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
http://release.theplatform.com/content.select?pid=WOyJKnXLT0b3OiSDgkx1tGLuG_VmsYJu

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 |
Last updated: November 10 2006 02:00

BP yesterday settled the main civil case arising from the fatal Texas City refinery explosion.

It lifts the immediate threat of highly-damaging documents being made public and the prospect of Lord Browne, BP's chief executive, being forced to testify.

BP said it would make $32m (£17m) in worker training and healthcare donations to help those in the industry, and provide a private settlement to the claimant to end the trial, which was to have started with opening arguments on Monday.

The company also agreed that plaintiffs could release all 7m of the documents they uncovered in researching their case to federal agencies investigating the blast, and work towards eventually making most of them public.

However, the deal does not end BP's problems in North America.

It still faces the threat of criminal prosecution arising from a grand jury investigation into the actions of the company and its executives. Fifteen people died and an estimated 500 were injured when the plant exploded last year - the worst US industrial accident for more than a decade.

It raised concerns among federal regulators about problems with BP's safety culture in the US, which were heightened by the closure of half of BP's Alaskan oilfield earlier this year after the discovery of severe pipeline corrosion.

Eva Rowe, the 22-year-old claimant whose parents died in the fire, voiced her satisfaction with the outcome. She had been alone out of the 1,000 claimants in refusing to accept only a private financial settlement.

"I wanted to help people, and that is what I was able to do. My parents' death was not in vain and, even from their deathbed, they were able to help.''

Attorneys for the plaintiffs said BP had agreed to donate $12.5m to Texas A&M University's process safety centre; $12.5m to the University of Texas Medical Branch burns unit; and $5m to the College of the Mainland's safety training for refinery and chemical plant workers. The donations will be made in the name of the 15 who died.

The attorneys said BP had also agreed to provide $1m to the cancer centre at St Jude's Children's Hospital in Memphis in honour of Ms Rowe's parents, as well as $1m to the Louisiana school where her mother was a teacher.

"We are deeply sorry for Ms Rowe's loss,'' said BP spokesman Ronnie Chappell. "We regret that our mistakes caused harm to so many people. We are working hard to ensure that something like this doesn't happen again in other BP facilities."

Ms Rowe's lawyer Brent Coon said he would work with BP to agree which documents would be released and settle any disagreements through an arbitrator. He hoped to work with legislators to make all refineries safer.

Financial Times
November 7, 2006

http://www.ft.com/cms/s/05822f0c-6e06-11db-8725-0000779e2340.html

How BP put a price on human life
By Sheila McNulty in Houston
Published: November 7 2006 02:00 |
Last updated: November 7 2006 02:00

BP was not only willing to put a value on human life, something its predecessor Amoco refused to do it listed it at $20m (£10.5m) for a single fatality incident, with the cost escalating for multiple deaths in the same accident, the Financial Times has learned.

The details, revealed in sworn testimony, come as the first civil trial begins this week arising from the fatal explosion at BP's Texas City refinery in 2005.

"If the incident had four fatalities, then the number would escalate to $40m. In, you know, 100 fatalities, the number would escalate to $200m per life," said Robert Mancini, who is now a BP consultant in process safety, following his 2004 retirement from the UK company as a chemical engineer.

Mr Mancini's comments were made on October 19 2006, in videotaped sworn testimony to plaintiffs' lawyers to be used in the trial. A copy of the transcript of his deposition was seen by the FT.

The claimant in the trial, Eva Rowe, who lost both parents in the explosion, has so far been unwilling to settle, like the majority of claimants in the other death and injury cases.

Fifteen workers were killed and an estimated 500 people in and around the facility injured when the Texas City refinery exploded last year.

BP immediately set aside $700m to litigate or settle the lawsuits, yet the terms of each has been confidential.

In an e-mail to a colleague from 1999, the year BP bought US rival Amoco, Mr Mancini explained the different approaches to risk assessment and management by the two companies.

The e-mail, a copy of which also was seen by the FT, states in capital letters: "COST' OF A HUMAN LIFE.''

It continues: "BP embraced the principle that these costs can be specified for the purposes of cost benefit analysis. Amoco was generally unwilling to take this step. This is more a cultural issue than a technical one, but one that will have to be addressed.''

In another set of documents, dated October 17 2002, the BP documents likened its staff to the "three little pigs'' and a massive accident, such as the Texas City explosion, as the "big bad wolf'' of the children's fable. BP noted: "If the wolf blows down the house, the piggy is gobbled,'' and asked, "Which type house should the piggy build?''

At the top of the documents, which were for a "major accident risk awareness training'', BP depicted the three little pigs as piggy banks, under its logo, and then broke down different options under the 'House' subheading - as straw, sticks, brick and blast resistant.

In handwriting - in the copy BP provided to the plaintiffs' lawyers - the word "optimized" is written by someone and an arrow is drawn to the house of bricks, which listed at $200 - the cheapest option.

John Manzoni, BP's head of global refining, was clearly disturbed at seeing a copy of the pig analogy during his deposition, taken September 8 2006.

A transcript of the videotaped sworn testimony, to be shown during the trial, has him saying: "I - well, first of all, I am not - this is - this is the most extraordinary set of charts to use these sorts of analogies in this . . . It is an extraordinary way of articulating something about risk."

Mr Mancini, however, was able to explain in his deposition: "It just gets the idea across that there are different types of vulnerabilities out there . . . We chose something that was very easy to understand, that people might get a little humour out of, wake them up if they are falling asleep, and make it interesting; but it's not a treatise on facility siting."

Ronnie Chappell, BP spokesman, said neither the analytical concepts discussed in Mr Mancini's March 1999 e-mail on the "cost" of a human life, nor the other materials, referencing the value assigned per life and the pigs analogy, were factors in the refinery explosion.

Mr Chappell said: "These concepts were not used by BP when making spending decisions at Texas City.''

In addition, he said, BP's investigation team did not identify budget decisions or lack of expenditure as a critical factor, or immediate cause of the accident. Indeed, he said, that team noted maintenance and turnaround spending in the years prior to the incident had increased as Texas City staff addressed the safety and plant integrity issues of greatest concern.

Yet the US Chemical Safety Board, the main US federal agency investigating the blast, said last week that cost-cutting helped compromise safety at the Texas City refinery, BP's biggest.

The agency added that it considered this was a contributing factor in the worst US industrial accident in more than a decade.

Houston Chronicle
November 7, 2006

http://www.chron.com/disp/story.mpl/business/energy/4315352.html

Judge: Mailing may taint BP jury pool
The jurist says if another panel is needed, company must pick up bill
By BRAD HEM

GALVESTON - A mailing from a BP manager to 900 members of the Texas City Chamber of Commerce could have influenced potential jurors in a civil trial it faces for the deadly 2005 explosion at its Texas City plant, the judge in the case said Monday.

