September 2006 News Stories

Bellingham Herald
September 30, 2006

http://news.bellinghamherald.com/apps/pbcs.dll/article?AID=/20060930/BUSINESS/609300323/1001/NEWS

BP to start cleaning corroded oil pipeline
Mystery leak forces closure of separate line
ASSOCIATED PRESS

OUTPUT DOWN
Prudhoe Bay and its satellites normally produce a combined 450,000 barrels per day. On Thursday, output stood at about 350,000 barrels.

ANCHORAGE, Alaska - The shutdown of a satellite field on Alaska's North Slope will not stop BP PLC from beginning the process of cleaning out a corroded transit line in the nation's largest oil field.

"We're going to start a series of maintenance pigs this weekend," spokesman Steve Rinehart said Friday. A pig is a device that moves through the inside of a pipeline to clean or inspect the line.

On Thursday, BP shut down a satellite Prudhoe Bay oil field after workers detected natural gas leaking into a manifold building, a key control facility. BP closed the Lisburne production center that processes crude oil and gas coming from the Lisburne field and the neighboring Point MacIntyre oil field.

The shutdown of Lisburne, a satellite field that feeds into the Prudhoe production stream, dropped production by 25,000 to 30,000 barrels per day, about 4 percent of North Slope output.

Methane gas from a high-pressure 14-inch pipeline somehow filled the unoccupied manifold building Thursday morning at Drill Site L2 along the shore of Prudhoe Bay, Rinehart said.

The gas had dissipated by late Thursday night.
"There's no estimate at this point of when production will return," Rinehart said. "We're kind of moving on two priority fronts: To complete the investigation and safely return to production."

The shutdown was a setback in what had been a gradually improving oil production picture since the eastern side of Prudhoe Bay ceased production Aug. 10, a few days after a leak was discovered in a corroded transit line.

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Wall Street Journal
September 30, 2006

US DOT Investigating Gas Leak At BP Lisburne Pipeline
DOW JONES NEWSWIRES
September 29, 2006 3:51 p.m.
 
NEW YORK (Dow Jones)--The U.S. Department of Transportation is investigating a natural gas leak on one of BP PLC's (BP) pipelines at the Lisburne oil field in Alaska, a department spokesman said Friday.

"We have inspectors on site and they're investigating the cause," he said.

The gas leak happened Thursday at a manifold building, which BP uses to monitor and direct output from the Lisburne and Point MacIntyre fields. The fields lie to the north of the Prudhoe Bay field. Between 25,000 and 30,000 barrels a day of production were shut in, BP spokesman Steve Rinehart said.

BP cleared the gas from the building, but it still doesn't know what caused the leak, he said. "The field remains shut down until we learn some more about what happened," Rinehart said. "We're not sure how much time that's going to take."

Restoration of production in Prudhoe Bay proper will continue, however.
 
-By Matthew Dalton and Brian Baskin, Dow Jones Newswires; 201-938-4604; matthew.dalton@dowjones.com  

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BP: Prudhoe Gas Leak Won't Stop Key Weekend Pipeline Tests
DOW JONES NEWSWIRES
September 29, 2006 3:00 p.m.
 
HOUSTON (Dow Jones)--A natural gas leak that forced BP PLC (BP) to shut down production at two satellites to the Prudhoe Bay oil fields won't delay pipeline tests scheduled for this weekend, a company spokesman said Friday.

The "pigging" of east Prudhoe Bay pipelines, where cylindrical droids clean and test the inside of the lines, is a prerequisite to restoring the Alaskan oil field to its full 450,000 barrels a day of production. BP halted 250,000 b/d out of east Prudhoe Bay in early August after discovering severe pipeline corrosion.

The gas leak happened Thursday at a manifold building, which BP uses to monitor and direct output from the Lisburne and Point MacIntyre fields. The fields lie to the north of the Prudhoe Bay field, but is counted as Prudhoe production. Between 25,000 and 30,000 barrels a day of production were shut in, spokesman Steve Rinehart said.

BP cleared the gas from the building, but it still doesn't know what caused the leak, he said.

"The field remains shut down until we learn some more about what happened," Rinehart said. "We're not sure how much time that's going to take."

Restoration of production in Prudhoe Bay proper will continue, however.

Currently about 350,000 b/d is coming out of the giant field. Of that, 200,000 b/d in the western half was never shut in, and 150,000 b/d in the eastern half was restored last weekend.

BP had said on Sept. 22 that the eastern half would be producing 200,000 b/d by this weekend.

Rinehart declined to comment on the status of the field.

"We're getting out of the production reporting-business," he said, citing the variability of production from hour to hour.

He said pigging will begin this weekend, regardless of whether output in east Prudhoe Bay falls short of the 200,000 b/d goal. A maintenance pig will be sent through the east pipeline first, to clean the line. In about two weeks, a second "smart pig" will then go through to check for cracks.

BP is also working on bypasses to the troubled pipeline, in case the smart pig finds more problems. One such bypass will by the end of October allow an additional 50,000 b/d to return to production, fully restoring Prudhoe Bay's production capacity, BP has said.

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

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Anchorage Daily News
September 29, 2006

http://www.adn.com/money/industries/oil/prudhoe/story/8248183p-8144751c.html

Natural gas leak idles Lisburne field
SETBACK: Oil production at Prudhoe drops until cause is found and repairs made.
By WESLEY LOY
Anchorage Daily News
Published: September 29, 2006
Last Modified: September 29, 2006 at 04:31 AM

BP was forced to shut down oil production in the Lisburne field Thursday after dangerous natural gas leaked into a manifold building, a key control facility.

The shutdown is a setback in what had been a gradually improving picture of North Slope oil production.

For several days, BP has been in the process of restarting wells in the giant Prudhoe Bay field, the eastern half of which was idled early last month due to pipeline corrosion.

The shutdown of Lisburne, which is a satellite field that feeds into the Prudhoe production stream, means that oil flow will go down by 25,000 to 30,000 barrels per day, said Steve Rinehart, spokesman for BP Exploration (Alaska) Inc. That's about 4 percent of North Slope output.

On Thursday morning, methane gas from a high-pressure 14-inch pipeline somehow filled the manifold building at Drill Site L2, along the shore of Prudhoe Bay, Rinehart said.

The building was unoccupied at the time, no one was injured and there was no fire or explosion, he said. Prudhoe Bay firefighters arrived at the scene about 9:25 a.m., he said.

Through the day, field workers waited for the gas to dissipate enough to allow them to safely re-enter the manifold building, Rinehart said.

Because of the problem, BP had to shut down the large Lisburne production center that processes crude oil and gas coming from the Lisburne field as well as the neighboring Point MacIntyre oil field, he said.

The exact source and cause of the gas leak remained unclear late Thursday, and Rinehart couldn't say how long oil production will be down.

"We're going to investigate, find out what happened and fix it," he said.

Prudhoe Bay and its satellites normally produce a combined 450,000 barrels per day. On Thursday, output stood at about 350,000 barrels.

BP runs Prudhoe, Lisburne and Point McIntyre on behalf of itself and other owners, including Exxon Mobil and Conoco Phillips.

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

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http://www.adn.com/news/politics/veco/story/8248166p-8143820c.html

Alaska candidates get cash from Veco
$119,000: Six executives donated what
turns out to be unwanted money.
By DON HUNTER
Anchorage Daily News
Published: September 29, 2006
Last Modified: September 29, 2006 at 03:09 AM

DONATION LIST
http://www.adn.com/ips_rich_content/920-29VecoContributions-150-x-595.gif

Six executives for the Veco Corp., the company named in the federal investigation into political corruption in Alaska, donated at least $119,000 to the campaigns of candidates running for more than half the seats open in this year's primary election.

The total might have still been climbing had not the FBI raided the company's corporate headquarters and the offices of at least a half-dozen state lawmakers two months before the Nov. 7 election. Veco's total in this election cycle is a little more than half the $200,000 its executives generated for legislative races in 2004, but Veco money has suddenly become unwanted across most of the political spectrum.

Scores of Alaskans are regular and generous contributors to political candidates, year after year. Developers, construction company owners, doctors, lawyers, business owners, oil and gas executives, retirees. Many give the candidates of their choice the maximum amounts available in a given year -- $1,000 annually since 2003; $500 annually starting next year under an initiative passed by voters in August.

Veco's six executive contributors -- chairman Bill Allen, president Peter Leathard, chief financial officer Roger Chan, vice president Rick Smith, information officer Thomas Corkran and personnel manager James Slack -- regularly donate to a similar list of candidates, usually in the same $500 amounts and with checks dated within a few days of each other.

As is usually the case, almost all the Veco money donated to candidates this year and during the 2005 interim year went to Republicans, and the vast majority to incumbents.

Leathard didn't return two calls seeking comment. In the past, company officials have said they support candidates who favor economic development and a stable oil tax climate in Alaska. In a written statement issued Sept. 5 in response to the federal investigation, Veco said its officials were cooperating with the authorities and denied any wrongdoing by the company or its executives. The company said it looked forward to "dispelling any concerns on the part of the government and others."

One Democrat, Rep. Carl Moses of Unalaska, got a total of $3,000 in donations from the Veco executives in the first seven days of August. A couple of weeks later, Moses, nursing a pinched nerve in Anchorage, flew to Juneau to break a deadlock on a revamped state oil and gas tax the company favored, one of only four Democrats to support the measure. Moses has said the donations had nothing to do with his vote.

Nineteen of the 22 Republican House incumbents running for re-election this year had received Veco donations by the time the most recent campaign finance reports were filed Aug. 15. Four Senate Republicans who are running for re-election got Veco donations, along with state Sen. Ben Stevens, who withdrew, and a Republican candidate for another vacant Senate seat. Veco's executives also donated to four Republican candidates in House races with no incumbent.

A few Republican incumbents up for election, however, had received no Veco money. They were state Sen. Gene Therriault of Fairbanks, and Reps. Mike Kelly, R-Fairbanks, Nancy Dahlstrom, R-Eagle River, and Paul Seaton, R-Homer

Three Republicans in one race -- for seat N in the state Senate -- got a total of $15,000. Stevens, the incumbent, accepted $3,000 last year, before pulling out of the race in July. House incumbents Lesil McGuire and Norm Rokeberg each got about $6,000 -- $3,000 in 2005 and another $3,000 this year -- to run against each other for Stevens' vacated seat.

McGuire, who handily defeated Rokeberg in the primary, said her 2006 Veco checks were delivered by Smith to a fundraiser she held on Aug. 9. Rokeberg's were dated a day later.

McGuire was one of four Republicans who took a position in at least some votes against the oil profits tax and against Veco's position. The other Republicans were her husband, retiring Rep. Tom Anderson, and Reps. Dahlstrom of Eagle River, who got no Veco money, and Vic Kohring of Wasilla, who received about $6,000 in contributions.

McGuire said she's segregated the $3,000 in Veco contributions she received this year and won't spend it unless the company is exonerated. Kohring didn't say.

In all, 33 candidates in 31 races got Veco donations, but some, like McGuire, have had second thoughts. Among them: Earl Mayo, a Republican seeking a Senate seat in East Anchorage, and House candidates Matt Moon, Jeff Gonnason and Darwin Peterson returned the $3,000 each received from six Veco executives. Rep. Jay Ramras, R-Fairbanks, also said he was "segregating" the Veco money in his campaign account and would decide what to do about it later.

