the victims’ families, the work was intended to help the larger community.

“We understood the importance of making the community whole,” he said. “It made up for inconvenience and damage to the community psyche, and the enjoyment of our environment.”

Fuel companies paid for emergency restoration work in areas heavily damaged by the explosion. And burned hillsides already have grown thick with trees planted by Washington Conservation Corps crews and volunteers.

But most of the money allocated to restoration projects and open space has gone outside the areas most heavily damaged by the explosion. It went to areas suffering the effects of urbanization and neglect, and areas that property owners want to save from development.

“At the time it seemed like kind of a stretch to use some of the money for properties out in the county,” Fogelsong said. “My opinion was that the lion’s share should come back to the city and the Whatcom Creek area.”

Shannon Sullivan, a spokeswoman for the state Department of Ecology in Bellingham, an agency in charge of administering about $2.5 million in pipeline penalties, said Ecology feels comfortable with the way the money has been applied.

“It was to be used for restoration or enhancement of property either damaged or within that vicinity, and for spill prevention preparedness,” she said.

From Ecology’s perspective, Whatcom County is within the vicinity of the explosion the larger community can enjoy those enhancements, Sullivan said.

Xxxxxxxxxxxxxxxxxxxxxxx

http://www.bellinghamherald.com/102/story/41116.html

ENVIRONMENT
Fines pay for projects, properties
$1 million spent on salmon habitat
Advertisement
KATIE N. JOHANNES
THE BELLINGHAM HERALD

Fines paid by Olympic Pipe Line Co. and Shell Pipeline Co. have paid for about $22 million in environmental projects and parks and open space acquisitions in Whatcom County.

The largest restoration project not including the emergency restoration work performed immediately after the 1999 Olympic pipeline explosion was nearly $1 million for work at Salmon Park and Cemetery Creek. Money was paid through insurance by Olympic as part of a federal Natural Resource Damage Assessment obligation.

The 3.6-acre area is an open space at the end of Meador Avenue, behind Haskell Business Park and west of Whatcom Falls Park. Whatcom and Cemetery creeks run through the area, which was scorched by fire coming down Whatcom Creek during the pipeline explosion but not heavily damaged.

The city was interested in improving the area before the fire. The stream channels had been straightened and the area was overgrown with berry bushes.

Work started on the project this summer in July. Almost 2,000 feet of new channels have been cut, allowing the streams to meander and pool more naturally, and run into back channels. The creek beds rise and fall, and logs crisscross through the channels, providing varied habitat for fish.

The project entailed blocking the channel during construction, pumping water downstream, and relocating about 1,000 juvenile coho salmon and other fish, said Renee LaCroix, the city’s environmental coordinator.

Layers of coconut fiber cloth are keeping the new stream bank stable until trees, which will be planted this fall, take root. The cloth will rot away in about three years.

Land value is not included in the restoration cost.

water downstream, and relocating about 1,000 juvenile coho salmon and other fish, said Renee LaCroix, the city’s environmental coordinator.

Layers of coconut fiber cloth are keeping the new stream bank stable until trees, which will be planted this fall, take root. The cloth will rot away in about three years.

Land value is not included in the restoration cost.

Other restoration and improvement projects are:

$850,000 left over from Salmon Park and Cemetery Creek projects that can be used on other city projects.

$1.46 million for planting, oversight and maintenance, also paid through the federal Damage Assessment settlement paid by Olympic.

$1 million to buy Squalicum Park, the result of a criminal penalty paid by Shell.

$4 million for an environmental trust fund, paid as a civil penalty by Shell. The interest from the money can be used for environmental restoration projects.

$1 million for a 51acre park at Point Whitehorn near Cherry Point, paid by Olympic as part of a civil penalty and sent to the state Department of Ecology.

$500,000 toward the 77- acre Fenton Family Nature Reserve east of Blaine. This money also came from a federal civil penalty paid by Olympic and directed to Ecology.

$12 million, the remaining money that BP, nowowner of Olympic, estimates the company paid for cleanup to the standards of the Natural Resources Damage Assessment program.

SOURCES: Shell Pipeline Co., BP, Washington State Department of Ecology, city of Bellingham.