State District Judge Susan Criss said in court she will compare a list of people who received the mailing, which she called "nonsense," to those tapped for jury service and fine BP an amount at her discretion for any potential jurors who received it.

If enough names show up on both lists to require a new jury pool, BP would have to pay for that, Criss said.

The mailing, dated Oct. 31 and addressed "Dear BP Texas City Neighbor," highlighted actions the company has taken to improve safety in the last 18 months. It says BP will spend more than $1 billion at the refinery over the next five years to refurbish and rebuild key equipment.

"Your client decided at the last minute to pull a stunt," Criss told the refinery's legal team in court Monday after 242 potential jurors had filled out 110-question surveys that lawyers will use to pick the panel later this week.

BP spokesman Neil Chapman said the mailing, sent by Neil Geary, BP's Texas City-based manager for government and public affairs, was a response to increased media coverage, including a recent CBS 60 Minutes episode, and was intended to keep community leaders informed about changes at the plant since the explosion that killed 15 people and injured scores more.

'Course of business'

It was not an attempt to influence potential jurors, Chapman said.

"The communication was the normal course of business," he said.

Efforts to reach Geary Monday night were unsuccessful.

Earlier in court, he told Criss he sent the mailer without getting company approval first, though a company attorney had reviewed it for accuracy, Criss said.

Criss' scolding ended what had been a busy afternoon in the first civil trial from the explosion.

BP has spent hundreds of millions of dollars to compensate injured workers and families of those killed, but 22-year-old Eva Rowe from Hornbeck, La., is seeking $1.2 billion for the deaths of her parents, James and Linda Rowe. Both worked at the plant.

Focus on safety measures

Rowe's attorneys have said she wants to hold the company responsible by showing they failed to improve safety at the refinery before the explosion.

Some of the 242 potential jurors gasped and groaned when James Galbraith, a lawyer for BP, introduced himself and the name of his client.

Until then, the crowd had not known what kind of trial it might decide.

They groaned again when Arthur Gonzales, a lawyer for Rowe, told them the trial could last up to five weeks.

Jurors spent most of the afternoon filling out a 12-page questionnaire, which had a special first question added by Criss after she saw Geary's mailing over the weekend.

Instead of asking for the potential juror's name, the first question asked whether they had gotten any mail, e-mail, fliers or other communication from Rowe, BP, the attorneys or anyone else regarding the case.

Other questions

Other questions asked for basic background information education, marital status, employment and more.

But most of the questionnaire zoomed in on potential biases among the jury pool:

•"Based on what you have read and heard, would you work at BP Texas City Refinery?"
•"Would your decision change if an expert said it was safe?"
•"Would your decision change if the government said it was safe?"
•"Would you say you have strong negative or positive attitudes toward large oil companies?"
•"Do you know anyone who was involved in any way or injured in any way in the March 2005 explosion at the BP plant in Texas City?"
•"How closely have you followed media coverage and other reports related to the events surrounding the March 2005 explosion ... ?"

Remark overheard

Criss ordered panel members not to talk to reporters, but one woman was overheard remarking to another potential juror on their way out the door, "That was a heck of a questionnaire. I think they asked the same question four different ways."

Because of today's elections and the length of the questionnaire, trial proceedings won't resume until Thursday, when lawyers will begin picking a 12-member jury and four alternates. Open arguments are scheduled for Monday.

brad.hem@chron.com

Anchorage Daily News
November 6, 2006

http://www.adn.com/news/government/veco/story/8382484p-8277730c.html

FBI targets corruption in 2006 politics
A TOP PRIORITY: A new director wouldn't balk at sting operations.
By GREG GORDON
McClatchy Newspapers
Published: November 6, 2006

WASHINGTON -- The new chief of the FBI's Criminal Division, which is swamped with public-corruption cases, says the bureau is ramping up its ability to catch crooked politicians and might run an undercover sting on Congress.

Assistant FBI Director James Burrus called the bureau's public-corruption program "a sleeping giant that we've awoken" and predicted that the nation will see continued emphasis in that area "for many, many, many years to come."

So much evidence of wrongdoing is surfacing in the nation's capital that Burrus recently committed to adding a fourth 15- to 20-member public- corruption squad to the FBI's Washington field office.

In the past year, former Republican Reps. Duke Cunningham and Bob Ney have pleaded guilty to corruption charges. FBI agents are investigating about a dozen other members of Congress, including up to three senators. Dozens of agents are actively engaged in a massive investigation of illegal influence in the Alaska Legislature.

If conditions warrant, Burrus said, he wouldn't balk at urging an undercover sting like the famed Abscam operation in the late 1970s in which a U.S. senator and six House members agreed on camera to take bribes from FBI agents posing as Arab sheikhs.

"We look for those opportunities a lot," Burrus said, using words rarely heard at the bureau over the last quarter-century. "I would do it on Capitol Hill. I would do it in any state legislature. ... If we could do an undercover operation, and it would get me better evidence, I'd do it in a second."

Philip Heymann, who oversaw the Abscam investigation as chief of the Justice Department's Criminal Division during the Carter administration, expressed surprise to learn of the FBI's willingness to attempt another congressional sting after the outcry from Capitol Hill over Abscam.

"It shows courage at the FBI," said Heymann, now a criminal law professor at Harvard University. He said he concluded, after watching a recent public television documentary and listening to experts, that "there is more corruption (on Capitol Hill) than I ever thought imaginable" and that a single FBI sting "might result in very large numbers of prosecutions."

But even without an undercover operation, Heymann and other observers say they have been pleased with the GOP-controlled Justice Department's willingness to pursue old-fashioned investigations, even if they hurt congressional Republicans in Tuesday's elections.

Nationally over the last year, 600 agents worked 2,200 public- corruption cases, resulting in 650 arrests, 1,000 indictments and 800 convictions, Burrus said.

FBI Director Robert Mueller, who listed public corruption as his top criminal investigative priority when he shifted the FBI's focus to terrorism in 2002, said last month that the surge in convictions "sends the message that public corruption will not be tolerated." Despite the realignment, the number of agents working on public corruption has remained constant.

Burrus argued that the FBI is "uniquely qualified" to handle such cases, pointing to the bureau's political independence, exemplified by Mueller's 10-year term. Burrus said that Alice Fisher, the politically appointed chief of the Justice Department's Criminal Division with whom he confers weekly, also has "an aggressive attitude" about pursuing public officials.

"Operation Rainmaker," the FBI's broad investigation of a Washington lobbying ring, has already led to a handful of convictions, including Ney's guilty plea last month. The inquiry was one reason for the resignation last year of House Majority Leader Tom DeLay, R-Texas, who also faces state campaign finance charges. Other investigations seem to be sprouting everywhere.