Peterson, who will face incumbent Democrat Berta Gardner in House District 24, said he wasn't worried that accepting contributions from a company under investigation would taint his candidacy.

"I'm above reproach as far as I'm concerned," he said. "I just wanted to make sure I was impartial and neutral in this whole investigation."

In some cases, donations went to influential incumbents facing only token opposition, or none at all. Reps. Kevin Meyer and Mike Chenault, for example, were unopposed in their primary elections and have no opponent in the November general election. Both incumbents got a total of $3,000 from the Veco executives in 2005, and both were among a series of candidates who received another $3,000 in Veco donations during joint fundraisers held at Anchorage's Petroleum Club in the second week of July, as lawmakers were being called back into a second special session on oil and gas issues by Gov. Frank Murkowski. Meyer and Chenault are co-chairmen of the House Finance Committee.

Another incumbent, Rep. Peggy Wilson, R-Wrangell, accepted $3,000 in Veco contributions during the same week of Petroleum Club fundraisers.

"I have nothing to feel guilty about," Wilson said. "I didn't do anything wrong. And I definitely don't pay any attention to what people give me (when) I make my decision."

Wilson said she does remember the first time she met Allen, however.

"It was my first year in Juneau. My staff was making appointments for different lobbyists, and I got up -- I can remember, I was in Room 409 -- and (saw) this man coming in. It was Bill Allen. He's a big man, so I'm kind of looking up at him, and the first words out of his mouth were, 'I've donated to your campaign.' I got so hot! I shook my finger in his face and said, 'Listen here, mister, I'll be glad to sit and listen to you, but whether you gave me any money or not will have nothing to do with the decision I make."


Daily News reporter Don Hunter can be reached at dhunter@adn.com. Reporter Lisa Demer contributed to this story.

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Fairbanks News Miner
September 28, 2006

http://newsminer.com/2006/09/28/2328/

House OKs pipeline regulations
By Sam Bishop
Published September 28, 2006
Posted in Local

WASHINGTONA U.S. House committee approved tougher inspection rules Wednesday for oil pipelines like those that leaked at Prudhoe Bay this year, but Alaska Rep. Don Young, chairman of a second committee with jurisdiction, said he’ll take his time reviewing the proposal.

The House Energy and Commerce Committee voted Wednesday morning in favor of a bill that would require the U.S. Department of Transportation to regulate low-stress pipelines in the same manner as high-stress lines. Low-stress lines are those with internal pressures below 20 percent of their designed strength.

Only certain low-stress lines fall under DOT regulation at present. The leaking transit lines that serve the western and eastern operating areas of Prudhoe Bay are not federally regulated, although a rule proposed by DOT late last month would change that.
Young, chairman of the House Transportation Committee, said Wednesday afternoon that he wants to review the DOT’s new regulations before he agrees to the kind of broad changes in law that the Energy and Commerce Committee approved earlier in the day.

The Transportation Committee approved its own separate reauthorization of the Pipeline Safety Improvement Act in July.

“I’ve said we have a good bill,” Young said. “Regulations are already in place.”

“I get a little bit concerned when we as a Congress try to solve problems in a state of hysteria,” he added. “I don’t need to move this bill. We’re going to review it and see if it’s good or bad.”

The Energy and Commerce bill approved Wednesday was pushed by Rep. Joe Barton, D-Texas and the chairman of that committee. The bill would tell the DOT to “issue regulations subjecting low-stress hazardous liquid pipelines to the same standards and regulations as other hazardous liquid pipelines” and to do so within a year of the legislation’s passage.

The rules would not apply to lines upstream of the gathering centers, also known as flow stations.

The only other exceptions would be for lines that already are subject to U.S. Coast Guard safety regulations and those that are less than a mile long and serve certain refining or manufacturing facilities or truck, rail or ship terminals.

There was still some committee debate Wednesday over whether the bill should explicitly require “smart pig” inspections of pipelines. The bill as passed does not require such pigging. DOT officials say that’s the technique most operators already use to comply with internal pipeline inspection regulations but that it can’t be done on every pipe because of bends and valves.

The bill would tell DOT to review internal corrosion regulations to make sure they are adequate and report back to Congress in a year.

The DOT also would have to analyze the domestic petroleum pipeline system and identify places where “unplanned loss of individual pipeline facilities may cause shortages of crude oil or other petroleum products or price disruptions.”

Barton and other House members, in a hearing earlier this month, were concerned that the federal government had no clear authority to require maintenance on pipelines such as those at Prudhoe Bay that carry a large portion of the domestic crude supply.

The Pipeline Safety Trust, a nonprofit group funded with $4 million in settlement money after a 1999 gasoline leak and explosion in Bellingham, Wash., praised the Energy and Commerce bill.

Lois Epstein, a consultant for the trust and a senior engineer with Cook Inletkeeper in Anchorage, said the bill was a great improvement over the administration’s proposal from late August.

“The Bush administration’s proposal to regulate low-pressure transmission pipelines had two major problemsit didn’t cover all low-pressure transmission lines and it was technically deficient,” she said in a news release. “Fortunately, the committee bill fixes both of these problems.”

Washington, D.C., reporter Sam Bishop can be reached at (202) 662-8721 or sbishop@newsminer.com.

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Wall Street Journal
September 28, 2006

Senate Commerce Panel Introduces Pipeline Safety Bill
DOW JONES NEWSWIRES
September 28, 2006 7:35 a.m.
(This article was originally published Wednesday)
 
WASHINGTON (Dow Jones)--A bipartisan covey of senators on the Commerce, Science and Transportation Committee on Wednesday introduced new pipeline safety legislation, the panel chairman said in a statement.

Similar to a new act passed by the House Energy and Commerce Committee earlier in the day, the proposed legislation would give the Department of Transportation federal authority to regulate low pressure oil lines.

Chairman Ted Stevens, R-Alaska, said the bill was co-sponsored by ranking Democrat Daniel Inouye, D-Hawaii, Trent Lott, R-Miss., and Frank Lautenberg, D-N.J. The measure would specifically reauthorize the Pipeline Safety Act for four years starting in 2007, Stevens said.

The House energy committee earlier Wednesday passed a pipeline safety bill that includes stricter federal regulation of low pressure oil lines in the aftermath of one of the biggest crude leaks in Alaska's North Slope.

Although both the Senate proposal and House legislation exempts some lines, they are more comprehensive than a new rule proposed in late August by the Department of Transportation.

Low pressure crude lines similar to the ones at BP PLC's (BP) Prudhoe Bay system that leaked earlier this year - causing a partial shutdown of the largest producing fields in the U.S. - are currently unregulated by the federal government.

BP's system failure is thought to have been the result of a history of a mismanaged corrosion prevention program.

Stevens said under his new 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.

The House amendment 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 he thought it was possible the bills might be made law before Congress adjourns Friday. He added, however, that it's more likely to pass in a lame duck session after the Nov. 7 congressional elections.

An industry expert close to the matter expressed optimism that the two pieces of legislation could be be ironed out before Congress leaves.

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

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US House Panel Passes Pipeline Safety Bill
DOW JONES NEWSWIRES
September 28, 2006 7:30 a.m.
(This article was originally published Wednesday)
 
WASHINGTON (Dow Jones)--The U.S. House Energy and Commerce Committee on Wednesday passed a pipeline safety bill that includes stricter federal regulation of low pressure oil lines in the aftermath of one of the biggest crude leaks in Alaska's North Slope.

Although the legislation exempts some lines, it is more comprehensive than a new rule proposed in late August by the Department of Transportation.

Also, key members of the U.S. Senate Commerce, Science and Transportation Committee may introduce an even tougher pipeline safety bill this week, possibly as early as Wednesday, two people close to the matter said.

Low pressure crude lines - similar to the ones at BP PLC's (BP) Prudhoe Bay system that leaked earlier this year, causing a partial shutdown of the largest producing fields in the U.S. - are currently unregulated by the federal government.

BP's system failure is thought to have been the result of a history of a mismanaged corrosion prevention program. Commerce committee chairman Rep. Joe Barton, R-Texas, said the legislation had been developed together with the Democratic minority, in concert with the transportation department. Although Barton said it had been reconciled with a similar bill created by the House Transportation and Infrastructure Committee, a staffer later said that it hadn't yet been reconciled but that counsel from the two committees were working together to marry the separate bills.

Given the bipartisan momentum, Barton said the Pipeline Safety Act Could be passed this week, but added that it was more likely to be ratified in a lame-duck session after the Nov. 7 congressional elections.

The chairman said the committee's amendment to the act exempted gathering lines, flow lines and inter-facility lines, but covered oil transit lines similar to the ones that failed at Prudhoe Bay.

Ranking Democrat John Dingell, D-Michigan, said the bill requires "the vast majority" of low pressure oil lines to be covered.

"In my opinion, this language is far better than the proposed rule recently issued by DOT," he said in a statement.

The amendment 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 head of the transportation department's Pipeline and Hazardous Materials Safety Administration, Thomas Barrett, previously testified to the committee that he didn't believe many small low-pressure lines warranted federal regulation, nor did they posed the same risk as BP's in Prudhoe Bay.

"Some lines you can't pig for a number of reasons, because they telescope, or have tight bends," he added.

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

A Democratic aide said the transportation department would now be required to inventory all low pressure lines, which it previously hadn't done.

A Senate bill - yet to be introduced - would be tougher than the House act, one person close to the Senate commerce committee said.

"It would be more comprehensive, beyond what the House passed," the person said, adding that it was possible the committee's chairman, Sen. Ted Stevens, R-Alaska, could introduce the bill onto the Senate floor either individually or jointly with the committee's ranking minority member Sen. Daniel Inouye, D-Hawaii.

If the Senate committee passed a jointly-worked proposal, given its differences with the House bill, both bills would likely have to be ironed out in a conference committee, the person added.
 
-By Ian Talley, Dow Jones Newswires; (202) 862 9285; ian.talley@dowjones.com ; 

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Anchorage Daily News

September 27, 2006

http://www.adn.com/money/industries/oil/prudhoe/story/8239632p-8135543c.html

Eastern Prudhoe oil flow resumes
BP: Production could reach 150,000 barrels a day by the weekend.
By MARY PEMBERTON
The Associated Press
Published: September 27, 2006
Last Modified: September 27, 2006 at 04:35 AM

Oil giant BP restarted the eastern side of the Prudhoe Bay oil field -- shut down since August when a leak was found -- and expects production to reach 150,000 barrels a day by the weekend, a BP spokesman said Tuesday.

The eastern side of the country's largest oil field ceased production Aug. 10, a few days after a leak was discovered in a corroded transit line. Initially, the company expected to shut down the west side of the field as well, but kept that side in operation after determining it could be operated safely. The west side is producing about 200,000 barrels a day.

Production in the northern part of the field adds about 50,000 barrels a day. The oil field normally produces about 450,000 barrels of petroleum products daily.

A test in July on the northern field transit line that services that part of the field showed it was in good shape, said BP Alaska spokesman Daren Beaudo.

"It came out with flying colors," he said.