Wall Street Journal
November 14, 2006

US Senate Pipeline Safety Hearing May Pave Way For Bill
DOW JONES NEWSWIRES
November 13, 2006 2:50 p.m.
By Ian Talley
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)--The U.S. Senate Committee on Commerce, Science and Transportation said Monday it would hold a hearing Thursday on the reauthorization of the pipeline safety bill.

The hearing would likely pave the way for a pipeline safety bill to be passed through Congress in the lame-duck session, industry experts said, though some doubt there's enough time in the session, which is the last before the Democrats take over the majority.

The oil industry is watching the proposed legislation, as it would give the Department of Transportation federal authority to regulate low-pressure oil lines such as the type that leaked at Prudhoe Bay, causing a partial shutdown of the largest producing fields in the U.S.

Congressional aides said before the lame-duck session started that House members would likely agree to a unified version of two pipeline safety bills that two committees presented in the last session.

"I'm pretty confident that we'll be able to hammer out a united House bill to be able to present to the Senate...in the first days of the lame-duck session," a committee aide said.

The aide said, however, with the Democrats taking over the majority in both the House and Senate the next session, "they may want to re-legislate one or two things that didn't go as far as they wanted to," and might block passing any bills.

Congressman John Dingell, D-Mich., the ranking Democrat on the House Energy and Commerce Committee, said before he agreed to the committee's approval of its version of the pipeline safety bill that he would have preferred more stringent regulations, particularly for low-pressure crude pipelines.

Daphne Magnuson, communications director at the American Gas Association, said she believed it would be difficult for Congress to pass the legislation in the lame-duck session. Although the AGA is hoping a bill will get passed as it has wording that would help to prevent damage to underground pipelines, "It will be challenging given the limited amount of time remaining in this session," she said.

House aides said the Senate is more stringent than the House bills have been so far.

Magnuson said she believed it was more likely one of the two chambers would pass a bill and send it over to the other side than two bills going through the markup process and then members from the two chambers ironing out the difference in conference.

"But all options all fairly optimistic," she said.

Representing AGA, Frank Bender, vice president of Baltimore Gas & Electric Company, will be one of the witnesses, Magnuson said.

Senate transportation committee chairman Ted Stevens, R-Alaska, said that under his proposal, pipeline operators will have to meet new safety requirements, including cleaning and continuous monitoring along more than 1,200 miles of pipelines. However, low-stress lines that aren't in "sensitive areas" - about 4,200 miles-worth of lines - would remain unregulated.

All low-pressure crude lines are currently unregulated, and some industry experts say regulation could have prevented the Prudhoe Bay fiasco.

The House legislation requires companies to "pig" lines at least once every seven years, or more often, based on a risk-assessment. "Pigging" is a cleaning and inspection program that involves sending a cylindrical droid down a segment of pipe. Experts say that BP's lines failed because the lines hadn't been pigged for more than a decade.

The Senate proposal also included provision for the DoT to increase the number of pipeline inspectors by 50% to 135.

House energy committee chairman Joe Barton (R-Texas) said before the last congressional session expired he was optimistic that one form of the pipeline legislation could be passed in the lame-duck session.

The Senate bill also includes a provision that would hold senior officials at pipeline companies accountable to certify that the information they are providing to regulators is accurate, and a study of oil pipelines critical to the nation's energy supply.

Barton said costs for oil companies associated with meeting the House proposed law's standards wouldn't be negligible, but he couldn't quantify them.

-By Ian Talley, Dow Jones Newswires; (202) 862 9285; ian.talley@dowjones.com;

Fairbanks News Miner
November 13, 2006

http://newsminer.com/2006/11/13/3286/

Stevens schedules pipeline safety hearing
By Sam Bishop
Published November 13, 2006

WASHINGTON Sen. Ted Stevens has scheduled a hearing on the nation’s pipeline safety program for Thursday, the first such hearing in the Senate Commerce Committee since a leak in early August cut Prudhoe Bay oil production in half for weeks.

Stevens, chairman of the committee, refrained from holding a hearing on the Prudhoe Bay problems in September even while several other congressional committees did so.

However, on Sept. 27 he and Sen. Daniel Inouye, D-Hawaii, introduced a bill to reauthorize federal pipeline regulations and expand them to cover allow-stress pipelines.

On the House side, the Transportation committee, led by Rep. Don Young, R-Alaska, approved a reauthorization bill in July. The House bill would tell federal regulators to regulate some, but not all, low-stress pipelines.