But Reid Weingarten, a former Abscam prosecutor who now is a high-profile Washington criminal defense lawyer, said he would bet that the flurry of congressional cases has resulted from evidence "falling in their (investigators') laps" rather than a programmed FBI hunt for corruption.

The FBI does appear to be stepping up its use of electronic surveillance and has conducted stings of state politicians. Bureau agents secretly taped Rep. William Jefferson, D-La., before finding $90,000 in his freezer during a raid last May. Cell phones were wiretapped for four months in an investigation of Rep. Curt Weldon, R-Pa., government sources say.

In "Operation Tennessee Waltz," 10 Tennessee state officials, including five current and former legislators, have been prosecuted in a scheme in which hidden cameras whirred as FBI undercover agents offered payoffs in return for help for a dummy company. Burrus said some targeted Tennessee legislators were moving so quickly that "we were actually having to discuss how we were going to slow it down" so that bills aiding the phony firm didn't become law.

A separate undercover inquiry led to the indictment of three members of San Diego's city council.

In Alaska, the FBI has more than doubled its manpower in a massive investigation of illegal influence in the Alaska Legislature by the international oil-field service company Veco and other businesses. On Aug. 31 and Sept. 1, the FBI conducted two dozen raids and searched the office of state Sen. Ben Stevens, son of U.S. Sen. Ted Stevens, R-Alaska. No charges have been filed, but the FBI has said the investigation continues.

Burrus declined to discuss any investigation but said the FBI will focus on more state capitals over the next year "because we have seen a trend in cases that leads us to believe there's more out there."

When he arrived as deputy chief of the criminal division in 2004, he said, field offices frequently told him they had "no idea" how to pursue public- corruption leads. Since then, he said, agents in about 30 of the bureau's 56 field offices have been trained. FBI agents in Washington have studied congressional activities that might invite bribes, such as hard-to-trace "earmarks," in which members appropriate money for pet projects and often keep their involvement off the public record.

"Public-corruption cases have to be fished out," he said, noting that crooked politicians tend to do secret deals with one other person and often try to disguise their actions as "for the public's good."

Controversial new legal theories are also helping prosecutors bring cases in which they can't prove outright briberies. A vaguely written, 28-word 1988 law, for example, makes it a fraud for a politician to deprive taxpayers of his "honest services." It was among the charges lodged against Cunningham, Ney, former lobbyist Jack Abramoff and the San Diego councilmen.

Burrus said the FBI has to prove "that this person engaged in the activities specifically to receive this stream of benefits and knew that stream of benefits would stop if he did not support these particular projects."

Houston Chronicle
November 6, 2006

http://www.chron.com/disp/story.mpl/business/4312552.html

First civil trial to start in BP blast
By ANNE BELLI
Copyright 2006 Houston Chronicle

Over the past 18 months, BP has paid hundreds of millions of dollars to compensate injured workers and the families of the 15 people killed in the horrific explosion at its Texas City refinery.

But one woman, who lost parents in the blast and who believes the London-based oil giant was negligent in operating the plant, has rejected confidential settlement offers so she could have her day in court.

That day has arrived.

Jury selection begins today in Galveston County in the first civil trial stemming from the blast. It promises to be a highly contentious, highly technical and highly watched proceeding, as 22-year-old Eva Rowe from Hornbeck, La., takes on one of the world's biggest corporations.

"Eva lost both of her parents and she wants BP to admit publicly wrongdoing," said Rowe's attorney, Brent Coon of Beaumont. "She doesn't want them to just say, 'Hey, we're sorry.' She wants them to say, 'We knew there were problems and we should have listened.'"

Rowe is seeking $1.2 billion in damages.

Expressed regret

BP has repeatedly said that it takes responsibility for the blast, that workers and managers made mistakes and even that the accident was preventable. But it says it was not negligent.

"We deeply regret what occurred and the harm caused by our mistakes," BP spokesman Ronnie Chappell said.

He added that the company has "worked in good faith" with Rowe and other remaining plaintiffs to achieve a settlement and continues to do so.

"We hope to be successful in that effort," Chappell said. If not, he said, the company respects her decision "to choose the full extent of the Texas court system."

Lead BP trial attorney Jim Galbraith referred questions to the company.

Rowe also is suing former Texas City plant manager Don Parus and J E Merit Constructors, the contractor for which her parents worked.

Houston lawyer Don Riddle, who is representing Parus, said his client also is remorseful for the accident but vehemently denies he was negligent.

"This was a tragedy, and Mr. Parus has great and sincere feelings towards the victims," Riddle said. "But this is a highly frivolous claim."

Meanwhile, Merit lawyer James Ebanks denied allegations that the contractor was negligent in allowing its construction trailer to be parked 121 feet away from the unit that exploded. Most of those killed were inside that trailer.

Rowe contends Merit was warned about such dangers in 1995 when three people working in trailers were killed in an explosion at the Pennzoil Products Co. plant in Rouseville, Pa.

But Merit said in court filings that that did not constitute negligence. And in a recent court appearance, Ebanks said Rowe was more focused on BP.

Actions under scrutiny

Much of the evidence and testimony is expected to center on the actions of the oil company's employees, managers and even top executives in the days, weeks, months even years leading up to the explosion on March 23, 2005.

It was just another day at the nation's third-largest refinery when workers began restarting the plant's isomerization unit used to boost the octane of gasoline after a monthlong outage.

Operators accidentally overflowed the unit's so-called raffinate splitter tower with highly volatile and flammable light hydrocarbons.

That fluid then flowed into a relief system called a blowdown drum, which was equipped with a stack that vented to the atmosphere.

After filling up the drum, the fluid and gas vapors rushed up the stack, then out onto the plant grounds.

Within seconds, the cloud was ignited, causing a series of explosions that rocked houses up to five miles away and injured scores of workers.

Question of flare

Within days of the blast, union workers and others began complaining about the overall safety of the plant.

A federal investigation has since found that a crucial level indicator that would have warned the board operator the fluid was rising was not working properly. Alarms also malfunctioned, the investigators have said.

The U.S. Chemical Safety and Hazard Investigation Board also has said the trailers, one of which was parked just 121 feet from the isomerization unit, were placed too close to the process area.

But the biggest post-accident question has centered on BP's decision over the years not to install a flare on the so-called F-20 blowdown drum and vent stack that exploded.

Blowdown drums and stacks largely have been deemed antiquated and dangerous in the refining industry because venting light hydrocarbons which can form vapor clouds and are highly flammable into the atmosphere is considered environmentally unsound and a potential safety hazard to workers.

In 1992, the Occupational Safety and Health Administration cited Amoco, which owned the refinery at the time, for venting hydrocarbons to the atmosphere elsewhere at the refinery.

It suggested the company install a flare, which safely burns away gases and liquids.

Rowe says in court documents that she has evidence a flare was not installed because it was deemed too costly for the multi-billion dollar company.