But BP plans to replace two of three Prudhoe Bay transit lines because of corrosion, or about 16 of 22 miles of pipelines.

The U.S. Department of Transportation Friday gave BP approval to resume production at three facilities on the east side of the field. Beaudo said restoring east side production will allow BP to run a device called a "smart pig" through the line to check its condition. That is the same test used on the northern transit line.

Beaudo said the east side transit line will first be scraped and cleaned with maintenance pigs. Within a few days, a smart pig that uses ultrasound will be put through the line to check for thin spots. Cleaning of the line could begin as early as this weekend, he said.

"We are resuming production in the east in a safe, orderly and structured manner," he said.

It is expected to take about a week before the east side of the field reaches a steady state of operation with production at about 150,000 barrels a day. That is still 50,000 barrels a day below pre-leak production because the line on the east side where the August leak occurred remains shut down. BP is constructing a bypass on that line.

BP expects to get replacement pipe by the end of the year and begin construction by early next year.

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http://www.adn.com/news/alaska/ap_alaska/story/8236628p-8133472c.html

BLM proceeds with partial Alaska lease sale
By JEANNETTE J. LEE, Associated Press Writer
Published: September 26, 2006
Last Modified: September 26, 2006 at 04:12 PM

ANCHORAGE, Alaska (AP) - A judge has halted part of a federal lease sale of oil-rich land on Alaska's North Slope, but the government on Tuesday said it can still sell sections outside an area environmentalists want to preserve for migratory birds and calving caribou.

The original sale in the National Petroleum Reserve-Alaska would have included the Teshekpuk Lake area, which sits above 2 billion barrels of recoverable oil, federal estimates say. Environmental groups argue that a 600,000-acre section that includes the lake contains some of the most important wetlands in the Arctic.

The decision on Monday in U.S. District Court in Anchorage blocked the Bureau of Land Management from selling leases to 2.5 million acres of the 8 million acres opened to bidding in August, according to Julia Dougan, the bureau's acting state director.

Judge James K. Singleton echoed a ruling he had issued on Sept. 7 that temporarily halted the sale in the vast area set aside in 1923 for its oil resource.

Government environmental studies, Singleton wrote, were too narrow in scope because they did not consider how leasing in the northeastern part of the 23 million-acre reserve would affect land and wildlife in the northwestern section.

The ruling expressly forbade the government from selling leases to tracts in the northeast section of the reserve, but left room for sales in the northwest section, according to Danielle Allen, a spokeswoman for the bureau in Alaska.

After consulting attorneys on Tuesday, the bureau decided it did not have to close the 5.5 million acres in the northwestern area it had offered for lease.

"We believe the northwest tracts are on very sound legal footing," Dougan said.

The bureau will announce the high bidders for the northwest tracts on Wednesday, as planned, Dougan said. The bureau had received bids for 940,000 acres as of last week's deadline, she said.

Plaintiffs, who included the National Audubon Society and the Center for Biological Diversity, said they were not surprised by the government's decision to continue the sale.

"We are concerned with parts of the northwest planning area because of migratory bird and waterfowl habitat, but we don't have a specific conflict with a large number of these tracts," said Charles Clusen. "This lawsuit was about Teshekpuk Lake."

The government plans to redo its environmental impact studies and did not rule out the possibility of trying to reopen the lake region to lease sales.

"The BLM continues to believe that the development of those energy resources and protection of the natural resources aren't mutually exclusive," Dougan said.

Leases for nearly 13 million acres of the reserve are eligible for sale or have been sold to oil companies for exploration, most notably ConocoPhillips. The company hopes to augment waning crude stocks in the Prudhoe Bay fields east of the NPR-A.

The company's spokeswoman in Anchorage did not immediately return calls for comment.

The reserve contains between 5.9 billion and 13.2 billion barrels of technically recoverable oil resources and 39 trillion to 83 trillion cubic feet of natural gas, according to federal estimates.

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Anchorage daily News
September 26, 2006

http://www.adn.com/news/politics/veco/story/8236307p-8132041c.html

FBI returns for more from Stevens' office
CONNECTION: Some material relates to fisheries legislation his father handled in U.S. Senate.
By RICHARD MAUER and LISA DEMER
Anchorage Daily News
Published: September 26, 2006
Last Modified: September 26, 2006 at 03:49 AM

FBI agents returned last week to the legislative office of Senate President Ben Stevens and seized more evidence, including a copy of a sworn statement that implicated Stevens in an alleged payment scheme involving fisheries legislation brought by his father, U.S. Sen. Ted Stevens.

Word of the second search, and what was taken by the FBI, came from Ben Stevens himself, who disclosed the information in a letter to the Daily News dated Sept. 22. In his letter, Stevens denied a request by the newspaper for a copy of any FBI search warrants which may have been served on him or his office, and the government's receipts for items seized. But Stevens provided what he said was a "complete listing of what was obtained from my legislative offices" on Aug. 31 and Sept. 18.

Stevens, a Republican who is not seeking re-election this year, said he voluntarily consented to the two FBI searches, though federal agents said they had a judge's warrant for the Aug. 31 search.

Among the material hauled off by agents, Stevens said, were binders on the proposed natural gas pipeline and revised oil taxes, as well as information on a board that doled out federal marketing money to fisheries companies, some of which paid him as a consultant. Stevens was chairman of that board until about six months ago.

The vast majority of items on Stevens' list were public records that could have been obtained by anyone, sometimes under a formal public information request, sometimes just for asking. For instance, the FBI seized the 2006 Legislative directory, the 2003 Legislative Ethics Training Manual, federal and state laws governing North Slope gas, and a "piece of paper" with the tax identification number for Stevens' consulting firm, Stevens and Associates.

Though much has been made of the FBI's apparent interest in the relationship between legislators and the politically active oil field service and construction company Veco -- the company itself was searched, and it was mentioned in other search warrants -- Stevens listed only a single Veco document taken by the FBI: an undated memo to Veco president Pete Leathard.

Stevens' list couldn't be independently verified and he wouldn't elaborate on anything. The FBI has said little about its investigation, aside from acknowledging serving 24 search warrants Aug. 31 and Sept. 1. The offices of six legislators were targeted Aug. 31, and Stevens is the only one the FBI returned to for a second round, said FBI spokesman Eric Gonzalez. No one has been charged.

It was also impossible to determine the significance of any particular item seized -- whether it was scooped up to determine its relevance later, or central to the inquiry. That's normal in a federal investigation, said former U.S. Attorney Wev Shea, now in private practice in Anchorage. FBI agents will seize records through a warrant rather than simply ask for them as public records to make sure they are getting everything, he said. Plus, the drama of the FBI raids themselves may have been designed to stir things up and get people talking as the investigation continues.

"They don't know what phones are tapped. Nor do they know who is wired," said Shea, who added that he doesn't have inside information of the case.

The FBI has been asking some state legislators about the debate on the gas pipeline and oil taxes, and those subjects make up the largest haul from Stevens' office Aug. 31.

The government also seized Stevens' Rolodex containing business cards and a phone log, made a copy of the hard drive of a Gateway computer, and took an 80-gigabyte hard drive, an untitled compact disc and something described as an "e-mail found on printer."

Some of the material goes beyond issues known to be important to Veco like the gas pipeline and touch on fishery subjects that involve Ben's father, long-time U.S. Sen. Ted Stevens, R-Alaska. Since 2005, Ted Stevens has chaired the Senate Commerce Committee, through which all fisheries legislation passes. Before that, he chaired the Senate Appropriations Committee, one of the most powerful seats in Congress.

Among fishery-related items, Ben Stevens reported that in the second search, the FBI seized "Victor Smith affidavit" and a 2004 "UFA" letter -- United Fishermen of Alaska. Agents also took two April 2006 letters he wrote to the U.S. Department of Commerce regarding the Alaska Fisheries Marketing Board, which he headed from its creation by Ted Stevens in 2003 until his resignation earlier this year.

The second search also yielded a Jan. 23 fax to Ted Stevens along with "unknown documents of Ted Stevens with a cover page dated 6/5/06 bearing the United States Senate seal."

Through a spokesman, Ted Stevens said he had no comment.

Ben Stevens, a former crab-boat captain, has maintained an active fisheries consulting business since being named to a vacant Senate seat in 2001, disclosing $775,435 in income from nine companies and associations since then. He has never publicly said what he has done for the money.

Victor Smith, a former Southeast Alaska salmon fisherman who now operates a barge in north Puget Sound, said Monday he has signed three affidavits regarding Ben Stevens. The affidavits helped form the basis of complaints brought against Ben Stevens at the Alaska Public Offices Commission and other agencies by Ray Metcalfe, a government watchdog and founder of the independent Republican Moderate Party in Alaska.

It could not be determined which of Smith's affidavits the agents seized. In one, he reported attending a 2004 meeting of the Purse Seine Vessel Owners Association in which officials of that organization and the Southeast Alaska Seiners Association discussed how it would pay Ben Stevens after congressional passage of a $50 million loan program to reduce the seine fleet.

Smith said he learned Ben Stevens was supposed to be paid "through convoluted accounting" $5,000 a month to secure a plan, and $10,000 a month if successful, until he was paid $500,000.

While the loan program passed Congress and was enacted into law, fishermen complained it was too expensive for them to use.

Bob Thorstenson Jr., executive director of the seiners association and president of the United Fishermen of Alaska, denied paying Ben Stevens to lobby Ted Stevens. In an interview last year, he said the payments of $3,000 a month were made starting in June 2004 to an Anchorage company, Advance North, in which Stevens and one of his father's former aides, Trevor McCabe, were 50-50 partners. McCabe became sole owner of the company in October 2005.

In both searches of Stevens' offices, FBI agents seized documents involving the Alaska Fisheries Marketing Board. The organization was created in 2003 in legislation by Ted Stevens to provide federal grants to companies to promote Alaska seafood. It has distributed between $5 million and nearly $10 million a year in grants.

At least three of the beneficiaries of grants from the board paid consulting fees to Ben Stevens. Metcalfe complained to the APOC last year that those fees were thinly disguised "kickbacks," but the commission only ruled on a technicality: Ben Stevens' failure to disclose his chairmanship of the board in 2004. It fined him $150.

Ben Stevens resigned from the marketing board about six months ago, according to its executive director, Bill Hines. Hines wouldn't say whether he has recently spoken to federal agents.

"I think that's between me and the FBI," said Hines, an employee of the U.S. Commerce Department.

Ben Stevens was a member of the Senate Ethics Committee and some of the seized documents were connected to that committee, including a 2003 ethics complaint against former Sen. Jerry Ward. An investigation concluded the complaint was without merit.

Daily News reporter Richard Mauer can be reached at rmauer@adn.com   or 257-4345 and Daily News reporter Lisa Demer can be reached a ldemer@adn.com   or 257-4390.

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Anchorage Daily News
September 24, 2006

http://www.adn.com/news/politics/veco/story/8229536p-8126216c.html

FBI raids cast light on dual incomes
CONSULTANTS: Ethical standards for lawmakers questioned.
By TOM KIZZIA and LISA DEMER
Anchorage Daily News
Published: September 24, 2006
Last Modified: September 24, 2006 at 05:52 AM

Last month, state Rep. Tom Anderson testified before the Anchorage Assembly in favor of Wal-Mart's plan for two stores in his old neighborhood. Assembly chairman Dan Sullivan introduced him as Representative Anderson, but the lawmaker for Muldoon corrected him.