Officials at the federal Department of Transportation proposed their own new low-stress line regulations in late August. They would require certain inspection and maintenance procedures for lines in “unusually sensitive areas.” Prudhoe Bay’s lines fall in that category because they’re near habitat of rare ducks and whales.

Critics said the agency’s proposed regulations left too many miles of low-stress lines unregulated and have pushed Congress for more stringent rules.

Stevens’ legislation appears more in line with that approach.

“Low-stress lines that aren’t in such sensitive areas (about 4,200 miles) would continue to be unregulated,” the Senate Commerce Committee news release says of DOT’s proposal.

“The draft bill goes further than the draft regulation and requires DOT oversight of all low-stress pipelines,” the news release said.

Young has said he wants to review DOT’s approach and has declined to support federal regulation of all low-stress lines. Young held a hearing on the Prudhoe Bay leaks and pipeline regulation in September.

Health committee

Sen. Lisa Murkowski, R-Alaska, is hoping to find a spot on the Senate Health, Education, Labor and Pensions Committee when Congress returns next year.

“Health and education are issues that drive me,” she told Alaska reporters last week.

The Health committee has two Republican slots opening, due to Tennessee Sen. Bill Frist’s retirement and Ohio Sen. Mike DeWine’s election defeat. Her quest may be difficult, though, because she doesn’t want to give up her spot on the Senate Energy and Natural Resources Committee.

Environmental agenda

Major environmental groups will talk with reporters in Washington, D.C., today about their agenda for the next Congress, both houses of which will be controlled by Democrats.

“Environmental leaders are planning to play offense for the first time in years,” according to a news release promoting Monday’s teleconference.

Representatives will discuss energy sources, global warming, farm subsidies, public land conservation and endangered species. Groups participating include the National Audubon Society, the National Environmental Trust, the Environmental Working Group and the U. S. Public Interest Research Group.

Environmental groups played a key role in defeating Rep. Richard Pombo, R-Calif., in the Nov. 7 election.

They targeted Pombo because he is chairman of the House Resources Committee, where most environmental legislation is, or isn’t, considered. Californians in the 11th congressional district elected Democrat Jerry McNerney.

“America is extremely fortunate to be replacing someone whose energy priorities were dictated by Big Oil with a man who his an expert on renewable wind power and who has the vision to help our nation develop smart new energy technologies and jobs,” the Sierra Club said in a news release congratulating McNerney.

Washington reporter Sam Bishop can be contacted at (202) 662-8721 or sbishop@newsminer.com

Forbes.com
November 10, 2006

http://www.forbes.com/forbes/2006/1113/158.html

Cold Front
Statoil plans to find oil and gas riches in the Arctic.
It will face harsh weather and surly Russians.
Michael Freedman 11.13.06

From Edvin B. Ytredal's window on an island in Hammerfest, Norway, the vast Barents Sea looks placid on a recent sunny morning. But soon the sun will set and not rise again for months. The temperature will drop to well below freezing, and steady gale-force winds will howl in for the winter. Ytredal's understatement: "It is a challenging environmental area."

Hard to fathom that it is also the hottest battleground on the planet for vast untapped energy reserves. Here, at 70 degrees latitude, well inside the Arctic Circle, Ytredal runs the day-to-day operations of a vital project for Statoil ASA, the $66 billion (trailing 12 months sales) company, Norway's largest. Geologists say at least 25% of the world's undiscovered oil and gas reserves could lie underneath these icy waters--a claim that has spurred a race to the Arctic by oil companies like Eni, Total and ConocoPhillips, followed quickly by oil services firms and ship manufacturers.

For Statoil the stakes are enormous. The company now gets 83% of its production revenue from the Norwegian continental shelf, a region that many industry analysts say has already reached or passed its peak. By 2010 production along the shelf is expected to hit 5 million barrels per day of oil equivalent, then drop to 3.5 million barrels by 2015 and to 1 million barrels by 2030. Statoil executives know the company's long-term success rides on exploring the frontier regions in the Barents Sea, and they're counting on the project Ytredal manages, known as Snøhvit, to secure an Arctic foothold to establish the company as the preeminent player in the region. "Statoil has been a pioneer in the Barents Sea," its chief, Helge Lund, said earlier this year, "and we want to play a central role in the further development of the far north."