She got a boost from the CSB last week, when investigators came to Houston to report that they, too, uncovered evidence that cost considerations drove BP's decision not to install a flare on the unit.

BP has denied assertions it ever put production and profit over safety and contends it did not think the flare was necessary to safely operate the unit.

And it has said repeatedly that while managers had become lax about safety at the Texas City site, the operators restarting the doomed unit that day made serious mistakes.

Dozens of witnesses are expected to testify about 35 on the plaintiffs' side alone and about 10,000 documents have been marked as exhibits, though they are not yet admitted into evidence.

Expected witnesses

Coon said his office set up two "command centers" to deal with the huge number of files expected to be brought into State District Judge Susan Criss' court. One is an entire floor of a nearby hotel. The other is a mobile home that will remain parked outside the courthouse.

Among the plaintiff's expected witnesses is Raymond Skinner, the former OSHA inspector who cited then-Amoco in 1992 regarding hazardous blowdown stacks and who now works as a consultant.

In a strongly worded report filed in court, the 30-year OSHA veteran, who led the agency's process safety management team, criticized BP for not equipping the doomed unit with a flare

Also expected to testify is West Virginia refinery consultant Peter Paul Howell, who alleges in a report that BP fraudulently filed erroneous emission data with the Texas Commission on Environmental Quality to win permits for the F-20 drum and stack.

BP lawyers have denied the company misled regulators.

Potential jurors are scheduled to fill out a lengthy questionnaire today. They will return for questioning Thursday with final selections made Friday. Testimony is expected to begin Nov. 13.

anne.belli@chron.com

Wall Street Journal
November 6, 2006

One Civil Suit Vs BP Lingers After '05 Texas City Blast
DOW JONES NEWSWIRES
November 5, 2006 3:25 p.m.
By Juan A. Lozano
Of THE ASSOCIATED PRESS

HOUSTON (AP)--For Eva Rowe, refusing to settle her lawsuit against BP PLC (BP) for the deaths of her parents in last year's deadly Texas City refinery explosion hasn't been about getting a better offer.

"Because if I take their money and go away, I will not be able to make a difference. My parents' deaths will be in vain," said Rowe, 22. "I hope to accomplish (something) so that everybody and their families can work in refineries and be safer."

Rowe's civil lawsuit against the oil company is the last remaining one involving fatalities from the March 2005 blast that killed 15 people and injured more than 170 others. The rest have been settled out of court.

Jury selection is set to begin Thursday in Galveston with the trial expected to last at least a month.

Brent Coon, Rowe's attorney, said the trial will highlight how a history of budget cuts, a lack of training and resources and willful ignorance of growing problems at the facility by upper management all combined to cause the accident.

He said Rowe was bringing the lawsuit to try to "embarrass" BP into improving safety at the plant and prompt lawmakers to pass refinery safety legislation. She is seeking $1.6 billion in damages.

Last week, the U.S. Chemical Safety and Hazard Investigation Board, one of several agencies probing the blast, said internal BP documents show management knew about maintenance, spending and infrastructure problems well before the accident.

"BP came out and made a conscious decision to defer maintenance at the facility, made a decision to make massive budget cuts," Coon said. "As a result of that, what happened out there was inevitable."

A spokesman for London-based BP, Neil Chapman, said the oil company has accepted responsibility for the accident at the plant. It has already settled hundred of lawsuits related to the accident.

"We know we cannot undo the harm caused by this tragedy," he said. "All we can do is focus on the future, to learn the lessons from it and make all our operations as safe as we can as a result."

Chapman said BP has made vast safety improvements at the refinery, including introducing better training programs, removing more than 200 temporary structures, moving hundreds of employees and contractors offsite and requiring supervisors to be present for all startups, shutdowns and other critical operations.

The explosion occurred when faulty sensors didn't warn of vapor accumulating near an isomerization unit, which boosts the level of octane in gasoline. The vapor ignited as the unit was starting up.

The CSB concluded the unit had a history of problems and wasn't hooked up to a flare system that burns off vapor and could have prevented or minimized the accident.

Rowe, whose parents James, 48 and Linda, 47, worked as contractors at the plant, said she hopes to educate the public about the accident and focus attention on changes needed to prevent others from happening.

"BP took my life away so I tried to make something better out of it to honor my parents. They were all I had," she said.

Dow Jones News Wire
November 3, 2006

DJ
..\2006 News Headers sorted by Month\november_2006_news_headers.htm#dj1103

Alaska Regulators Were Warned Of BP Pipeline Leaks In 2001
By Matthew Dalton
Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Senior Alaska regulators were briefed in 2001 about failings in BP PLC's (BP) pipeline maintenance program but didn't require expensive equipment upgrades that some suggest could have prevented a March
leak, the largest ever on the state's North Slope.

Kurt Fredriksson, who heads the state environmental agency that regulates oil companies, testified at a congressional hearing in September that he was never told of these problems. But according to documents being reviewed by federal and congressional investigators, Fredriksson and other top officials at the Alaska Department of Environmental Conservation were told in a teleconference on Oct. 17, 2001 that BP's system for detecting leaks on the pipelines where severe corrosion was later discovered didn't meet state regulatory standards.

"BP's leak detection systems have been out of compliance since 1997," according to the documents used in the teleconference and reviewed by Dow Jones Newswires. "Need clear resolution to long standing (leak detection) compliance issue."

The documents raise questions about what state officials knew about the problems on the pipelines in question, which bring crude oil from processing facilities to the Trans-Alaska Pipeline. BP stunned global energy markets in August when it partially shut Prudhoe Bay, the nation's largest oilfield, after finding severe pipeline corrosion.

Susan Harvey, then a senior official at the agency who is now a consultant, prepared the briefing for Michele Brown, ADEC's commissioner at the time, Fredriksson, then the deputy commissioner and Larry Dietrick, the director of
ADEC's spill prevention and response division. E-mails indicate that all three listened to the briefing.

Harvey recommended steps to improve BP's leak detection system that she estimated would cost over $10 million, according to the presentation.

The Federal Bureau of Investigation and the U.S. Environmental Protection Agency are investigating BP's program to prevent corrosion, after the March leak, which spilled over 200,000 gallons of crude oil onto the Alaskan tundra.

Agency Says Lacked Authority

At a September Capitol Hill hearing of the House Energy and Commerce Committee, Rep. Bart Stupak, a Michigan Democrat, questioned Fredriksson about problems with BP's leak detection system.

"In 2001, were you, Commissioner Michelle Brown and Larry Dietrick warned by your staff that BP's pipeline leak detection system had been out of compliance since '97?" he asked. "No, sir," Fredriksson replied.

Fredriksson's assistant said the commissioner was out of the state and couldn't be reached for comment. Larry Neal, a spokesman for the House committee, said the panel hadn't examined the facts yet, "but the reason we take testimony under oath is to get to the truth. Anything less is perjury."

