January 2007 News Stories
Anchorage Daily News
January 31, 2007
http://www.adn.com/front/story/8604491p-8497377c.html
BP will
cut pipeline again to study corrosion
EXPLORATORY: The U.S. request is not related to criminal investigation.
By WESLEY LOY
Anchorage Daily News
Published: January 31, 2007
Last Modified: January 31, 2007 at 03:45 AM
PHOTO
http://www.adn.com/ips_rich_content/633-31PrudhoePipeLoc.gif
BP this week plans to cut a 40-foot
section out of a major Prudhoe Bay pipeline and study it for clues about why
it sprang leaks last summer, causing an unsettling partial shutdown of the
nation's largest oil field.
It's the second time in less than a year that federal authorities have asked
BP to snip out a piece of Prudhoe pipe for analysis.
Last year, a federal grand jury investigating possible criminal violations hit
BP with a subpoena for a segment of another leaky pipeline. That piece is
being held as evidence.
This latest request for a pipe section isn't related to the criminal
investigation, a federal official said Tuesday.
Rather, it is part of efforts to learn more about the aggressive strain of
corrosion that ate numerous holes and near-holes inside the steel pipeline
that leaked in August. The pipe, three miles long and 30 inches in diameter,
is on Prudhoe's east side.
"The main goal is to find out the root cause," said James Wiggins, a spokesman
for the U.S. Pipeline and Hazardous Materials Safety Administration. The
answer could prevent future pipeline ruptures, he said.
BP runs the giant oil field on behalf of itself and other owners including
Exxon Mobil and Conoco Phillips.
The London-based company has been under fire since early last year for lax
maintenance of Prudhoe Bay pipelines, drawing scrutiny and pointed criticism
from pipeline regulators, members of Congress and others.
The problem pipes are known as transit lines -- major trunk lines that drain
oil out of the vast field and feed it into the larger trans-Alaska pipeline,
which carries the crude 800 miles south to the tanker port at Valdez.
The transit lines are old, installed before North Slope oil production began
in 1977.
Because the lines carry pure crude oil free of corrosive water, BP executives
have said they were surprised that holes developed and caused leaks. But they
also have admitted the company failed to regularly clean and inspect the pipes
for problems.
According to letters exchanged between BP and the federal pipeline
administration, BP crews will begin work Thursday on cutting out the 40-foot
section of pipe.
"It's not a small job," BP spokesman Daren Beaudo said Tuesday.
The badly corroded, above-ground pipeline has been out of service since it
leaked in August, and BP plans to demolish it. It's been drained, but some
residual oil might still be inside, Beaudo said.
Crews will take precautions to contain any oil that might spill when they cut
out the section, and dangerous petroleum vapors will be snuffed by sweeping
the pipeline with nitrogen, according to a BP plan submitted to regulators.
The plan says a crane will lift the length of pipe onto a truck for delivery
to a shop, where it will be cut into smaller pieces for study of corroded
spots, sediment buildup and scaly deposits, which are thought to have
contributed to the corrosion outbreak.
Meantime, the exposed ends of the pipe left in the field will have to be
sealed to prevent leaks.
The whole operation is expected to take four days, and federal pipeline
regulators will be on hand to "witness the activities," according to the
correspondence.
The regulators also asked BP to document the "chain of custody" for the pipe
section.
That doesn't necessarily mean the section is evidence to be considered in a
criminal investigation or enforcement action against BP, Wiggins said.
Rather, that's the normal procedure any time segments are cut out of pipelines
for study, as happens from time to time on damaged or ruptured pipelines
around the country, he said.
Beaudo said BP is cooperating fully in handing over the pipe section to
regulators.
"They said they wanted it and we said we'd do it," he said. "We're all
interested in the corrosion mechanism."
In October, after BP received a subpoena, the company cut a section out of a
similar transit line on the western side of Prudhoe Bay.
That section encompasses the almond-sized hole through which an estimated
201,000 gallons of crude oil leaked slowly onto the tundra. The spill,
discovered in March, was the largest oil spill ever on the North Slope.
Daily News reporter Wesley Loy can be reached at
wloy@adn.com
or 257-4590.