Yet exploiting the Arctic is a staggeringly risky proposition. Snøhvit has 6.8 trillion cubic feet of natural gas (the equivalent, in energy, to 1.2 billion barrels of oil) plus 113 million barrels of light oil, but it is situated 90 miles offshore and 1,000 feet underwater. Statoil must work alongside the fishing industry--an important sector of Norway's economy--and face off against environmentalists, while managing the technical complexity of the project. Ytredal and his staff must also contend with gnarly winter storms and freezing seawater. In years past there have been avalanches from the hills surrounding the Hammerfest harbor.

Still more challenging is that the future depends upon Russia--a prickly partner with an unsteady grasp of Western property rights. Statoil has long banked on gaining access to a monster field called Shtokman, one of the most prized assets in the energy world, with 113 trillion cubic feet of reserves. Companies from the U.S. and France have also vied for access. The state-controlled Russian behemoth Gazprom was cagey about its plans. Then, after months of growling and temporizing, Gazprom's enigmatic chief, Alexei Miller, stunned the energy world last month by announcing that the company would go it alone, without foreign equity partners. "Yes, it was disappointing," says Henrik Carlsen, a senior vice president who oversees Statoil's Barents strategy. "But that does not change the basic strategy."

In heading to the High North, as Norwegians call it, Statoil executives will join the legions of explorers who have sought fortune and renown in this tough climate over the centuries. These hardy men suffered ice and isolation, while fighting off scurvy and mutinous crewmen, but they ushered in the modern era of Arctic exploration at the turn of the 20th century with the insight that the key to success there lay in working with the weather rather than fighting against it. They largely kept quiet about their territorial discoveries, at least in part to fend off competition for walrus from foreign vessels, and later because the Norwegians--always great seafarers and once brutal warriors--wanted to avoid disputes with other nations. Meantime, Norway's Arctic north enjoyed a lively trade with Russia, exchanging fish for flour in Hammerfest, the Arctic city with the ice-free harbor, thanks to the Gulf Stream.

Trade ended with the October Revolution. By the Brezhnev era Russia and Norway had become embroiled in a still-simmering dispute over a piece of the Barents Sea that measures 540,000 square miles--roughly four times the size of modern Germany--and is believed to hold vast energy reserves. Territorial beefs elsewhere were resolved more amicably. In 1965 Norway and the U.K. drew a line down the geographic center of the North Sea. The same year, after decades of drilling dozens of dry wells, energy companies discovered large oil and gas deposits, setting off a race to tap a region that would later be hailed as "the biggest play of them all." Phillips, BP and others drilled on both the Norwegian and British sides of the North Sea, but in the mid-1960s few Norwegians knew much about exploration and production. Finally, in 1972 the Oslo parliament set up Statoil ("state oil") to exploit the first big discovery on Norway's continental shelf.

Over the next three decades the state-owned company worked its way north along the shelf, gaining experience in harsh climates, while also expanding internationally. A 1990 alliance with BP gave it access to exploration licenses in such places as Angola and Azerbaijan. It later took stakes in the production of oil and gas in Algeria, China, the U.K. and Venezuela. In 2001 Statoil was partially privatized and listed on the Oslo and New York stock exchanges. The government, which now owns a 70.9% stake, doesn't get deeply involved in operations. By law, rights to the gas and oil reserves in the Norwegian parts of the sea are owned by the state, which then puts up for bid licenses to explore and produce in certain areas. Statoil and competitors all bid equally for the concession.

The government couldn't shield it from one of the biggest scandals in the history of Norwegian business. In 2002 news reports uncovered allegations of bribery--that Statoil had used an intermediary to pay $15.2 million to officials in Iran in order to get access to oil fields there. Statoil paid a $3 million fine to Norway, without admitting or denying guilt, and later agreed to shell out another $18 million to the U.S. The affair forced the resignations, in the fall of 2003, of three executives: the chairman, the chief executive and a vice president for exploration. In March 2004 the board appointed as chief executive Helge Lund, a then-41-year-old onetime McKinsey & Co. consultant who had most recently served as head of Aker Kvaerner, a Norwegian engineering and construction firm. That August he gave a presentation confirming that the future of the company lay in the High North.