He was there representing the home builders association, Anderson said.

Anderson, who was a consultant before he was elected to the state House four years ago, has never stopped making money on the side as a paid adviser for clients who do business with state and local government.

His dual role may have surprised the Assembly in August. But it would not have surprised some members of the Northeast Community Council, the neighborhood group that opposed the stores. They recall seeing Anderson at their meetings all though 2003. They assumed he was there as the local state legislator. But Anderson's state financial disclosure form, filed the following year, revealed he was also working as a $10,000 consultant on community councils and local government for the oil field services and construction company Veco.

"We are all going, 'This is so bogus,' " said council president Peggy Robinson, who publicized Anderson's Veco connection in an unsuccessful bid to topple Anderson from his House seat in 2004.

Now Anderson's role as a consultant to industry is coming under scrutiny again, following last month's FBI searches of six legislative offices seeking information on legislators' links to Veco.

The practices of Anderson and a few others who consult on the side also raise broader questions about state ethics laws. As it stands, lawmakers can receive unlimited and undefined "consulting" income from companies who could benefit from the Legislature's actions.

The FBI inquiry has given momentum to reform efforts.

"I can guarantee you this: That the subject will be brought up in the next session," said House Speaker John Harris, R-Valdez.

The cloud from the current investigation shows that reform is needed, Harris said. The public needs better assurance that lawmakers are qualified to do the work, he said.

"The question is: Do legislators get hired to do duties that they are really not qualified for and they're not asked to produce anything? That's what it comes down to," Harris said. "Is it just a form of a payoff?"

ON THE PAYROLL

Veco executives have long been frequent and generous contributors to political campaigns in Alaska and nationally. But two current legislators also have been regulars on its consulting payroll. Anderson reported $30,000 in Veco income between 2003 and 2005.

Senate President Ben Stevens declared $252,000 in consulting work for Veco from 2001 to 2005.

Veco, which also publishes the half-page "Voice of the Times" editorial section in the Daily News, did not respond to interview requests for this story. In a statement earlier this month, the company said, "To Veco's knowledge, it has done nothing improper or illegal." Stevens also has declined to be interviewed, and said last week that he's been advised not to answer questions about the investigation.

The concerns raised about lawmakers' employment by Veco -- hazy disclosure requirements, public uncertainty about motives and qualifications, possible conflicts of interest in and out of the Capitol building -- extend to consulting work for other business interests as well.

One example is Anderson's municipal lobbying work for the Anchorage Home Builders Association, which hired him at $2,500 a month in July. His job put him at odds with the Northeast Community Council, the grass-roots group in his House district, which opposed the Wal-Mart project. Anderson argued on behalf of the home builders it was good economic development.

The most noted example is Stevens, who has received more than $1.6 million in consulting contracts and pay from private organizations in the past five years. He reported $362,000 in income from an Adak fisheries company that received a pollock allocation worth millions of dollars through special congressional action by his father, U.S. Sen. Ted Stevens, R-Alaska. Ben Stevens returned $145,000 in consulting fees from Cook Inlet Region Inc., in the wake of bad publicity and complaints from several CIRI board members, saying he'd been unable to complete work on the business venture they'd discussed.

Stevens, with Veco as a major client, is one of the lawmakers whose office was searched by the FBI. Anderson's was not.

Three years ago, then-Sen. Scott Ogan, R-Palmer, came under heavy criticism for a $40,000 consulting contract with a shallow-gas drilling firm interested in his district. A former cabinetmaker, Ogan had developed his expertise as chairman of the Senate Resources Committee, in charge of regulating shallow-gas development. He gave up the contract but was threatened with a recall campaign and eventually quit the Senate.

While several legislators are employed directly by companies with interest in Juneau bills, the number of other reported consulting jobs remains small. One case is Rep. Vic Kohring, R-Wasilla, who reported income of $5,400 in 2004 and $38,100 in 2005 from Anchorage developer Marc Marlow.

Kohring's official disclosure said he was getting paid to assist with the development of construction-related projects, including arranging and conducting meetings, performing research, and developing plans and strategies. Marlow said recently that the work was to help him with plans to build an electrical power plant in the Mat-Su. Marlow said he isn't seeking any state funds, and Kohring said he has been very careful to follow state ethics rules.

Kohring, a longtime acquaintance, has the smarts for the complex power plant project, Marlow said. He's "detail oriented and conscientious," Marlow said, plus he has a master's degree in business administration and has served on the Alaska Housing Finance Corp. board. Kohring has said his other sources of income are work as a house painter and drywall hanger.

'RED-FACE TEST'

Earlier this year, before the FBI inquiry of the lawmakers and Veco burst into public view, Democrats tried to change state law to require greater disclosure of consulting and other contracts held by elected officials. Their efforts went nowhere.

The measure, introduced by Rep. Berta Gardner, D-Anchorage, would have required legislators with personal services contracts to disclose in broad terms what they did to earn the money and how much time they spent on the job. The bill required a description of the work "sufficient to make clear to a person of ordinary understanding the specific services performed."

"I thought I was dealing with the appearance of corruption, but maybe it's something more," Gardner said last week.

House Bill 461 passed through the State Affairs Committee last April and was referred to the House Judiciary Committee, where it died. The Judiciary Committee chairwoman was Rep. Lesil McGuire, R-Anchorage, who is married to Anderson. Anderson was the committee's vice-chairman.

McGuire said in an interview last week that she thought the bill had merit. She said she herself gave up consulting after completing a $10,500 contract with Providence Alaska Medical Center because public questions made her uncomfortable. But she said this year's bill died because Gardner didn't request a committee hearing early enough.

Gardner's office disputes that, saying their records show the request was made April 13, five days before the deadline for committee hearings. Gardner said she thought the bill died because Republican leaders didn't relish a fight with Ben Stevens. "He of course believed it was aimed at him," said Gardner. She said she plans to introduce a similar bill next year.

Neither Stevens nor Anderson is running for re-election. But that's not the only reason reform efforts are likely to get more attention from Republican leaders next year.

One Republican already preparing a bill, Rep. Bob Lynn of Anchorage, said he doesn't think legislators should take any consulting money. Even if their loyalties are not conflicted, it looks like they are.

"I don't agree with the consulting contracts. Period. It doesn't matter if it's 5 cents or 5 million," said Lynn, whose bill would stop short of a total ban.

Harris has a different solution. He wants evidence the legislator is truly being paid for expertise.

"I think the solution probably is to tighten up the existing rules a little bit to say the legislator has to show some either work or educational experience before they can accept a job from somebody," Harris said.

In his eight years in the House, Harris said, he's been offered a couple of consulting contracts that would have paid "substantial" money. Harris, who usually works in the off season as a Teamster truck driver, said he turned them down because the arrangement didn't pass "the red face test." He said he couldn't justify the work for the money. When it came down to it, he said, he knew they wanted him because he's a legislator. He wouldn't name the business, other than it wasn't Veco.

FOLLOW THE MONEY

A rule insisting on proper qualifications would probably have done little to crimp Veco's employment of legislators. Stevens and Anderson were both consultants before they ran for office.

Arrangements between Veco and two other lawmakers show up in state disclosure forms dating back to 2002. One was for a boat rental from a fisherman, one was for legal work from a lawyer.

In 2002, Veco paid $17,600 to use a boat owned by Rep. Paul Seaton, R-Homer. The contract came in the summer before Seaton, a commercial fisherman who owns several boats, was first elected. He said his fish tender just happened to be available in upper Cook Inlet when Veco needed a standby safety vessel during a short oil rig construction job.

The legal payments went to then-Sen. Robin Taylor, who got into a jam with critics in his home town of Wrangell over that work.

Taylor, a lawyer and longtime chairman of the Senate Judiciary Committee, reported being paid $15,700 for legal work by Veco in 2000, $19,300 in 2001 and $16,800 in 2002. He also served as city attorney for Wrangell during that period.

Critics accused Taylor of hiding his Veco ties when the city council considered taking up a private prison project in 2001. Veco had been part of the consortium whose prison plan had just been turned down in Kenai. Taylor insisted he had disclosed his Veco ties on state forms and didn't need to announce them.

Taylor retired from the Senate and his private legal practice in 2003 and is now head of the state marine highway system. He was among the current and former legislators known to have been interviewed by the FBI in the current investigation.

Taylor said last week that he had never been lobbied by Veco over the prison. As far as he knew, he said, Veco wasn't interested in a Wrangell prison. "It's a breach of attorney-client privilege, but I can tell you up front: That client never talked to me once about that project," Taylor said.

Gardner, the Democrat who pushed ethics reform last session, said legal work like Taylor's would probably require a different disclosure standard. There are privacy reasons for protecting details of legal work. But she said it would help to divulge the type of legal work required, to be sure the legislator has proper expertise.

Information on private-services contracts with Veco and other companies is available only through 2005. Any consulting salaries paid to legislators for 2006, in a year of high-stakes debate over oil tax and gas line issues, do not have to be disclosed until reports are due March 15, 2007.

As for past Veco consultants Anderson and Stevens, the public may never know if they had consulting contracts this year. As retiring legislators, the Alaska Public Offices Commission said, neither will have to file disclosure forms next year.

Reporter Tom Kizzia can be reached at tkizzia@adn.com  or in Homer at 907-235-4244. Reporter Lisa Demer can be reached at ldemer@adn.com   or 257-4390. Reporter Don Hunter also contributed to this story.

FOCUS: Rep. Tom Anderson's work as a business consultant and city lobbyist has raised questions and led to a call for reform.

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http://www.adn.com/news/politics/veco/story/8229536p-8126213c.html

Anderson's consulting services in demand
WELL-CONNECTED: Veco and home builders
group among clients he served.
By LISA DEMER and TOM KIZZIA
Anchorage Daily News
Published: September 24, 2006
Last Modified: September 24, 2006 at 05:52 AM

Tom Anderson's dual role as a legislator and consultant has drawn criticism over the years, but he defends it as work he's well equipped to do.

The 39-year-old Anchorage Republican has a master's degree in public administration from the University of Alaska Anchorage and a law degree from Hamline University School of Law in Minnesota (though he's never practiced law).

He is known as personable, funny, chatty and well-connected. His father is the former head of Alaska State Troopers. The younger Anderson worked as chief of staff to then-Rep. Terry Martin and was appointed to an Anchorage School Board seat in 2000 but lost an election to keep it eight months later. He was working as a government consultant for industry before he ran for state office.

For the past four years, Anderson has represented East Anchorage in the state House. For the first three years, he reported $65,000 in private consulting income on the side. Nearly half that money, $30,000, came from Veco, the oil field services and construction company whose ties to legislators now are under investigation by the FBI.

Disclosure reports by state legislators for outside work done this year are not required until next March. For Anderson and others who are leaving the Legislature after this year, they will not be required at all. But reports required by the Municipality of Anchorage, where Anderson says his recent work has taken place in his new role as a local-government lobbyist, provide some additional information about his work in 2006.