Brown and Dietrick said they didn't remember that specific briefing but said the agency lacked sufficient legal authority to require all the measures Harvey recommended.

"We did not have clear jurisdiction over those pipelines," Brown said. "We pushed the envelope as far as we could in dealing with these issues." She added that any suggestion regulators in 2001 could have prevented the spills and
corrosion discovered in 2006 "is flat out nonsense."

Dietrick said the department doesn't have the authority to require companies to install the specific types of equipment recommended by Harvey. "Our regulatory requirements are performance based," he said.

Companies need to have meters sensitive enough to detect at least a 1% loss of oil due to leaks. Harvey said the company failed that standard from 1997 through at least 2001.

In an interview, Harvey said a properly functioning leak detection system would have quickly found the March spill and the corrosion that caused it.

"Corrosion is your most common source of a pipeline leak," she said. "It was a corrosion-related problem that should have been detected in the first few hours of the spill by a leak detection system." Oil leaked from the pipeline for days
before BP responded.

Harvey has provided the documents to investigators under a subpoena from the U.S. attorney's office in Anchorage, which is presenting evidence to a grand jury considering criminal charges related to BP's corrosion control program.
According to the documents, she recommended a series of upgrades that would have gone beyond minimum requirements under state law. Harvey said the state had the
authority to do this as part of an enforcement action to settle BP's non-compliance with the state's leak detection requirements. The changes amounted to over $10 million in new spending on leak detection equipment.

Less Stringent Order On BP

Less than two months after the briefing, Dietrick removed Harvey from her position regulating companies operating on Alaska's North Slope, where the Prudhoe Bay field is located. Harvey left the agency in March 2002.

Dietrick said state personnel decisions are confidential. He said ADEC at the time was shifting responsibilities that necessitated personnel changes.

Harvey said top officials at ADEC reassigned her because she advocated more stringent environmental regulation of Alaska's powerful and politically-connected oil industry.

"We were following the law," she said. "We just weren't doing what the politicians wanted us to do."

Brown denies there was any pressure put on Harvey. "It's not uncommon to move one person around to deal with emerging issues," Brown said. "She was never singled out because of any industry pressure."

In June 2002, the Alaska agency finalized an enforcement order that required BP to improve its leak detection system and run a testing device through the pipelines in question. But the order left out many of the leak detection
requirements advocated by Harvey in her October 2001 briefing. It also didn't require the installation of more sophisticated leak detection meters and or that BP run a "smart pig," a type of pig that uses electromagnetic scanners to detect corrosion.

"The order was definitely watered down," Harvey said.

BP responded to the order in August 2002 saying it had checked the leak detection system on the North Slope and determined that it met state regulations. The state then waved the requirement to run a pig through the pipeline.

In March 2003, BP told the state that tests indicated its systems met the 1% leak detection standard, satisfying the compliance order's requirements. BP paid $300,000 for not being in compliance with requirements to fully settle the
order.

Neither BP or ADEC included the enforcement order in the documents it gave to the House committee, prompting further scrutiny from lawmakers. In a letter to the committee, Fredriksson said the enforcement order didn't deal with pipeline corrosion, which was the subject of the hearing.

"The (enforcement order) was not mentioned in the state's testimony," Fredriksson wrote, "because it did not appear relevant to what went wrong with BP's recent pipeline spills."

-By Matthew Dalton; Dow Jones Newswires; 201-938-4604;
matthew.dalton@dowjones.com

Anchorage Daily News
November 3, 2006

http://www.adn.com/news/environment/story/8372357p-8267676c.html

Council tries to clean air in Valdez
OIL: Watchdog group wants treatment plant to reduce pollution.
By ELIZABETH BLUEMINK
Anchorage Daily News
Published: November 3, 2006
Last Modified: November 3, 2006 at 04:54 AM

A Prince William Sound oil industry watchdog group launched a public relations campaign Thursday to pressure BP, Exxon Mobil and Conoco Phillips to curb air pollution at the Valdez tanker port.

"So far, we've only gotten platitudes," said John Devens, executive director for the Prince William Sound Regional Citizens' Advisory Council.

"We want a financial commitment," he said.

The council has budgeted $25,000 for its media war, including radio spots and large ads in local publications starting Sunday.

The council also plans to broadcast its message on the Web with a video on YouTube, the popular video-sharing Web site.

So far, the campaign has evoked consternation from the oil industry.

"Frankly, we don't understand the public bashing," said Steve Rinehart, BP Alaska's spokesman.

"We've already committed to doing this," Rinehart said, noting recent letters from BP and Exxon Mobil supporting planned air pollution reductions by the port's operator, Alyeska Pipeline Service Co.

At issue are emissions from a plant that removes oil from ballast water that tankers carry to Valdez on their trips to pick up North Slope oil.

At this time, the ballast water treatment plant is exempt from federal air regulations.

The plant emits 138 to 208 tons of hazardous air pollutants per year, according to the most recent industry and federal estimates.

Alyeska is on track to reduce air emissions to less than 1 ton per year by 2008, said the company's spokesman, Mike Heatwole. BP, Exxon and Conoco are the main owners of Alyeska.

The watchdog council was set up after the 1989 Exxon Valdez spill and includes members of Prince William Sound communities and industries.

The council disagrees with Alyeska over what technology is necessary to deal with the pollution. For example, the council wants the oil executives to commit money to Alyeska to capture vapors and install a chemical air stripper.

The council estimates that those modifications would cost $91 million and reduce hazardous air pollution in Valdez to "near zero" after 2008.

Alyeska's planned modifications at the ballast treatment plant involve spending $38 million through next year and reducing air pollution to less than 1 ton per year, according to Heatwole.

The council's public campaign officially begins Sunday with an open letter to the chief executives of BP, Conoco Phillips and Exxon Mobil.

The letter, unveiled Thursday at an Anchorage press conference, asks the executives to make the air pollution cuts by Dec. 31, 2008.

The letter says: "It is well known that major oil facilities can be operated without releasing anything near the 206 tons of hazardous pollution the EPA estimates you pump into the air each year at Valdez. The refinery in Benicia, California, for example, puts out less than a ton of hazardous air pollution annually."

The pipeline workers and residents of Valdez deserve as clean air as the people in California, said council president Stan Stephens on Thursday.

The council is paying for its campaign with funding that it receives from Alyeska, said council spokesman Stan Jones.

Those funds are to allocated to help the council inform the public, he said.

Daily News reporter Elizabeth Bluemink can be reached at ebluemink@adn.com or 257-4317.