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Anchorage Daily News
January 30, 2007
http://www.adn.com/money/industries/oil/story/8601209p-8494091c.html
BP ships
return to Alaska trade
GONE: Improper
metal tempering may have led to loss of ground tackle.
By WESLEY LOY
Anchorage Daily News
Published: January 30, 2007
Last Modified: January 30, 2007 at 12:25 AM
A fleet of double-hull tankers that carries Alaska North Slope crude oil for
BP is back in service following a bout with bum anchors, a BP spokesman said
Monday.
The four ships were held for repairs after two of the tankers, the Alaskan
Navigator and the Alaskan Frontier, each lost one of their two enormous,
bow-mounted anchors last month while hauling oil through the turbulent Gulf of
Alaska.
A preliminary investigation found the China-made anchors might not have been
properly tempered to strengthen the metal, allowing them to break off, said BP
spokesman Daren Beaudo.
The fleet's operator, Alaska Tanker Co. of Beaverton, Ore., flew replacement
anchors aboard a heavy-transport aircraft from the Netherlands to Seattle,
Beaudo said.
The Alaskan Navigator and the Alaskan Frontier each were outfitted with two
new anchors. The other two ships, the Alaskan Legend and the Alaskan Explorer,
each got one temporary replacement anchor procured from Long Beach, Calif.,
Beaudo said. Ultimately, each of those ships will get two new permanent
replacement anchors, he said.
"All four tankers were in port in Valdez picking up cargo last week," Beaudo
said.
The loss of the anchors was a disappointment to the tanker operator and BP, as
the ships are all relatively new.
A San Diego shipyard built the 941-foot tankers for about $250 million each,
with the first of them going into service in the summer of 2004.
Questions still remain about exactly what caused the anchor failures, and
Alaska Tanker Co., the U.S. Coast Guard and the Washington state Department of
Ecology continue an investigation, according to a Coast Guard statement.
Daily News reporter Wesley Loy can be reached at
wloy@adn.com
or 257-4590.
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Financial Time
January 29, 2007
http://www.ft.com/cms/s/c8420ac6-af3d-11db-a446-0000779e2340.htm
BP bosses
debated Texas report
By Sheila McNulty in Houston
Published: January 29 2007 02:00 |
Last updated: January 29 2007 02:00
BP's senior executives debated how much to reveal in its own report on the fatal
Texas City accident, according to internal e-mails.
Cynthia J Warner, BP's new group vice-president for refining, was in favour of
limiting what was included in the internal report, the Financial Times has
learned.
"I think it's essential that we limit root causes in this report to those that
led to the Isom incident and to those things that would have been discovered in
the focused investigation of the Isom incident,'' Ms Warner said in an e-mail to
John Mogford, BP's global head of safety and operations.
The FT has obtained a copy of the e-mail, dated October 12 2005.
Ronnie Chappell, BP representative, said Mr Mogford had asked Ms Warner to
comment on his report into the critical factors and underlying causes of the
March 2005 explosion of the Isom unit at Texas City, which killed 15 and injured
500 in the biggest US industrial accident in a decade.
Yet Ms Warner complained to Mr Mogford that she was "disappointed that almost
none of my input seems to have been included".
"This will become a public document and, thereby, creates a level of specific
commitment and need to discuss that requires a very high standard of us being
absolutely sure of our position.
"I agree that there is a much broader set of root causes that we must address
related to our overall system of Operations Excellence, but the Isom
investigation isn't the place to put these things, and you and I have been put
in place to find and address them, so I'm not worried that they will get
overlooked.''
Despite noting that the report was Mr Mogford's responsibility and "no one can
tell you what ought to be in it", Ms Warner said: "I just want to be sure you've
had the chance to hear some views of someone who has spent a lot of time in
refineries and in Texas City so you can consider them.''
She was concerned that some areas were being overlooked.
"There are some critical things that aren't included as root causes that I think
we must highlight and fix. One is the underlying issue of divisiveness and lack
of teamwork and another is the absence of a technical focus on the day-to-day
operations of the equipment at the Isom unit.''
Ms Warner objected to Mr Mogford's conclusions on BP's outdated blowdown system,
which vented to the atmosphere instead of to a more modern flare.