Lund's tenure has been aided by high oil prices. Between 2003 and 2005 Statoil roughly doubled earnings to $4.8 billion; at the end of last year it had 4.3 billion barrels (equivalent) of proved oil and gas reserves. Recently, Statoil, along with Chevron and Devon Energy, announced a find in the Gulf of Mexico that appears to hold between 3 billion and 15 billion barrels (equivalent) of oil and gas reserves.

Yet its big project in the north, Snøhvit, has run into snags. The company first discovered natural gas and oil there in 1981, but global demand was weak, and Statoil, like the rest of the industry, lacked the financial and technological know-how to transport gas over long distances. Two attempts at tapping the field failed. In 2001 Statoil faced further delays when greenies persuaded the Norwegian parliament to halt Barents Sea exploration until further study. After a heated debate and a series of environmental reports the government allowed the Snøhvit project to proceed a year later, but it only fully lifted the ban on exploration earlier this year, with some strict regulations. "It was quite a hard fight," says Arvid Jensen, head of Petro Arctic, a trade association for energy developers in the region. "You have to drill for 10,000 years to get an accident in the Barents Sea. But the risk is not zero. It's point zero, zero, zero something. But it's not zero."

Poor planning also took its toll. Statoil increased capacity at the gas liquefaction plant by 30% but failed to calculate all the necessary changes. The company had bought from a Hammerfest family a small island called Melkøya, built a 1.5-mile underwater tunnel to it from Hammerfest and intended to ship in prefabricated parts. But drawings and schedules were late, and by the time the parts arrived, executives found that they were poorly or improperly constructed and needed to be repaired. Delays set the project back by a year and put the $8.6 billion project 50% over budget.

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Statoil also faced technical challenges. While most offshore projects extract oil and gas via above-water platforms, the company placated environmentalists and trimmed costs by placing its platforms on the seabed, running pipes back to Melkøya and operating the wells remotely. In so doing the company found it could cut capital expenses by half and labor by 90%. In addition Statoil expects the experience will help in future cold-climate operations, especially in avoiding icebergs. Still, frigid conditions are a constant challenge in pipes that take in water, gas and condensate. At certain temperatures the water and gas mesh together and create hydrates, or icy sludge, that can block the pipes. Antifreeze is needed.

Despite the obstacles Statoil is now convinced Snøhvit will be up and running by the end of 2007. At current natural gas prices that means an estimated $1.4 billion annual kick to the company's top line. Hans M. Gjennestad, who runs the day-to-day strategy in the Barents Sea, argues that the lessons learned in Hammerfest will give Statoil credibility to take on other projects in the region. To go deeper into the Arctic, he says, the company is developing ways to work with or around the ice. Example: partnering with Aker Kvaerner to build ice-breaking vessels that can bring oil and liquefied natural gas through ice that is 6.5 feet thick. Gjennestad says the plan is to be able to go "anywhere in the Arctic by 2030."

That is, if its big neighbor to the east cooperates. Russia enjoys (if you can call it that) the largest Arctic coastline of any country, the world's largest natural gas reserves, with 1,680 trillion cubic feet, and 60 billion barrels of proved oil reserves. Yet foreign companies have had a tough time getting access to any of it. High energy prices have emboldened the Kremlin and encouraged it to revisit a number of projects with Western oil companies. In what has been widely viewed as an attempt to renegotiate or cancel existing exploration and production licenses and agreements, Russia is now accusing Royal Dutch Shell and bp of violating its environmental and regulatory standards.

Until very recently Gazprom, Russia's biggest company, seemed eager to accept foreign help in its largest field, Shtokman, located 300 miles offshore in the Russian Barents Sea. Though Gazprom is one of the ten most valuable companies in the world, with a market capitalization of $264 billion, it lacks the technological expertise to tap the field on its own. Earlier this year it suggested as much by announcing a list of potential equity partners that included Chevron and ConocoPhillips, Total, Statoil and Norsk Hydro. Eager to take part, Statoil hoped its offshore experience at Snøhvit would score points with the Russians. Arild Moe, deputy director at the Fridtjof Nansen Institute, an energy and environmental think tank in Oslo, says in return for an equity stake in Shtokman, Statoil would have given up a piece of Snøhvit, which would have allowed Gazprom to begin selling gas to the U.S. while acquiring knowledge about offshore projects that would pay off in its own Arctic efforts. Later on, Moe says, Statoil might have given it access to Europe through prospective Arctic pipelines.