Efforts to interview Anderson for this story were unsuccessful. He provided brief answers to several questions via e-mail.

"I have attempted at all times to fully comply with the laws and regulations governing the conduct of public officials," Anderson wrote.

He said his ability to perform as a responsible legislator for his district had never been compromised. To avoid conflicts, he did not begin his municipal lobbying this year -- for the Anchorage Home Builders Association and the Cabaret, Hotel, Restaurant and Retailers Association, or CHARR -- until after the regular legislative session was over, he said.

When Anderson registered as a lobbyist with the city this year, he reported working for the home builders on "homebuilding & construction," and for CHARR on the proposal to ban smoking in bars. He said in an e-mail that he worked to delay the effective date of the ban, which the Assembly agreed to. He said he no longer works for CHARR.

Even if Anderson is following the rules, his new role doesn't sit well with Anchorage Assembly member Dick Traini. Traini is proposing to bar state legislators from lobbying the Assembly or the School Board altogether for a year after leaving office.

"It just sets up a bad relationship when the same body you go to for funding comes to you to lobby for other things," Traini said.

A legislator can't realistically set aside elected duties to lobby, he said. "The moment you take office you represent your constituents. There is no time out."

In 2002, while Anderson was being paid $40,800 by the bar, restaurant and liquor trade group, he won his House District 19 seat.

After his first session in 2003, Veco approached him about a consulting job, Anderson told a Daily News reporter two years ago. His first role was to seek out civic and charitable events for Veco to become involved in and to watch out for local zoning cases, he said at the time. He noted on his disclosure form that he was "consulting on community council and local government affairs." He also has said his Veco duties didn't conflict with his being a lawmaker.

Anderson attended meetings of the Northeast Community Council during his first year in office as their legislator. His other role, as Veco's monitor of municipal neighborhood issues, didn't come to light until he filed his disclosure in 2004. Council officials said they were surprised. Veco, with offices around the world, had no local projects that four former and current council leaders knew about.

Peggy Robinson, a former Anchorage School Board president, raised his Veco work in her unsuccessful 2004 legislative race against Anderson. She also raised a questionable Anderson-Veco connection immortalized on a yellow sticky note.

The note was passed around May 13, 2003, during a meeting of the Labor and Commerce Committee, which Anderson chaired. Robinson got it from the office of another Republican legislator and was told Anderson wrote it. Up for discussion: A bill that would have loosened state regulation of pipelines.

"Vote 'yes' and remind Veco BP Phillips Exxon this summer," Anderson supposedly wrote on the note. Robinson featured the yellow sticky on a campaign mailer. Anderson responded at the time that he wrote a lot of notes and didn't remember that one but always voted his conscience, "not on who contributes to my campaign."

In September of 2003, Anderson took another job, consulting for the Alaska Telephone Association, a trade group of local phone companies. Its members tend to be rural companies. Anderson's Labor and Commerce Committee oversaw telecommunications issues, including a controversial and bitterly fought measure earlier that year to extend the life of the Regulatory Commission of Alaska for four years. The commission regulates telephone companies.

Jim Rowe, the long-time executive director for the Alaska Telephone Association, said he met Anderson that year and then hired him for $5,000 a month for four months to instruct association members how to be more effective in their dealings with legislators in Juneau. Anderson spoke at a trade show for the association and at least one other meeting and spent more time just with him, Rowe said in a recent interview.

"I understand that any relationship with Tom Anderson at this time is apt to be looked at with skepticism and a business/consulting relationship with even a more critical eye. Nonetheless, Tom treated me fairly, provided instruction to my membership, and I like him," Rowe said in a follow-up e-mail.

In 2004, Veco hired Anderson again, this time for $17,500 to consult on "Russian business endeavors," according to the disclosure he filed in 2005. Neither Veco nor Anderson has explained what he did. In 2005, Anderson only had a small Veco contract, $2,500 for "election/proposition research," according to the report he filed in April.

This year, in the heat of debate over oil tax increases, Anderson hand-delivered notes to his colleagues on the House floor passed from Veco chairman Bill Allen, sitting in the visitor's gallery, according to several legislators.

After marrying Rep. Lesil McGuire last year and moving to her district, Anderson chose not to run again. McGuire, also a Republican, is running for the state Senate seat being given up by Ben Stevens.

After the regular session this year, Anderson worked briefly again for the liquor trade group. In July, Anderson got a new job as municipal lobbyist for the Anchorage Home Builders Association, which is paying him $2,500 a month through the end of the year.

Four months earlier, Anderson had been prime sponsor of a bill making it easier for the state to fine unlicensed contractors. House Bill 81, which passed into law, was a priority for the home builders association.

Anderson's sponsorship of the bill had nothing to do with his getting hired, said Ray Hickel, president of the home builders association. Other legislators worked more on it, he said. The association needed a municipal lobbyist and there were few other choices.

Anderson appeared before the Assembly in August to tout a proposed Wal-Mart Supercenter and Sam's Club in Muldoon. The community council in January had voted to oppose the rezoning. Members were concerned the two stores would undermine the area's town center plan.

In his e-mail, Anderson said he appeared before the Assembly as part of his new, post-legislative work.

"At the end of the day, I have to answer first, certainly, to myself in terms of integrity and honesty," Anderson said in 2004. "And a close second is to my constituents."

Reporter Tom Kizzia can be reached at tkizzia@adn.com  or in Homer at 907-235-4244. Reporter Lisa Demer can be reached at ldemer@adn.com   or 257-4390. Reporter Don Hunter also contributed to this story.

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Anchorage Daily News
September 23, 2006

http://www.adn.com/money/industries/oil/prudhoe/story/8225623p-8122324c.html

Restart to push oil field output
PRUDHOE BAY: BP gets federal approval to resume production.
By WESLEY LOY
Anchorage Daily News
Published: September 23, 2006
Last Modified: September 23, 2006 at 04:56 AM

Federal pipeline regulators gave British energy giant BP permission Friday to restart production from a large section of Prudhoe Bay, a step that could bring the hobbled oil field back to near full output within a week.

It's a softer landing for Prudhoe than BP executives and state officials initially feared in early August, when a pipeline corrosion crisis forced the company to begin an unprecedented shutdown. The worry then was that the nation's largest oil field might be wholly or partially offline for many months pending pipeline repairs.

Now it appears likely the field will be back to its usual production of more than 400,000 barrels of oil per day by the end of September, less than two months after a leak from a major pipeline forced BP to begin its jarring shutdown on Aug. 6.

David Peattie, a London-based BP executive who spent time in Prudhoe helping direct the comeback, said the federal OK to restart the idle eastern half of the field, where the pipe leaked, is "an important milestone" in restoring production ahead of schedule.

Restoring production is a big financial boost not only for BP and the other oil companies that own shares of Prudhoe, but also for the state, which relies heavily on tax and royalty revenue the field generates.

By reactivating wells, processing plants and pipelines in eastern Prudhoe, overall field production will go up by about 150,000 barrels per day from its current level, BP said.

That's about $9 million worth of oil a day at today's price. For the state treasury, it's an extra $1.6 million per day in cash flow, said Robynn Wilson, state tax director.

Unfortunately for the state, however, the Prudhoe outage meant lost money because the price of oil has dropped considerably since early August.

North Slope crude oil for delivery to West Coast refineries sold Friday for $58.80 per barrel, down nearly $15 from the last trading day prior to BP's Prudhoe shutdown announcement.

On Friday, the U.S. Pipeline and Hazardous Materials Safety Administration gave BP permission to restart most of the eastern side of Prudhoe.

Agency officials said they were allowing the restart based on extensive corrosion inspections along a key pipe, known as an oil transit line, plus reassuring reports from two independent technical experts. The transit line, which consists of two segments, is the main trunk that feeds oil from the eastern half of the field into the trans-Alaska pipeline, which runs 800 miles south to the Valdez tanker terminal.

Only the lower segment of the transit line, 34 inches in diameter, will be restarted. The upper segment was the pipe that leaked, and BP does not plan to restart that part of the line. Rather, it plans to reroute oil into a bypass pipeline.

Federal pipeline administrators said restarting eastern Prudhoe will allow BP to run devices known as pigs through the transit pipeline to clean it out and better inspect it for corrosion.

Critics, including federal regulators and members of Congress, have flayed BP for failing to run such pigs through the pipes for many years, allowing sludge to build up inside them and corrosion to eat holes into their steel walls. A leak from a transit line on the western side of Prudhoe, which caused an estimated 201,000-gallon spill last winter, is now the subject of a federal criminal investigation. It was the Slope's largest oil spill ever.

Thomas Barrett, head of the pipeline safety administration, said BP must have people and equipment staged and ready to contain and clean up any spills once the restart begins.

And if any trouble develops, the agency will order the immediate shutdown of the line, Barrett said.

BP spokesman Daren Beaudo said the company is confident the pipe is safe, and that Prudhoe will ramp up to full production and stay there.

"We have a high degree of confidence in the integrity of the line because we've inspected thousands of feet of pipe," he said.

Those inspections, which involved the use of sound waves and other technology to look for thin spots in the walls of the above-ground pipeline, showed no significant corrosion, he said.

Ultimately, BP plans to replace all 16 miles of transit pipelines implicated in the corrosion scandal. But replacing pipe shouldn't interrupt oil flow, Beaudo said.

As many as 300 extra workers were deployed to the Slope to help clean up the August spill, to test pipelines for corrosion, and to engineer and weld bypasses. BP also had to seek permission from a raft of state agencies, including the Regulatory Commission of Alaska and the Alaska Oil and Gas Conservation Commission, to rejigger pipelines and change oil flow patterns.

BP runs Prudhoe on behalf of itself and the other owner companies: Exxon Mobil, Conoco Phillips, Chevron and Forest Oil.

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

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Houston Chronicle
September 23, 2006

http://www.chron.com/disp/story.mpl/business/4208619.html

Report sees BP indifference to safety
Former OSHA official calls it 'gross negligence'
By ANNE BELLI
Copyright 2006 Houston Chronicle

The former area director of the Occupational Safety and Health Administration says he believes gross negligence and indifference to safety at BP led to the fatal explosion at the Texas City refinery last year.

"It is my firm belief the clear and convincing evidence establishes not only that BP's negligence was the cause of the March 23, 2005, explosion and fire which killed 15 and injured hundreds more, but it's gross negligence as well," former regulator Raymond Skinner wrote in a report filed recently in a Galveston County court.

BP spokesman Neil Chapman, said the company disputed that opinion.

'Strongly disagree'

"We strongly disagree with many of Mr. Skinner's conclusions and will refute them in court," Chapman said.

He declined to provide specific responses to Skinner's assertions. But he reiterated the company's previous contentions that it takes full responsibility for the blast, has fully investigated its causes, is compensating victims, has imple- mented substantial safety improvements and is cooperating with all authorities.

Skinner's report was prepared for the injured workers and the families of those killed as part of their civil cases against BP. Lead plaintiffs lawyer Brent Coon acknowledged Friday that Skinner was a paid expert, but he said he was retained after he had already made his opinions known.

When asked why Skinner's office didn't keep closer tabs on BP's operations, Coon said that the agency had far too few inspectors to cover the vast region it was assigned.