"I think we are getting way ahead of ourselves when we conclude that the
appalling lack of focus on the Blowdown system as a critical safety system that
needed to be focused upon, maintained, and eventually phased out is a sign that
our overall focus on Process Safety is a shambles.''
Ms Warner admitted BP could have problems with its process safety system but
added: "There are a lot of good things about it and, for the most part, I'll
allege that it's in good shape.''
The independent panel led by James A Baker III, the former secretary of state,
reported last week that "significant process safety culture issues exist at all
five US refineries''.
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Fairbanks News Miner
January 25, 2007
http://newsminer.com/2007/01/25/4720/
Pipeline
fire could lead to policy changes
By Eric Lidji
Staff Writer
Published January 25, 2007
Officials are investigating a fire caused by a shutdown of the trans -Alaska
oil pipeline on Jan. 6.
The fire is believed to have started when an unplanned pipeline shutdown
released vapors near a work area at Pump Station 9, 150 miles southeast of
Fairbanks, being warmed by an industrial heater.
The fire did not cause any injuries or major damage.
According to preliminary reports, pressure testing in Valdez initiated an
automatic shutdown in the pipeline while workers at Pump Station 9 were
preparing a work area near a series of large holding tanks. With temperatures
reaching 25 below zero, the team received permission to use large industrial
heaters to warm the area.
The shutdown in Valdez initiated a sequence of events that sent oil into the
holding tanks, which then released vapor through a vent. Because of low winds,
the vapor hung in the air and was ignited by the industrial heaters.
Crews extinguished the fire by shutting off the vent.
The fire damaged temporary structures near the tanks. The Fort Greely Fire
Department scanned the area with infrared cameras and determined the fire did
not creep up into the tanks.
The fire did not affect oil production on the North Slope. Officials at the
Alyeska Pipeline Service Co. and the federal-state Joint Pipeline Office are
conducting separate investigations.
A preliminary Alyeska report indicated the industrial heater was placed closer
to the tank than allowed by company policy.
It also indicated the fire could lead to changes in policy for simultaneous
work in separate places along the pipeline.
A safety officer with the Joint Pipeline Office has finished a draft based on
his investigations.
Rhea DoBosh with the Joint Pipeline Office said her agency oversees safety,
among other things, at the pipeline. The office employs a fire marshal, but
that position has been vacant since the start of the year.
DoBosh said the safety officer is capable of handling the fire marshal’s
duties.
Contact staff writer Eric Lidji at 459-7504 or
elidji@newsminer.com
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Edmond Journal
January 25, 2007
http://www.canada.com/edmontonjournal/news/business/story.html?id=fc6d4b04-cc4c-4799-aac3-f71c3bd6da53&k=77297
Royal
Dutch goes deep in Alaska waters
Higher crude prices make field viable
Joe Carroll
Bloomberg
Thursday, January 25, 2007
Royal Dutch Shell plans to expand its search for oil by drilling the deepest
offshore Alaskan well ever.
Shell, which abandoned U.S. Arctic exploration 21 years ago, plans to drill
one well to 14,000 feet beneath the sea floor (4,267 metres), which would
exceed the deepest well ever drilled in Alaskan waters by 3,000 feet. Two
additional wells will be 7,000 feet deep.
Shell is refurbishing two floating drill rigs, one in Canada and one in
Singapore, which will be moved to the Beaufort Sea 90 miles northeast of
Prudhoe Bay. Drilling is expected to begin in 110 feet of water on Aug. 1,
said Keith Craik, the Shell drilling engineer leading the project.
"Shell is pretty high on the Arctic," Craik said in a interview in Inuvik,
Northwest Territories. "It's a really healthy place to look for hydrocarbons."
The Hague-based Shell began converting a mothballed drill ship, the Kulluk, in
June 2006 in the Arctic Ocean off Canada. The conversion, halted for winter,
will be finished in July, Craik said.
The Kulluk, operated by Frontier Drilling, will move to Alaskan waters,
accompanied by a second rig also renovated to navigate ice-choked seas. Two
ice-breakers and two supply vessels will also be on site.