Shtokman has been a key piece of Statoil's Arctic strategy. It has said that during even the first phase of development the Russian field could produce 3.5 times as much natural gas as Snøhvit, and, later on, nearly as much as all Norwegian fields were producing in 2005. The High North, Statoil has said, is "a natural meeting area for long-term cooperation."

Maybe one day. Gazprom's bombshell announcement provoked astonishment, confusion and anger. Was it a part of the negotiation--an attempt by a Russia and its powerful state-controlled company to extract more? Or yet another example of resource nationalism--"petro-arrogance," as some put it? "The Shtokman decision is a serious blow for both Statoil and Hydro," observes Moe. "Both Statoil and Hydro are looking at other options in Russia, but clearly they will evaluate their strategies now."

A flummoxed Statoil issued a six-sentence press release expressing surprise, as well as an abiding commitment to a long-term presence in Russia. Executives say they are looking at other gas and oil fields there; they are still hoping, perhaps naively, that Shtokman is not completely off the table. "When you deal with the Russians, you have to be very patient," says Øystein Noreng, a professor of petroleum economics at BI Norwegian School of Management. "The worst thing you can do is push them, because then they will react."

Jonas Gahr Støre, Norway's foreign minister, has made collaboration with Russia a top priority over the last two years. At the request of Statoil and Norsk Hydro he has discussed the Shtokman field with his counterpart and the energy minister in Russia and planned to do so again at a meeting in western Siberia; another get-together is planned in Moscow. A day after the Shtokman announcement Støre delivered a planned speech in Brussels, amending it in light of the news. "I continue to believe that the Norwegian experience--technologically, industrially and managerially--could benefit Russia in its quest to develop its resources in the Barents Sea," he said, sounding like a scorned suitor still in shock.

Meantime, back to plan B: exploring the Norwegian continental shelf and its own part of the Barents. There's the other unpredictable beast to deal with--nature. At the plant in Snøhvit, builders installed breakwaters around Melkøya island to protect against a millennial 45-foot wave, as well as weatherproofing and insulation to withstand the 45mph winter gusts from the north and west. In January a hurricane with freezing temperatures and 100mph winds forced Statoil to evacuate 1,100 workers to the mainland. "That's why it was so cold," muses a Statoil executive. "Cold winds blow from Russia."

Houston Chronicle
November 10, 2006

http://www.chron.com/disp/story.mpl/business/4324819.html

Daughter settles with BP in parents' death
Just days before trial, she accepts private sum,
plus $32 million for hospitals, schools
By BRAD HEM
Copyright 2006 Houston Chronicle

The daughter of two people killed in the 2005 explosion at BP's Texas City refinery settled her case against the company Thursday, and as part of the settlement, BP agreed to donate more than $32 million to hospitals and schools.

The lawsuit would have been the first related to the blast to go to trial.

With this agreement, London-based BP has settled with the families of all 15 killed in the March 23, 2005, explosion. Injury suits still remain, with some scheduled for trial in February.

Lawyers for Eva Rowe and BP worked out the settlement on the same day they were scheduled to pick a jury for the trial that would have started Monday.

The financial terms for Rowe, 22, were kept private Thursday, but some previous settlements for deaths at Texas City reportedly have been in the tens of millions of dollars.

Rowe, who is from Hornbeck, La., vowed to use some of her settlement money to crusade for workplace safety nationwide.

"I know that would make my parents proud," she said. "I'm going to do everything that I can."

Under the settlement, BP will donate at least $32 million to various colleges and hospitals in Texas, Tennessee and Louisiana.

"Eva Rowe today is making peace with BP," her Beaumont attorney Brent Coon said. "Eva did not want her parents to die in vain. They were survived by a daughter who would not let this go."

BP officials declined to say why they settled the case, but they repeated apologies for the blast that killed 15 and injured scores more at the nation's third-largest refinery.

"We are deeply sorry for the loss that this caused Miss Rowe," BP spokesman Ronnie Chappell said. "We regret that our mistakes caused harm to someone."

Their favorite charities

Also as part of the settlement, all claims against contractor J.E. Merit Constructors., which employed Rowe's parents, and Texas City plant manager Don Parus were dismissed.