KTUU Television
November 2, 2006

http://www.ktuu.com/cms/anmviewer.asp?a=7057&z=1

Federal criminal investigation into corroded BP pipelines
Thursday, November 02, 2006 - by Jason Moore

Anchorage, Alaska - The Energy and Commerce Committee of the U.S. House of Representatives is questioning the testimony Alaska Department of Environmental Conservation commissioner Kurt Fredriksson, who testified to the committee in September. The hearings were held to determine how the oil spills on the North Slope occurred and how BP was unable to prevent them.

The committee alleges that Fredriksson was either untruthful or unaware of previous enforcement action against BP regarding the leaking pipelines.

BP’s leak detection system missed the 200,000 gallons of crude oil that leaked onto the North Slope tundra in March. Instead, the leak was discovered after a worker smelled oil. That corrosion spill and another in August prompted a partial shutdown of Prudhoe Bay, and it's brought intense pressure down on BP and the Alaska Department of Environmental Conservation.

“I take very seriously the department's duty to prevent and respond to the unauthorized release of oil and other hazardous substances,” Fredriksson said during the committee hearings Sept. 7.

Fredriksson testified at a congressional oversight hearing in early September. At that hearing, Michigan Rep. Bart Stupak asked about events in 2001 concerning BP leak detection system. At that time, Fredriksson was the department's deputy commissioner.

Fredriksson was asked by Rep. Stupak whether Michele Brown, Larry Dietrick or himself had been warned by their staff in 2001 that BP’s leak detection system had been out of compliance since 1997. He replied that he his staff had not warned him.

“But if someone told us that or reported to this committee you wouldn't be surprised or you couldn't dispute it, could you?” asked Rep. Stupak.

“I would be surprised to learn that the department management had been warned that BP was out of compliance for a four-year period,” Fredriksson said.

Susan Harvey was the DEC manager in charge of industry preparedness in 2001. She claims not only to have briefed Fredriksson on BP’s failure to install a leak detection system, but that the agency issued a compliance order to BP the following year, after Harvey was removed from her North Slope oversight.

The order said BP did not meet DEC standards and fined the company $300,000.

“For them to claim that they didn't have knowledge of this during their testimony to the congressional investigators is unbelievable,” Harvey said.

Fredriksson could not be reached for comment. His office said he is out of state.

The compliance order said BP’s leak detection sensors wouldn't work because of sludge in the pipeline. As part of the order, DEC required BP pig the transit line on the eastern half of the field and if necessary, on the western half as well. But BP came back to DEC and said it could pass the test despite the sludge concerns.

“BP reported back to the department that the sediment was not a problem and subsequently we went ahead and conducted the test and it was completed,” said Larry Dietrick, the division of spill prevention and response director of the DEC.

Once the system passed the test, the compliance order went away, the lines were never pigged and the sludge never cleaned out.

During the congressional hearing, despite questioning Fredriksson, the compliance order never came up.

Fredriksson testified that the leak detection system was in place and tested before the oil spills of this year, but he claimed not to know what date specifically. He also could not explain to Congress why the system did not work.

After the hearing, committee members started asking about the compliance order. They wrote to Fredriksson and BP asking why, given the potential seriousness of this order and the direct relevance to the matters that occurred on both the western and eastern lines, the order was not provided to the committee.

Fredriksson responded that the pipeline corrosion was not an issue addressed in the compliance order; instead, the compliance order was not mentioned in the state's testimony because it did not appear relevant to what went wrong with BP’s recent pipeline spills.

Although the order is the one piece of evidence that shows both BP and the state were aware of sludge in the lines in 2001. That sludge is the suspected cause of the corrosion leaks.

A federal criminal investigation is now underway to determine what BP knew and whether it lied to the state and congressional committee members. Susan Harvey is among those who have received a subpoena.

Also part of the investigation is whether the leak detection system worked at all.

“To anybody -- not [just] a trained pipeline professional -- it should be absolutely obvious that you've got pipelines that have leaked onto the tundra, they were leaking for days, and the only way the leak was detected was through the human nose. There was an operator driving by in the winter, with rolled up windows and smells the leak. That is not best available technology for leak detection,” Harvey said.

BP’s investigation into the March spill found the leak detection alarms went off several times during the week prior to the spill's discovery. BP said the alarms were ruled out as a spill because of high sediment and water in the line.

In December 2002, BP’s leak detection system reported passed a test determining that it met state standards, which require the system detects a leak of more than 1 percent of volume in the pipelines over a 24-hour period.

----------------------------
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http://www.ktuu.com/cms/anmviewer.asp?a=6964&z=1
(Thursday, October 26, 2006)
The gubernatorial race could hinge on which candidate voters believe will best develop the state’s natural resources. According to a former state employee, however, former Gov. Tony Knowles bowed to oil industry pressures during his second administration in monitoring oil pipeline corrosion. This lack of oversight caused the oil spills on the North Slope earlier this year, that employee maintains, and gives evidence to Knowles' cozy relationship with the major oil producers.

Xxxxxx

http://www.ktuu.com/cms/anmviewer.asp?a=7056&z=1

Council wants oil producers to fund air pollution cleanup
Thursday, November 02, 2006 - by Jill Burke

Anchorage, Alaska - A group of Alaskan concerned about toxic emissions from the Ballast Water Treatment Facility in Valdez sent a message to polluters: Stop polluting the air, dip into your corporate coffers and help fund a fix.

The Prince William Sound regional citizen's advisory council is launching an ad campaign asking the CEOs of BP, ConocoPhillips, and ExxonMobil to pressure their companies to take action.

The RCAC claims that for years, excessive emissions from Valdez-based Alyeska pipeline processing plants have allowed poisons, including cancer-causing benzene, into the air at levels far beyond Environmental Protection Agency standards.

They said while the companies have entertained the idea, they haven't committed to spending the money to fix it.

“We have just not been able to get the agreement. We are quite concerned there is just too much pollution if you use EPA’s figures,” said RCAC executive director John Stevens.

In a written statement, BP Press Officer Steve Rinehart said, "Given the clear commitments we have made to upgrade the facility and improve Valdez air quality, we are disappointed with the RCAC's advertising campaign."

The ad campaign will launch in the Anchorage Daily News this weekend.

Anchorage Daily News
November 2, 2006

http://www.adn.com/money/story/8368220p-8263670c.html

Shell to go ahead with drilling, tests
BEAUFORT: Four wells planned for 2007; seismic work also expected.
By ALAN BAILEY
Petroleum News
Published: November 2, 2006
Last Modified: November 2, 2006 at 04:45 AM

Shell is moving ahead with its plans for drilling exploration wells in the Beaufort Sea next year.

Shell plans two wells at the Siv Ullig field and two wells east of that at a location named Olympia, Paul Smith, Shell operations manager, said at a recent National Marine Fisheries Service meeting.

Siv Ullig was previously known as Hammerhead and it lies east of Prudhoe Bay and north of Point Thomson, the huge undeveloped natural gas field that borders the Arctic National Wildlife Refuge.