If Shell finds oil off the Alaskan coast, the company would seek permission to
build a pipeline from the wells to the existing Trans-Alaska pipeline
terminal, said Craik, who is based in Houston. Shell found oil in the same
part of the Beaufort Sea in 1986.
The company abandoned those discoveries because oil prices plunged to near $16
a barrel, making it unprofitable to extract those reserves. Crude is currently
trading near $55 a barrel.
Arco, now part of BP Plc, drilled to 11,000 feet beneath the sea floor off the
Alaskan coast in 1993, the deepest ever in those waters.
Exxon Mobil Corp., the world's biggest oil company, and other producers have
discovered more than 10 billion barrels of oil in North American Arctic seas.
Those reserves remain locked beneath the sea floor because of a lack of
pipeline capacity to ship them to markets, said Robert Hunt, president of
Calgary-based Horizon North Logistics Inc.
Shell will build an ice road across McKinley Bay in March to haul supplies and
gear to the Kulluk, which has been iced in since November. Shell plans to
return the vessel to McKinley Bay each November to protect it from more
dangerous ice floes in the open seas.
Craik was in Inuvik to brief Inuvialuit hunters and trappers who could be
affected by the work on the Kulluk. The Inuvialuit inhabit McKinley Bay, 300
kilometres north of the Arctic Circle.
"We're going to send in the ice breakers in June to bust out a channel so the
Kulluk can be moved out," Craik said. "We have an ambitious scope of work, but
we're very optimistic."
Shell plans to drill for at least three years and will extend that if the
discoveries are big enough to warrant it. The wells drilled in 1986 indicated
the presence of large pools of oil. Those wells terminated at a depth of about
6,000 feet.
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BP Web site
January 16, 2007
BP News <editor@bp.com>
BP will
Implement Recommendations
of Independent Safety Review Panel
HOUSTON -- BP p.l.c. will implement the
recommendations made by an independent safety review panel as part of the
company's continuing effort to improve its safety culture and to strengthen
and standardize process safety management at BP's five U.S. refineries.
BP already has taken a number of actions which align with the recommendations
of the BP US Refineries Independent Safety Review Panel and will, after a more
thorough review, develop plans for additional action at its U.S. refineries
and for applying lessons learned elsewhere.
In a report made public today, the Panel identified material deficiencies in
process safety performance at BP's U.S. refineries and called on BP to give
process safety the same priority BP has historically given personal safety and
environmental performance. The Panel made recommendations for improving BP's
process safety leadership, systems, expertise and oversight of process safety
performance.
The Panel, led by former U.S. Secretary of State James A. Baker, III, was
appointed by BP Group Chief Executive John Browne in October 2005 on the
recommendation of the U.S. Chemical Safety and Hazard Investigation Board (CSB).
BP is cooperating with the CSB in its investigation of the March 23, 2005
explosion and fire at the Texas City refinery that claimed the lives of 15
workers and injured many more.
John Browne said: "I want to thank Secretary Baker and the other Panel members
for their effort, their insights and their recommendations," Browne said. "We
asked for a candid assessment from this diverse group of experts and they
delivered one. We will use this report to enhance and continue the substantial
effort already underway to improve safety culture and process safety
management at our facilities."
The Panel acknowledged the company's efforts stating that "since March of 2005
BP has expressed a major commitment to a far better process safety regime, has
committed significant resources and personnel to that end, and has undertaken
or announced many measures that could impact process safety performance at
BP's five U.S. refineries." The Panel also said that making dramatic change in
large companies is difficult in short time frames and that the ultimate
effectiveness of the actions taken or planned by BP could only be determined
over time.
"Many of the Panel's recommendations are consistent with the findings of our
own internal reviews," said Browne. "As a result, we have been in action on
many of their recommendations for a year or more. Our progress has been
encouraging but there is much more to do. Members of our refining leadership
team will be meeting with the Panel within the week to address how best to
implement these recommendations.
"I share the Panel's confidence in BP's refining workforce," Browne added.
"They are, as the Panel stated, ready, willing and able to participate in a
sustained effort to move BP towards process safety excellence. As I told the
Panel, I intend to ensure BP becomes an industry leader in process safety
management and performance. We will want to do everything possible to prevent
another tragedy like the one that occurred at Texas City."