In memory of James and Linda Rowe, $1 million will go to the cancer center at St. Jude's Children's Research Hospital in Memphis, a favorite charity of the Rowes, and to Hornbeck High School in Louisiana, where Linda Rowe had worked as a special education teacher's aide before moving to Texas.

BP also will make another $30 million in donations on behalf of the Rowes and the other 13 people who died in the explosion.

The biggest payments will be $12.5 million each to the burn unit at the University of Texas Medical Branch at Galveston, which treated 23 people injured in the first six hours after the Texas City blast, and to the Texas A&M University Mary Kay O'Connor Process Safety Center, which works to prevent workplace injuries in the petrochemical industry.

The College of the Mainland in Texas City will receive $5 million for safety and process technology training for refinery and chemical plant workers.

BP also agreed to match other private donations to those three colleges up to $2 million each. Coon announced his law firm and Eva Rowe would each donate $100,000 to the schools.

Records to be made public

Though every other wrongful death case against BP was settled in the past 18 months, Rowe had gone ahead because she wanted to hold the company responsible for the deaths of her parents, she has said.

She also said she wanted potentially damaging documents about BP safety practices to come to light during the trial.

Coon said, as a term of the settlement, those records will be made public. The process for releasing them is still being worked out, he said, but attorneys from his firm and BP will negotiate their disclosure.

The lessons learned from those records will set new industry standards and prevent future accidents, Coon said.

Rowe's attorney said she may have made peace with BP, but that doesn't mean she has forgiven them.

"I'll probably never say BP is a good company," she said.

But now some of BP's money will go for good causes in the Rowes' names. Hornbeck High School is expected to graduate just 18 students nearly half of them on free or reduced-price lunch programs this spring. But all of them will have more money for college than they thought. The $1 million donation to the school will provide $100,000 in scholarships for at least the next 10 years, Vernon Parish School District Superintendent Cindy Gillespie said.

Most of the students would likely have gone to in-state schools, but the scholarships might allow them to go out of state, she said.

"It will give them a lot of opportunity," Gillespie said. "We're glad that they thought so much of this community."

Gillespie said she hadn't known one of her schools might benefit from Rowe's lawsuit until an attorney with Coon's firm called Thursday morning.

"I thought he was joking with me," she said.

UTMB President Dr. John Stobo said the university would use its share of the settlement to research treatment of children's burns.

"Anytime some good can come out of a horrible event, we applaud that," he said.

'We need to move on'

Constance Kivell, a Galveston resident in the pool of potential jurors, stayed to watch Coon's news conference on the settlement. She said BP's donations were "magnanimous."

"No one will ever forget what happened," Kivell said. "But we need to move on."

The explosion at the plant happened after a blowdown drum overfilled with flammable liquid hydrocarbons.

The excess liquid and vapor were then vented from the drum and ignited as the isomerization unit a device that boosts the octane in gasoline started.

Alarms and gauges that were supposed to warn of the overfilled equipment didn't work properly.

The blast killed the Rowes, who were in a construction trailer 121 feet away, and was felt as far away as five miles.

Chronicle reporter Anne Belli contributed to this report.

brad.hem@chron.com

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http://www.chron.com/disp/story.mpl/business/4324744.html

BP settles with fired refinery workers
The group of 6 sued claiming libel after the fatal Texas City blast
By ANNE BELLI
Copyright 2006 Houston Chronicle

Six former BP workers who were fired in the wake of the fatal March 2005 blast at the company's Texas City refinery have settled their libel suits against the company.

According to court records and interviews with some of the workers and attorneys, BP settled the cases with the workers in September for undisclosed amounts.

The workers operators Steven Adams, Andy Tenhaaf and Warren Briggs and supervisors Scott Yerrell, Larry Davidson and Charlie Logan had each alleged that BP defamed them by pinning most of the blame for the blast on them during a news conference two months later.

All but Adams were part of the team that was restarting a unit after a monthlong outage when it exploded just after lunchtime on March 23, 2005. Adams had worked on the unit the night before and had initiated some of the start-up steps.

Adams could not be reached Thursday. And his wife, Gaye Adams, declined to discuss terms of the settlement.

"We're happy it's over," she said, adding that she and her husband continue to believe he was wrongly terminated.

"He and others were fired so BP could go to their press conference the following day and say that they had taken action against the men who were responsible," Gaye Adams said.