Skinner, who retired from OSHA in January 2004 after 30 years, had been area director of the Houston South area office for the previous 12 years.

In 1992, Skinner warned Amoco, which owned the Texas City refinery at the time, that so-called blowdown drums and vent stacks  like the kind that exploded last year  were dangerous to the environment and workers and should be replaced or changed.

The blast occurred as workers accidentally overflowed the refinery's F-20 blowdown drum and stack, which vented to the open atmosphere, while restarting a unit that had been shut down for a month.

Hydrocarbons spewed from the stack and collected on the plant grounds along with a vapor cloud while workers were conducting their normal operations. The materials were ignited by an idling truck or other source, causing a series of explosions felt five miles away.

In his report, filed as part of civil litigation stemming from the blast, Skinner said the company promised to make improvements to blowdown drums and stacks as part of a settlement agreement in the 1992 case to prevent the dangerous materials from venting to the atmosphere, but it did not.

A harsh report

Amoco "certified to OSHA that the hazardous conditions for which it was cited do not exist or have been corrected," Skinner wrote in his harshly worded 17-page report.

"Amoco, however, in fact took no action whatsoever, and blowdown drums and stacks continued to exist after the OSHA citation and settlement agreement," he said.

Further, when BP merged with Amoco in 1999, it also did not make the necessary safety changes and continued to operate the equipment over the years even when it had clear opportunities to do so, Skinner said. The company was also fully aware of at least 19 near misses, Skinner said in his report, which he said he compiled after poring over numerous investigation reports and the depositions of two dozen BP officials and contractors.

BP "proceeded with conscious indifference to the rights, safety and welfare of those who were killed or injured," he wrote.

'Grossly negligent'

"It was grossly negligent ... for BP to continue to operate its blowdown drums and stacks with knowledge of at least 19 documented incidents involving hydrocarbon leaks, vapor releases and/or fires involving blowdown drums and stacks, including F-20," he added.

Skinner cited numerous violations of federal health and safety regulations, including some not included in OSHA's final report released a year ago. OSHA fined BP a record $21.4 million after finding more than 300 violations.

anne.belli@chron.com

 

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Wall Street Journal
September 23, 2006

BP Gets Approval to Restart East Prudhoe Oil Field
By IAN TALLEY
September 23, 2006; Page A4

WASHINGTON -- BP PLC said it has received permission to restart the eastern half of Alaska's Prudhoe Bay oil field in order to clean and test pipelines there.

BP expects to have the eastern part of the field producing 150,000 barrels a day within a week. This would bring oil output at Prudhoe Bay, which was partially shut down last month after the discovery of severe pipeline corrosion, to 400,000 barrels a day from the current output of 250,000 barrels a day, which is flowing only from the field's western side.

If BP can return the field, the largest producing oil field in the U.S., to nearly normal flows within the week, it would be months ahead of early estimates. Oil prices rallied more than $2 a barrel on Aug. 7, the day after BP said it would begin to shut down all of Prudhoe Bay's output. Crude oil for November delivery on the New York Mercantile Exchange fell 1.7% to $60.55 a barrel Friday, down $1.04.

The Department of Transportation has given approval for the United Kingdom energy titan to begin "smart pigging" a key oil-transit line, a process using a cylinder-shaped droid to conduct cleaning and inspection for cracks.

"This is an important milestone in returning all of Prudhoe Bay to production many months in advance of our complete replacement of 16 miles of oil transit lines," said BP Vice President David Peattie.

If smart pigging of the existing oil-transit lines shows they aren't fit for service, BP has said it will pursue options that would allow it to bypass the original pipeline system while it repairs and replaces some of its most corroded lines.

BP's problems in Alaska have prompted a storm of criticism as well as congressional, federal and state investigations. The disruption of oil supplies last month came at an inopportune time for markets, already nervous about tensions in the Middle East. Since then, however, oil prices have slipped as fears of supply disruptions waned and as the Prudhoe Bay output situation became less dire.

--John Biers in Houston contributed to this article.

Write to Ian Talley at ian.talley@dowjones.com


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2nd UPDATE: DOT OKs BP Restart Of E Prudhoe Bay Oil Flow
DOW JONES NEWSWIRES
September 22, 2006 5:52 p.m.
(Updates with more details and background throughout.)
By Ian Talley
Of DOW JONES NEWSWIRES
 
WASHINGTON (Dow Jones)--BP PLC (BP) said Friday it had received permission to restart the eastern half of Alaska's Prudhoe Bay oil field to clean and test pipelines there.

The restart approval - which the company says may bring the field up to 400,000 barrel a day within a week - is earlier than many in the market had originally expected. It follows weeks of severe criticism as well as congressional, federal and state investigations into the circumstances surrounding the failure of the London oil giant's maintenance practices in Alaska and subsequent shutdown of the largest producing field in the U.S.

BP spokesman Daren Beaudo told Dow Jones Newswires the company expects to have the eastern part of the field producing 150,000 barrels a day "within about seven days."

This would bring oil output at Prudhoe Bay, which was partially shut down in early August after the discovery of severe pipeline corrosion, to 400,000 barrels a day from the current 250,000, which is flowing only from the western side.

If BP succeeds in returning the field to nearly normal flows next week, it would be months ahead of early estimates that called for resumption of full production no earlier than the beginning of 2007. Oil prices, which had been trading at historically high levels at the time due to nervousness about tensions in the oil-rich Middle East and a hurricane season, rallied more than $2 a barrel the day after Aug. 6, when BP said it would begin activities to shut down all of Prudhoe Bay's output.

A resumption of full production levels would likely add to the downward pressure on crude prices that recently hit six-month lows as fears of supply disruptions waned and as the Prudhoe Bay output situation became less dire. On Friday, the price for the front-month contract settled $1.04 lower at $60.55 a barrel on the New York Mercantile Exchange.

However, maintaining this increased production may be contingent on the absence of severe corrosion along pipe walls.

Thumbs-Up To 'Pigging'
 
The U.S. Department of Transportation has given approval for BP to begin "pigging" a key oil transit line by using a cylindrical droids to conduct cleaning and inspection for cracks.

"This is an important milestone in returning all of Prudhoe Bay to production many months in advance of our complete replacement of 16 miles of oil transit lines," BP vice president David Peattie said in a statement.

The DOT's approval will enable BP to restore output from three of the four separation facilities in the eastern part of Prudhoe Bay, BP's Beaudo said.

Earlier this month, Thomas Barrett, head of the Pipeline and Hazardous Materials Safety Administration, estimated that it would take BP "a week or two" to clean out sediment from the inside of a transit line segment on the eastern half of the field and then another six weeks to inspect the line through the use of a "smart pig."

"It will take around six weeks before we would know with confidence the conditions of the line" once smart pigging had begun, Barrett said.

Pipeline experts, including Barrett, testified to the U.S. Congress that the corrosion was likely caused by bacteria. The colonies of bacteria that grew on the insides of the lines were protected by globs of sludge that BP had allowed to build up in unprecedented quantities all along the oil transit system on the eastern part of the field. The pigging, Barrett said last week, may well reveal more corrosion.

Barrett said in a statement Friday his agency is requiring BP to deploy incident response personnel and cleaning and containment equipment "to respond immediately to any sign of trouble."

"Any problems identified during the testing will result in an immediate shutdown of the line," he said.

Bypass Options
 
If smart pigging of the existing oil transit lines on the eastern half of the field shows they're not fit for service, then BP has said it will pursue bypass options.

The company previously said it was also preparing several temporary options that would allow it to bypass the original pipeline system - enabling a return to more normal output - while it plans to repair and replace 16 miles of the most corroded lines in the system.

The company continues to keep off line a three-mile stretch of pipeline on the eastern half of Prudhoe Bay where it found the August oil spill and discovered corrosion that ate through as much as 80% of the pipeline. BP is working on alternative routes to open up this additional production of about 50,000 barrels a day, such as a bypass through the Endicott line, Beaudo said.

The company is currently constructing the bypass to the Endicott line, which should be complete by late October, lifting production to a total of 450,000 barrels a day, Beaudo said.

BP's Alaska debacle has unleashed a storm of government censure after congressional and state hearings into the fiasco revealed the company had been warned of problems in advance of the spills.
 
-By Ian Talley, Dow Jones Newswires; (202) 862 9285; ian.talley@dowjones.com 

(John Biers in Houston contributed to this report.)

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Alaska Journal of Commerce
September 22, 2006

http://www.alaskajournal.com/stories/092406/hom_20060922016.shtml

State joins feds in tightening pipeline rules
By Tim Bradner
Alaska Journal of Commerce

The state of Alaska will implement its own new regulations on North Slope pipeline integrity to supplement new rules being developed by federal pipeline regulators, the director of the state's oil spill prevention division said Sept. 15.

"Even with the new federal rules there are gaps in regulatory coverage of the North Slope field pipelines, and our intent is to cover what the feds won't," said division director Larry Dietrick. "The flow lines from the wells to the processing centers have been a primary concern for us because they carry natural gas with high concentrations of carbon dioxide as well as hydrogen sulfide, which can contribute to corrosion."

The flow lines are smaller in diameter and liquids move at a higher velocity, which tends to limit corrosion, than is the case of the oil transit lines downstream of the processing center, where the corrosion was discovered.

In a related development, BP submitted an application Sept. 13 to the U.S. Department of Transportation seeking permission to restart production in the eastern Prudhoe area so that maintenance and "smart" inspection pigs can be operated in the pipelines.

The U.S. Office of Pipeline Safety is extending its rules governing low-pressure oil pipelines to those in rural areas in response to recent oil spills and corrosion problems in Prudhoe Bay field pipelines operated by BP.

However, Alaska officials said the new federal rules will only cover the pipelines from crude oil processing centers to the entry point to a common carrier pipeline. The new state regulations, which will be in effect by the end of 2006, will govern inspection and maintenance of flow lines from producing wells to the processing centers, where the raw gas, produced water and solids are separated from the oil, Dietrick said.

The flow lines, like the oil transit pipelines to the large common carrier pipelines, are now unregulated, he said. The state has been working on its new rules for two years. They were out for public review at the time of the March 22 oil spill on a Prudhoe Bay pipeline.

Mechanical integrity of the producing wells are regulated by the Alaska Oil and Gas Conservation Commission, which has regulated oil and gas production in Alaska since the 1950s.

BP is continuing to inspect pipelines in the eastern and western sides of the Prudhoe field, said company spokesman Daren Beaudo. BP has found no loss of pipeline metal due to corrosion greater than 32 percent of wall thickness in field pipelines inspected so far in the Prudhoe field aside from two heavily damaged pipelines where oil spills occurred and where corrosion-caused metal loss was greater than 70 percent.

BP believes these pipelines could be operated safely until they are replaced with new pipe this winter, but federal regulators must approve any restart, Beaudo said.

As of Sept. 13, the company had completed inspections on 7,000 feet of 25,301 feet of its western-side Prudhoe pipelines and found no wall metal loss greater than 32 percent discovered so far, Beaudo said.

About 18,000 feet of inspections have been carried out on eastern side pipelines, of 25,996 feet of total pipe, with no metal loss found so far greater than 30 percent, he said.