The drill ship Kulluk that Shell bought this year will drill two wells.

The company is bringing in another drill ship, the Discoverer, for the other wells.

The Discoverer, which is being refurbished with a reinforced hull, will enter the Beaufort Sea at the beginning of the drilling season and will leave at the end of the season, Smith said.

The drilling season will likely last from early July to early November, depending on ice conditions.

Two icebreakers, the Vladimir Ignatyuk and the Kilabuk, will support the drill ships.

Shell also plans to shoot seismic tests of the undersea geology in both the Chukchi and Beaufort seas next year. The company's plans for the seismic surveys are similar to its 2006 plans -- start surveying in the Chukchi in July, move into the Beaufort when ice conditions permit and then return to the Chukchi later in the season. Shell is again contracting WesternGeco's MV Gilavar for the seismic work.

In practice, it proved impossible to conduct the Beaufort seismic work this year because of an exceptionally large amount of sea ice.

"We hoped to get into the Beaufort in 2006 but we were unable to," Smith said.

The Beaufort Sea ice also limited the site surveying that Shell accomplished this year, so the company plans to continue with this surveying activity in 2007, looking for features such as shallow water hazards. The company is also planning to drill some 400-foot-deep boreholes to obtain soil strength data for the sea floor. The company will use that data in evaluating the design, cost and feasibility of future offshore oil facilities, Smith said.

Smith stressed that in developing its plans for next year Shell will be talking to the North Slope communities and the Alaska Eskimo Whaling Commission. All offshore work will be done in accordance with the terms of a conflict-avoidance agreement with the North Slope whalers, he said.

Michael Faust from Conoco Phillips said his company is still formulating its plans for the 2007 open-water season, but the company hopes to acquire seismic data in the Chukchi and Beaufort seas.

Although Conoco carried out seismic surveys in the Chukchi Sea this year, the company was unable to obtain as much data as it had hoped because of problems with sea ice, Faust said.

"We definitely want to go back into the Chukchi Sea," Faust said.

As in the 2006 season, Conoco will contract with WesternGeco to use the MV Western Patriot for the seismic work.

Faust said details of what the company does in the Beaufort will depend to some extent on results of the March federal Beaufort Sea lease sale. (Conoco elected not to conduct any seismic operations in the Beaufort this year because of concerns about the impact on wildlife of multiple surveys in the same area at the same time).

In response to concerns about the potential impact of offshore seismic surveying on subsistence hunting, Shell is going to research possible techniques of seismic data acquisition from the sea ice during the winter.

"We've decided to do a research project and go out and see if there's a way to do it," Smith said. The company has a contract with Veritas to do this during the coming winter, Smith said.

Veritas will be hiring a substantial number of people from the North Slope and establishing a camp of about 120 people about a half-mile offshore Prudhoe Bay's West Dock, Smith said. The experimental survey will take place about 12 miles offshore. The research team will try a variety of sound sources, including vibrators and a small air gun, with receivers deployed on the ice and suspended below the ice.

Anchorage Daily News
November 1, 2006

http://www.adn.com/money/industries/oil/prudhoe/story/8366126p-8260711c.html

BP Alaska president to step down at end of the year
CHANGE: Decision not linked to recent problems, spokesman says.
By WESLEY LOY
Anchorage Daily News
Published: November 1, 2006
Last Modified: November 1, 2006 at 04:04 AM

Steve Marshall is out as president of BP's troubled Alaska operation.

The British oil giant made the announcement Tuesday, saying Marshall would assume the new title of "vice president operations development" and would develop and lead a new organization called the BP Operations Academy.

Taking over for Marshall will be Doug Suttles, an engineer by education who worked from 1988 to 1996 in Alaska and most recently headed BP's activity on Sakhalin Island in Russia. Suttles, 46, will take over as president of BP Exploration (Alaska) Inc. effective Jan. 1.

BP Alaska spokesman Daren Beaudo said a year of troubles in the Prudhoe Bay oil field, including pipeline leaks and a partial field shutdown, was not a factor in the leadership change.

Rather, he said, Marshall was asked by Tony Hayward, BP's London-based chief executive for exploration and production, to take on the new assignment.

Marshall has served as BP's Alaska president for five years -- considerably longer than the average tenure -- and the academy he will head will provide advanced training to senior BP staff, Beaudo said.

Although the academy is a global program, he said Marshall might be able to continue living in Anchorage, where his wife, Sharon, is a prosecutor in the Anchorage district attorney's office.

"I am grateful that Steve has agreed to put his 29 years of years of experience to work by taking on this important role," Hayward said in a written statement from BP.

BP did not make either Marshall or Suttles available for interviews Tuesday.

This has been a tumultuous year for Marshall and BP, which operates the nation's largest oil field, Prudhoe, on behalf of itself and other owners including Conoco Phillips and Exxon Mobil. BP also runs most of the other North Slope fields.

Industry regulators and lawmakers have condemned BP for failing to safeguard key pipelines within Prudhoe against corrosion, which led to leaks and a partial shutdown of the field on Aug. 6, a decision that briefly roiled world oil markets. Federal criminal investigators are probing a major spill in March, and Marshall and other BP executives have appeared repeatedly before congressional committees considering pipeline reforms.

Marshall, 52, became the firm's Alaska president in fall 2001, coming here after heading BP's Scotland operations. He had previously worked in Alaska as a young engineer starting in 1978, the year after Prudhoe began pumping oil.

Times have been both grand and grim during Marshall's tour as president. With the tremendous upswing in oil prices in recent years, the company has tallied staggering profits on Alaska oil production, $2.6 billion in 2005.

Marshall has led initiatives to develop the North Slope's wealth of hard-to-pump heavy oil, and he along with other major oil company chiefs negotiated a draft tax contract with the state for a proposed $20 billion-plus natural gas pipeline.

On the downside, BP's safety record was shaken in August 2002 when a well explosion and fire severely injured a worker, resulting in a $1.3 million fine from state industry regulators. Also during Marshall's tenure, BP stopped wildcat drilling and instead concentrated on developing its known accumulations of oil and gas on the Slope.

Marshall is well-liked and respected in the industry, said Lynn Johnson, president of Dowland-Bach Corp., an Anchorage company that supplies BP with well safety systems.

Some people might view Marshall as a scapegoat for the Prudhoe problems, but "I don't think that's right," Johnson said.

Because of his long presidency, many were speculating more than a year ago that his tour was close to an end, Johnson said.

"I honestly think it's a coincidence," he said of Tuesday's announcement.

Gov. Frank Murkowski, in Taiwan on a trade mission, issued a statement:

"Steve Marshall has been a strong and steady leader for BP's Alaska operations. He has worked hard with the state to negotiate a gas pipeline contract which is fair to both sides. Most recently he has worked with the administration to resolve pipeline corrosion issues. We have appreciated his contribution to Alaska and wish him well in his new assignment."