"We wanted to take this case to court so the public would know the truth," she said. "But for months without an income, we had no choice but to settle."

Briggs, who was working as the board operator in the control room the day of the blast, also declined to discuss terms of his settlement with BP.

But like Adams, he maintained that his firing was unfair, adding, "It's over."

BP spokesman Ronnie Chappell declined to discuss the cases. Company attorney Jim Galbraith said the settlements are "consistent with BP's efforts to resolve disputes coming out of March 23, 2005."

At a news conference on May 17, 2005, Ross Pillari, then the president of BP Products North America, said that the "root cause" of the accident was operator error. Had the workers not made so many critical mistakes, Pillari said, the accident would not have happened.

BP later retracted that statement, and later acknowledged that management had become complacent about safety.

Also, in the months following the blast, federal investigators revealed that the unit had a history of near misses and had not been maintained properly and that on the day of the blast, a key level indicator and alarms malfunctioned, they said.

Further, investigators said earlier this month that BP officials worldwide have declined to make needed safety improvements to save money.

In the suits filed in U.S. District Judge Sam Kent's court in Galveston, the employees claimed their personal and business reputations were harmed because of BP's statements.

Adams, Yerrell, Tenhaaf and Briggs have found new jobs in the refining business. Davidson, Logan and their attorney could not be reached.

anne.belli@chron.com

Wall Street Journal
November 10, 2006

BP Settles Claim From Texas Blast,
Avoiding a Trial
A WALL STREET JOURNAL NEWS ROUNDUP
November 10, 2006; Page A2

BP PLC's last-minute settlement in a civil lawsuit stemming from a deadly explosion last year at a Texas refinery spares the British oil giant a drawn-out legal battle that threatened to further blemish its record amid other safety, environmental and compliance problems in the U.S.

A day before jury selection was set to begin for a trial in a Texas state court, BP agreed to give $32 million to a number of institutions to aid health care, worker training and safety and education in Texas, Louisiana and Tennessee, according to a statement by the plaintiff's attorney. The plaintiff, 22-year-old Eva Rowe of Hornbeck, La., whose parents were both killed in the explosion at a BP refinery in Texas City, Texas, walked away with an undisclosed financial settlement, her attorney Brent Coon said.

Ms. Rowe had sought $1.2 billion in damages, alleging negligence by BP related to the explosion. Shortly after the blast, BP moved quickly to settle with other victims' families and injured workers in the blast. The company said it set aside $1.6 billion to settle claims.

WALL STREET JOURNAL VIDEO
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CNBC's Scott Cohn reports that BP will give up to 38 million dollars to hospitals and schools for process safety education and the company will also upgrade its Texas City refinery.Mr. Coon said the private settlement with his client was "a very small fraction" of the $1.2 billion sought.

BP attorney Jim Galbraith said, "We deeply want to express our sorrow for the loss that Eva Rowe has sustained. We are working hard to make sure nothing like this ever happens again." A BP spokesman declined to disclose further details.

The Rowe lawsuit was the last civil action involving a fatality from the explosion, lightening considerably the legal risks stemming from the accident. BP faces continued scrutiny of the accident by federal investigators, as well as several other unrelated probes into its management of its Prudhoe Bay oil field in Alaska and its energy-trading practices. BP has said it is cooperating, and it has disputed price-manipulation allegations related to energy trading.

As part of the settlement, BP agreed to donations of at least $32 million to schools and medical facilities. About $12.5 million from the settlement will go to the adult burn unit at the University of Texas Medical Branch at Galveston, where many victims were taken after the blast.

Ms. Rowe also sued former Texas City plant manager Don Parus and J.E. Merit Constructors Inc., which employed her parents. Both were released from the lawsuit in the settlement.

After fading from the headlines, the accident had become BP's biggest public-relations headache as the trial approached. In recent days, the U.S. Chemical Safety and Hazard Investigation Board, one of several agencies looking into the blast, partially blamed cost-cutting at BP for the accident, citing internal BP documents.

As part of the settlement, Mr. Coon said the oil giant would negotiate on making public key documents unearthed during the litigation. But he acknowledged that there was no way to match the disclosure inherent in a trial.

Financial Times
November 10, 2006

BP settles main civil case on fatal
Texas oil refinery blast
By Sheila McNulty in Houston
Published: November 10 2006 02:00 |
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