Inspections are being carried out with ultra-sonic U-T technology and two new systems, Electromagnetic Acoustic Tranducer and Low Frequency Eddy Current technology, Beaudo said.

The western side of Prudhoe Bay is continuing in production but the eastern side remains shut down. BP hopes to restart at least part of the eastern side, if federal regulators agree, after cleaning and running smart pig inspections in pipelines. The company hopes to have bypass connection links in place by the end of October to use the undamaged Lisburne and Endicott field pipelines to begin production from Flow Station 2 in the eastern side of Prudhoe and Gathering Center 3 on the western side, according to Maureen Johnson, BP's manager for Prudhoe Bay. GC-3 is now linked to eastern side pipelines.

Tim Bradner can be reached at tim.bradner@alaskajournal.com . 

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Anchorage Daily News
September 22, 2006

  http://www.adn.com/money/industries/oil/story/8220818p-8117599c.html

BP acts on fears of caller
ANONYMOUS: The firm heard women may have been denied jobs.
By WESLEY LOY
Anchorage Daily News
Published: September 22, 2006
Last Modified: September 22, 2006 at 05:54 AM

BP is investigating complaints that women possibly were denied jobs in the Prudhoe Bay oil field for lack of separate women's housing, a company spokesman said Thursday.

The investigation was begun after an anonymous woman on Wednesday called a secretary to BP's Alaska president, Steve Marshall, expressing concern about reprisals if she complained, said BP spokesman Daren Beaudo.

BP, which runs the Prudhoe Bay field on behalf of itself and other owner companies, will look into whether BP or oil field contractor companies somehow discriminated against women workers, Beaudo said.

"We believe in equal opportunity," he said, adding that BP managers don't tolerate discrimination against any class of workers whether they work directly for BP or a contractor.

BP and its contractors have brought hundreds of additional workers to the North Slope since Aug. 6, when the London-based energy giant began shutting down the giant Prudhoe field due to corrosion-related pipeline leaks.

The field, which normally produces about 400,000 barrels per day of crude oil, remains severely hobbled with output still down by about half.

BP and its contract workers are testing miles of above-ground pipelines for corrosion and installing new pipes in an effort to bring the field back up to full production. The work is sometimes rough, requiring laborers to strip thick insulation off above-ground steel pipes.

The influx of new workers has strained the Slope's housing capacity, forcing BP and its contractors to bring in portable housing units in some cases to accommodate all the workers, Beaudo said.

BP will investigate to see whether some women were denied jobs because there wasn't adequate women's bed space available, he said.

Rick Wilson, a manager for Pacific Environmental Corp., one of several contractors doing pipeline and other work on the Slope, said his company is providing ample work to women, and that the firm's lead person on the Slope is a woman.

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

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Seattle Times
September 22, 2006

http://seattletimes.nwsource.com/html/localnews/2003270403_alaska22m.html

 
Alaska politics crazy this year, even by state's own standards
By Ralph Thomas
Seattle Times staff reporter

ANCHORAGE  How fitting for tavern owner Mr. Whitekeys that in the weeks leading up to his final show, voters dumped their once-popular governor and federal agents raided state legislative offices  searching for, among other things, hats emblazoned with "Corrupt Bastards Club."

Whitekeys has spent a quarter-century lampooning Alaska's politicians in stage shows at his Fly-By-Night Club, a bright-blue bar that proudly bills itself the "sleaziest" nightspot in town.

He's never had a shortage of fodder. Alaska, a state seemingly still in puberty, always has been known for its colorful characters and political upheavals.

One former governor  there have been only eight  was nearly impeached and another claimed he was guided by an invisible "little man" on his shoulder. In the 1980s, two of the state's most powerful lobbyists were sent to prison on extortion and racketeering charges. A state lawmaker was busted for illegal possession of machine guns.

"This place plays by its own rules. Always has," said Whitekeys, who recently sold the bar and put his stage show into hibernation.

But even by Alaska standards, things have been pretty wild lately.

Last month, Gov. Frank Murkowski suffered a humiliating defeat in the Republican primary, losing badly to the former mayor of a town not much bigger than Omak. A U.S. senator for 22 years before becoming governor, Murkowski was dogged by ethics scandals and political missteps, including appointing his daughter to his old job in Congress and buying a private jet.

On Aug. 31, FBI agents swarmed the offices of six legislators, including Senate President Ben Stevens  son of the state's most powerful figure, U.S. Sen. Ted Stevens. At the Capitol in Juneau, agents lugged boxes marked "evidence" past photo-snapping tourists.

Though little has been revealed about the investigation, it's clear the feds are looking into the relationship between lawmakers and Veco, a politically powerful oil-field service company with close ties to the younger Stevens.

All this happened against a backdrop of trouble for Alaska's lifeblood oil industry. In early August, BP was forced to partially shut down the giant Prudhoe Bay oil field after discovering badly corroded pipes.
 
BP officials, already facing a criminal probe into an earlier spill at Prudhoe, were hauled before Congress and berated for ignoring warnings about the corrosion.

Aside from rocking two of the state's most-prominent political families and shaking up the state's Republican-dominated establishment, the events last month further jeopardized two of Alaska's biggest petroleum dreams.

Murkowski and the Legislature have been jousting for the past several months over his proposal for a new pipeline to carry natural gas from the North Slope to markets in the Lower 48. The $25 billion, 2,100-mile pipeline would create a construction boom and tap the state's vast gas reserves.

But legislative leaders have no desire to take the project up again right now.

Meanwhile, BP's problems at Prudhoe Bay pose a serious obstacle to the state's effort to allow oil drilling in environmentally sensitive areas, such as the Arctic National Wildlife Refuge.

Dependent on oil

In a sense, everyone in Alaska is on the take from oil.

Nearly 90 percent of the state budget comes from oil taxes and royalties. Citizens pay no state taxes. And the state next month will send out Permanent Fund dividends, the annual cut each citizen gets from earnings on the state's $34.5 billion oil savings account. This year's checks are $1,106.96 per person.

Meanwhile, record-high oil prices have created a gusher of new money for the state treasury.

So it's no surprise that Alaskans generally have had a friendly relationship with the oil industry. But things have gone a little sour lately, said Jerry McBeath, a political-science professor at the University of Alaska, Fairbanks.

McBeath said many Alaskans  who have been hit as hard as anyone by high fuel prices  don't believe the state has been getting its fair share of the record-high profits the industry has reaped the past few years.

Politically, "this is the worst time for the industry since the Exxon Valdez oil spill," McBeath said.

A citizen initiative before voters in November would for the first time tax natural gas while it's still in the ground. The measure, aimed at forcing energy companies to start producing the gas, is bitterly opposed by the industry but stands a good chance of passing.

"The industry is under a lot of pressure now  on all kinds of fronts," said Judy Brady, executive director of the Alaska Oil and Gas Association.

Both of the leading candidates to replace Murkowski  former Gov. Tony Knowles and Sarah Palin  openly criticize the industry.

Knowles, a Democrat who has been considered a friend of big oil, and Palin, the maverick Republican who defeated Murkowski last month, both say there is a general sense that the state's political leaders have conceded too much to the oil companies. And with profits soaring, they say, it's especially offensive to learn that BP failed to maintain crucial pipes at Prudhoe.

"All of that mixes together into a pretty unpalatable stew," Knowles said.

"Bald Ego" takes flight

Murkowski can't blame the anti-oil mood for his demise.

In late 2002, just after he was sworn in as governor, Murkowski appointed his daughter, Lisa Murkowski, to replace him in the Senate. It was all downhill after that  and Murkowski hit a lot of trees on the way down.

Two political friends he appointed to state jobs were chased from office by ethics complaints.

Murkowski scrapped the state's "longevity bonus" program, a monthly cash payment to seniors. And even though the Legislature tried to block his efforts to buy a jet, he kept pushing and eventually got his plane  a craft his critics dubbed the "Bald Ego."

On top of all that, the public and many legislators were miffed by Murkowski's secret negotiations with oil lobbyists over a major rewrite of oil-tax laws and the industry's gas-pipeline proposal.

By election time, one local columnist had taken to calling him America's "most unpopular nonindicted governor." Murkowski's 19 percent showing in the primary was the worst in state history for an incumbent governor.

State Rep. Jay Ramras, a rookie Republican lawmaker from Fairbanks, said the election was a "referendum on the leadership style of a very long-in-the-tooth ex-U.S. senator."

But Palin said it was more than that. Palin, former mayor of Wasilla, a small town 40 miles north of Anchorage, won despite being outspent by both of her opponents and her rocky relationship with Republican Party leaders.

It was Palin who pressed the ethics complaints that forced out two of Murkowski's appointees. And she was a leading critic of Murkowski's dealings with the oil industry.

Aside from going for Palin's populist message, voters also approved a ballot measure that largely restores campaign donation and lobbying limits that Murkowski and the Legislature weakened three years ago.

"People are saying, 'No more of this,' " Palin said.

Veco a prominent player

Palin said the FBI raids will only fuel that mood.

The FBI remains mum about the investigation. But agents were searching for "anything of value" provided to legislators by Veco executives and documents related to the recent high-stakes oil-tax and gas-pipeline talks, according to a copy of a search warrant obtained by the media.

Agents were also looking for hats or garments with the slogan "Corrupt Bastards Club" or "Corrupt Bastards Caucus," nicknames several lawmakers jokingly gave themselves after a newspaper column accused them of being too cozy with Veco.

Veco has long been a prominent political player. The company's top executives handed out about $1 million in state and federal campaign donations during the past decade  much of it coming in the past two years as the gas-pipeline talks heated up, according to the Anchorage Daily News.

The company, which has been cited in the past for violating campaign finance laws, also has paid big consulting fees to state lawmakers.

Sen. Ben Stevens, for instance, has received more than $250,000 in consulting fees from Veco since 2001. State law doesn't require Stevens or the company to disclose what work he did  and neither is saying.

Knowles and Palin have both sworn off donations from the company, although Knowles received more than $20,000 from Veco in past elections. In Washington state, U.S. Senate candidate Mike McGavick said he returned $14,000 he received from company executives.

Meanwhile, several Democratic legislators have decried what they say is a "culture of corruption" in the Legislature.

"I've watched for the last 10 years, and each year these Veco people and industry people get more and more blatant," said Rep. Harry Crawford of Anchorage.

But others say they haven't seen the unseemly atmosphere the Democrats describe.

"Everybody gets their arms twisted, but that's part of the job," said Rep. Ralph Samuels, an Anchorage Republican. "I've never had anyone say, 'Hey, we held a fundraiser for you, you better vote for our bill.' "

State Republican Party Chairman Randy Ruedrich notes that federal probes sometimes turn out to be little more than fishing expeditions.

But Mike Doogan, a former newspaper columnist who is running as a Democrat for the state House, said he doubts the feds would raid the offices of a powerful U.S. senator's son without good cause.

"Anybody who says this was a fishing expedition, go whistle," Doogan said. "They've got something."

And then there's Mr. Whitekeys. With Alaska in the midst of such political upheaval, Whitekeys said he worries he's "giving up a gold mine" by giving up his stage at the Fly-By-Night.

"But that's why we're closing," he laughed. "Because I got all that money under the table from Veco and now I don't have to work anymore."