Five companies share ownership of Prudhoe Bay, with BP holding 26 percent and Exxon and Conoco each holding 36 percent.

Asked whether they demanded changes in BP management because of the problems at Prudhoe Bay, spokesmen for Exxon did not reply Tuesday and Conoco's Dawn Patience said, "Leadership decisions like this are made by individual companies. We look forward to working with Doug Suttles in his new role."

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

Major 2006 BP Alaska events

• Largest oil spill ever on the North Slope -- an estimated 201,000 gallons from a corroded pipeline -- discovered March 2.

• Emergency shutdown of Prudhoe starts Aug. 6 after another corroded pipe leaks. Production cut by nearly half for six weeks.

• Federal criminal investigators, Congress launch investigations into Prudhoe troubles.

• BP reports $2.6 billion profit on its Alaska oil production in 2005.

• Legislature overhauls tax law to collect more oil revenue when oil prices are high.

• Oil companies negotiate state tax contract to spur natural gas pipeline construction, but deal stalls.

Houston Chronicle
November 1, 2006

http://www.chron.com/disp/story.mpl/front/4301766.html

New safety measure urged for BP, others
Texas City blast leads feds to seek tighter
regulation and changes in the refining industry
By ANNE BELLI
Copyright 2006 Houston Chronicle

Federal investigators urged the nation's petroleum industry to eliminate the use of atmospheric vents like the kind involved in last year's fatal blast at the BP Texas City refinery.

Further, they called on regulators to push the nation's refiners to implement safer equipment, such as flares, as part of the pressure relief systems at their plants.

In issuing their safety recommendations Tuesday, officials with the U.S. Chemical Safety and Hazard Investigation Board said they did not know how widespread the use of this type of equipment is in the nation's 142 refineries. But they had a strong warning for an industry in which they said cost-cutting and complacency are far too common.

"The experience of BP should serve as a cautionary tale to every oil and chemical company that hears this message," CSB Chairman Carolyn Merritt said in a morning news conference.

"There has been cost-cutting in the chemical industry and in the petroleum industry, and has it gone too deep?" Merritt said. "Many companies, as the result of this BP explosion, are asking themselves that question."

On the day of the Texas City blast, a blowdown drum and attached vent stack were accidentally overfilled with highly flammable hydrocarbons, which spilled onto the ground and formed vapor clouds around unsuspecting workers.

Those liquids and gases then ignited, causing a series of explosions that killed 15 people and injured scores more in the worst refinery accident in more than a decade.

CSB's recommendations

Specifically, the CSB, which makes recommendations but has no enforcement authority, urged the American Petroleum Institute to issue new guidelines to its members calling for the elimination of atmospheric blowdown drums and stacks that vent flammable gases and liquids to the open air.

Ray Connolly, a spokesman for the API, said it would form a task force to examine the issue and that the organization had not yet set a timetable for its work. But he said that API members are "committed to safety and environmentally sound practices."

Several months ago, BP began eliminating the 22 blowdown stacks at its five U.S. refineries. Company spokesman Ronnie Chappell said this week that will be complete by 2008.

He added that BP will work closely with the API task force.

"We will participate in API's review of the recommendation and will ensure that other member companies are aware of the actions we've taken and the lessons we've learned as a result of the March 23, 2005, explosion," Chappell said.

Also Tuesday, the CSB recommended that the Occupational Safety and Health Administration establish a national program promoting the elimination of blowdown drums and vent stacks, and encouraging the industry to install safer flare systems.

The CSB has previously said that had a flare been installed on the vent stack that overflowed at the Texas City refinery, the liquids and gases likely would have burned safely away.

An OSHA spokeswoman said the agency already is forming a program to address safety concerns in the refinery industry in Region 6, which includes the Houston area. But she could not say whether that program will specifically address the blowdown drums and vent stacks.

"Although OSHA has two ongoing regional emphasis programs in Region 6 that focus on reducing workplace injuries and fatalities in the oil and gas well drilling and the petrochemical industries, because more oil and gas facilities are located in Region 6 than any other region in the country, OSHA is developing a National Emphasis Program that focuses on refinery safety and health, which will be coordinated with the states, as is standard practice," the spokeswoman said.

It is not known how many blowdown drums and vent stacks are still in operation. But Merritt and Don Holmstrom, CSB investigator, said that part of the API review would likely include a survey to determine that number.

James Jones, vice president of the Dallas-based consulting firm Turner, Mason & Co., said the industry has long since recognized that atmospheric vent stacks to relieve light hydrocarbons are dangerous.

A spokeswoman for Valero, the largest refiner in North America with a capacity of about 3.3 million barrels a day, said at least 14 of its 18 refineries do not use blowdown stacks.

"This is a big issue in our safety group," said Mary Rose Brown.

Motiva, a joint venture of Shell Oil Co. and Saudi Refining that runs three U.S. refineries with a combined capacity of 740,000 barrels a day, uses both flares and blowdown stacks, said company spokesman Stan Mays.

"Our top priority is the health and safety of our workers and communities where we operate," Mays said in a statement.

Spokesmen with Lyondell, operator of a 268,000-barrel-a-day oil refinery in Houston, and Pasadena Refining Systems, which runs a 117,000-barrel-a-day refinery here, said they do not have blowdown stacks at their facilities.

Officials at Exxon Mobil, the largest refining company in the world, and ConocoPhillips, which owns 12 U.S. refineries, could not provide information about their use of blowdown stacks by press time.

On Monday, the CSB said that company-wide cost-cutting that occurred at the Texas City plant and 34 others worldwide had contributed to unsafe work conditions at those facilities.

On Tuesday, Holmstrom said that Texas City managers had contemplated installing a flare on the unit that exploded three years before the accident. But they decided against it for financial reasons.

"Cost pressures drove this decision," Holmstrom said.

BP's position

The company has denied it cut costs and says budget issues were not a factor in the blast.

The Houston Chronicle reported last year that internal BP e-mail showed that a flare project on the unit that exploded was abandoned because a so-called "pressure relief valve study" had not been conducted on the unit as required by federal regulation.

Had such a study been done on the doomed unit, BP managers would have known that the "blowdown drum simply wasn't large enough to hold all the liquid released from the distillation tower if it flooded."

Eva Rowe, whose parents were both killed in the blast, said immediately after the news conference that she was happy to hear the federal investigators' recommendations.

"I think it's wonderful," said Rowe, whose civil case against BP goes to trial Monday in Galveston. "It's what we have been working so hard for."

The API's Connolly said a task force formed to examine trailer placement would issue its findings early next year. The CSB said it would issue its final report on the blast in March.

Chronicle reporter Tom Fowler contributed to this report.

anne.belli@chron.com