Ralph Thomas: 360-943-9882 or rthomas@seattletimes.com

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KTUU Television
September 21, 2006

http://www.ktuu.com/cms/anmviewer.asp?a=6467&z=1

BP launches probe into sexual discrimination on Slope
Thursday, September 21, 2006 - by Jill Burke  

Anchorage, Alaska - BP has launched an internal investigation after women claim they are being denied jobs on the corroded pipeline repair project. Hundreds of workers are needed to help BP repair its pipes.
 
Oil-industry laborers know the conditions will be rugged and sometimes even crude. But three whistleblowers said they never expected to lose out on work because they are women.

With corrosion repair on BP’s oil pipeline underway, work on the North Slope is plentiful. But a handful of women claim something isn't right.

“Just before I left, all my crewmembers that were with me said, ‘Oh yeah, we got our two-week rotation.’ I didn't get my two-week rotation. Is something wrong, or what's the deal here?” said "Marilyn," a North Slope worker.

Three women, who spoke to KTUU-TV on condition of anonymity, were told that they were not eligible for work on the project because of their gender.

“The contractors were told that they cannot hire women, and not to put women in the classes because they are not going to have room for them anytime soon,”  said "Julie," a North Slope worker who was denied a job.

Two companies -- Pacific Environmental Conservation (PENCO) and Control Components Inc. (CCI) -- are currently supplying workers for the corrosion repair work. In a written statement, PENCO said it has “been told to delay crews because rooms were not available.”

The letter goes on to say that the company has “never been told by any of our clients to not provide female employees.”

So the question remains: why are some women being rotated out of work?

“I was told that they were not hiring women for the stripping crews because of the conditions and because of the lack of housing and facilities,” “Marilyn” said.

CCI did not return KTUU-TV’s call.

Meanwhile the women said it's more than work they are missing out on, but critical training as well.

Another North Slope worker, “Maria,” was told that a contractor would hire her to work on the project provided that she pay for the training required in order to perform the repairs.

“They paid for the men's training,” "Maria" said.

Much of the work is being overseen by VECO Corp. and BP. Both admit that lack of housing is a problem, but firmly say there is no mandate to keep women away.

BP has launched an investigation to ascertain what discriminatory actions -- if any -- were taken against women. The company said in its statement that, “if there were miscommunications or actions inconsistent with BP’s values, it will be corrected immediately.”

The women said the only satisfactory remedy is to receive the same opportunity as men to work on a job they know they can perform.

“We are doing the same things that men are doing. We just don't understand why this is going on,” “Maria” said.

In addition to missed work and training, the women said they have concerns that men with less experience than they have are being funneled to the North Slope. They were also disappointed that their company did not support them after word allegedly came down not to send women to the North Slope.

BP said equal opportunities for all employees is paramount and they are doing what they can to discover what was said, how it was interpreted and why some women feel they have been unfairly discriminated against.

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Statement by: Paula Dawson, Pacific Environmental Corporation
Pacific Environmental Corporation (PENCO) is an equal opportunity employer and an environmental company that provides personnel to several contractors on the North Slope for a variety of projects.

Currently, PENCO is working with VECO Alaska to provide trained asbestos abatement personnel to work on the pipe stripping project for BP Exploration.

PENCO has mobilized 18 individuals since September 17th to work on this project. Two of these individuals are women, including our lead supervisor.

Billeting has been an issue for personnel on the Slope with all of the extra requirements necessary to assist in the pipeline shutdown. This led PENCO to find their own accommodations through an alternate camp that is not related to BP Exploration or VECO. PENCO has complete control over who is hired, placed in this camp and employed on the project.

At no time has PENCO been directed by any of our North Slope contractors to not hire women because of billeting. We have, however, been told to delay crews because rooms were not available at all, but we reiterate, we have never been told by any of our clients to not provide female employees.

PENCO services many clients on the North Slope, some of which have gone out of their way to accommodate housing for our female personnel.

Thank you,
Please call if you require further comment  907-562-5420

 

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Financial Times
September 20, 2006

http://www.ft.com/cms/s/f24d51d2-4844-11db-a42e-0000779e2340.html

BP battles to clear its Augean stables
By Carola Hoyos
Published: September 20 2006 03:00 |
 Last updated: September 20 2006 03:00

On March 23 last year, a cloud of highly flammable hydrocarbons erupted at BP's Texas City refinery, after a catalogue of mechanical failures. Alarms remained silent, level indicators failed to judge the mounting danger and valves jammed.

At 1.20pm, probably ignited by a spark from a pick-up truck, the cloud burst into flame, setting off a series of explosions.

Fifteen workers in two trailers next to the tower died and 170 others were injured.

Long after families had buried their dead and the refinery had been rebuilt, the explosion continues to tear through BP's corporate fabric. Until the day of the tragedy, BP and Lord Browne, its chief executive, had enjoyed as celebrated and successful a run as is possible in one of the world's most dangerous and unpredictable industries. Lord Browne was regularly voted Britain's most admired business leader.

However, on March 23 BP crossed a "fault line", Lord Browne would later say, that would force a "fundamental change" in the way the company operated. For BP, Texas City has been as profound an event as Exxon's huge oil spill at Valdez in Alaska in 1989. The explosions at Texas City marked the beginning of a wretched 18 months. In that period, BP's flagship Thunder Horse platform in the Gulf of Mexico was damaged in a hurricane in July 2005 and its Alaska pipelines corroded so badly that almost exactly a year after the Texas City disaster they caused the biggest onshore spill in the state's history and forced the company to shut America's largest oil field.

This summer, the US government accused BP's traders of having tried to corner the propane market in 2004; and Lord Browne himself was strong-armed by his chairman into announcing he would retire promptly in 2008.

The run of trouble has prompted investors to sell BP shares and to ask whether the company had a systemic problem.

This week's announcement that BP would have to delay the restart of Thunder Horse a third time deepened the company's malaise. It prompting analysts to warn that, as a result, its earnings per share would fall 4.5 per cent in 2007 and 6 per cent in 2008.

BP's shares have already retreated so far that Royal Dutch Shell in August knocked it off its perch as Europe's second-biggest listed energy group.

Moreover, BP's troubles have thrown Lord Browne's succession into doubt, with four of the five candidates, many of them groomed for decades, embroiled in the trouble. Lord Browne and BP's senior executives have steadfastly maintained that the recent events in the US were unconnected.

Nevertheless, they have appointed Bob Malone as the new president of BP USA, and Stanley Sporkin, a former federal judge, as its ombudsman. It is also spending $7bn (£3.7bn) over four years on the safety and integrity of its US operations. It has also promoted John Mogford to be vice-president of safety and operations, reporting directly to Lord Browne, to co-ordinate what is intended to be a company-changing overhaul of its operations.

BP's root-and-branch revamp will take five to 10 years. It will allow the company to clean up a system thrown into upheaval by 15 years of low oil prices followed in 1998 by the most ambitious acquisition spree attempted by an oil company since the days of John D Rockefeller and the rise of Standard Oil a century ago.

Many analysts, oil workers and company executives believe repairs to old refineries, such as the one in Texas City and to pipelines, such as those at BP's Prudhoe Bay field in Alaska, were delayed by oil companies' cost-cutting in the 1980s and 1990s, when oil prices fell as low as $10 a barrel and thousands of workers were laid off.

One senior energy executive says: "One of the problems is that this industry was in decline for two decades. In such an industry you have to make assumptions and decide where to spend more."

Matthew Simmons, a well-known Houston-based industry consultant, puts it more bluntly. "BP's culture was designed to be the most efficient cost-cutter in the industry and they did that with a certain degree of arrogance and out of that came too many corners cut on maintenance and safety."

Most of BP's oldest operations are in the US and that the late 1980s and 1990s were a trying time.

Lord Browne has warned that the industry faces a shortage of engineers and workers as a result, noting that a disproportionate share of BP's workforce is above 45, and in some areas, such as exploration and production, above 50.

As oil companies embarked on round after round of lay-offs from 1983 to 2002, the number of petroleum engineers in the US shrunk from 33,000 to 18,000, while the number of geologists and geophysicists fell from 65,000 to 48,000, data from the US Bureau of Labor Statistics show.

Meanwhile, students shied away from studying a subject for which there seemed no further use and the number of US colleges offering undergraduate petroleum engineering degrees fell from 34 to 19. The trend has been similar in the UK with the number of registered engineers falling more than 8 per cent over the past decade. For BP, the situation was magnified by the acquisitions of Amoco in 1998 and Arco in 1999, which led to further cost cutting.

During that time BP launched Ghser, "Getting Health Safety and Environment Right", which set out new expectations for the bigger group now heavily weighted in the US.

In the following eight years, BP managed to improve Amoco's lagging safety record. Until the Texas City disaster, BP's safety record was one of the best in the industry. But, privately, the company now admits it failed to integrate fully its different safety systems. Plants still use a range of procedures, entrenched by local custom and practice.

Leo Martin, director of GoodCorporation, which helps companies including Total and BG, BP's smaller UK rival, assess their environment, health and safety cultures, says: "BP set the tone from the top but failed in the implementation. British culture would usually do it the other way round." At BP, he says, it appears a gap emerged between the corporate centre, which tries to establish clear business principles, and local management, which is focused on day-to-day operational performance.

To be able to catch up with ExxonMobil, the industry's undisputed leader, BP knows it must change its entire structure, not just its safety system.

Getting the revolution off the ground will be one of Lord Browne's final big challenges before he retires at the end of 2008.

BP's problems in the US have consumed the chief executive, people close to him say.

Lord Browne has grown more weary and retreated from the spotlight that he had in the past commanded with such obvious enjoyment. Meanwhile, even after their bitter public row over succession, he has called on Peter Sutherland, BP's chairman, for guidance. Earlier this summer, he went to Marbella in search of his advice. "Golf was not on the agenda," one insider notes.

Neil McMahon, analyst at Sanford Bernstein and a former BP employee, stresses that the executives' focus must now be on centralising BP's operations.

"BP's organisational structure is comprised of numerous business units, surrounding assets or profit centres, versus the more old-school style of ExxonMobil, which has a few giant functions run centrally.

A more centralised organisation structure may help the top management of BP have greater control on the organisation as they strengthen procedures," he says.

According to one senior executive of a big European energy group, ExxonMobil is the only major oil company with the operating structure that allows it to face the new challenge of taking on huge, technologically challenging projects at a time when oil rich countries are increasingly shutting the doors to their oil and gas fields to foreigners.

Exxon's success was born from bitter experience. On March 24 1989, the Exxon Valdez tanker struck a reef and spilled 11m gallons into Alaska's pristine Prince William Sound. Exxon spent $300m compensating victims, was fined $287m and is still contesting $4.5bn in punitive damages.

The company eventually overhauled its approach to safety, centralised its businesses, added checks and balances and created an internal communications system that improved everything from financial prudence and physical caution to technological innovation.

Based on the approach taken by Dow Chemical, the company structure is the same round the world so that employees do not have to relearn Exxon's policies and procedures every time they move. It also allows problems to be communicated throughout the company so that others can help, or at least learn from them.

Mark Albers, president of ExxonMobil Development Company, who oversees all of Exxon's new production and development projects, says the centralised structure is key to its success. From