Notes to editors
The full text of the report prepared by the BP US Refineries Independent
Safety Review Panel is available at
www.bp.com/bakerpanelreport (pdf, 2352KB)
• The BP US Refineries Independent Safety Review Panel
was established to make a thorough, independent and credible assessment of
corporate oversight of safety management systems at the company's five U.S.
refineries and of the company's corporate safety culture. The Panel did not
investigate the Texas City incident or any other past event.
• The Panel makes clear in Section 1 that its findings
"should not be construed as suggesting or determining that any particular
individual, whether a refinery employee or contractor, refinery manager,
corporate-level manager or BP board member failed to meet any applicable legal
standard, was negligent, otherwise committed a wrongful or tortious conduct,
or breached any duties owed to BP, BP's shareholders or anyone else. Any such
finding or determination is outside the scope of the Panel's charter. The
Panel simply did not seek to develop the type of data and evidence that would
be necessary to make such a finding or determination. The Panel observes,
however, that during the course of its review, it saw no information to
suggest that anyone - from BP's board members to its hourly workers - acted in
anything other than good faith."
• The Panel also says that it is under no illusion that
the deficiencies in process safety culture, management, or corporate oversight
identified in the report are limited to BP. All companies in the industry
should give serious consideration to its recommendations.
• BP has taken significant action to reduce risk and
improve process safety performance at its U.S. refineries and its other
facilities around the world. Those actions include:
o Formation of a senior executive team, which includes
several managing directors, to support and oversee process safety, integrity
management, and operational integrity initiatives within the company.
o Creation of a new Safety and Operations function
responsible for establishing Group operations and process safety standards and
auditing safety and operations performance. The Safety and Operations function
reports directly to the Group Chief Executive.
o The appointment of a new Group Vice President for
Refining familiar with the work of the Panel. Cynthia Warner will move into
the position effective April 1, 2007 after serving as the company's liaison
with the Panel.
o Significant expansion of the responsibilities and
powers of the Chairman and President of BP America to include monitoring BP's
U.S. operations to ensure compliance with regulatory requirements and company
standards, and to rectify problems when they are identified. Robert A. Malone,
a BP Executive Vice President with significant operations experience, was
appointed to the post effective July 1, 2006. He reports directly to the Group
Chief Executive.
o Creation of an advisory board to assist BP America
management in monitoring and assessing BP's US operations.
o Appointment of retired federal Judge Stanley Sporkin to
act as a channel for receiving, investigating and resolving concerns raised by
BP staff and contract workers in the U.S.
o An increase in spending from $1.2 billion in 2005 to an
average of $1.7 billion per year from 2007 to 2010 to improve the integrity
and reliability of our refining assets in the United States. This represents
an increase in, and an acceleration of, planned spending.
o Systems to manage process safety at the refineries are
undergoing a major upgrade, with some $200 million earmarked to pay for 300
external experts who are conducting comprehensive audits and re-designs, where
necessary, of all process safety systems. The new systems are targeted to be
installed and working by the end of 2007, a year ahead of the original
schedule.
o Adoption of new corporate standards governing
operations integrity management and control of work and the adoption of a new
engineering technical practice governing the use of temporary occupied
structures in refineries and other facilities.
o Significant external recruitment across our US refining
businesses to increase underlying capability in operations and engineering.
o Providing focus through the creation of a six point
plan, including implementation of the Integrity Management and Control of Work
Group Standards.
o Changes in the way safety audits are conducted and
results communicated within the corporation. The company has appointed a
central 60-person operations and safety audit team led by an expert recruited
from outside the company.
o Development of metrics as leading indicators of process
safety performance.
o Installation of modern process control systems on major
units, the transition to a more powerful maintenance management system,
improvements in worker training, and the removal of blow down stacks which
vent heavier than air light hydrocarbons to atmosphere.
Other background
• BP has accepted responsibility for the March 23 explosion at the Texas
City refinery and for the management system failures and employee mistakes
which contributed to or caused the explosion.
• The company has set aside $1.6 billion to compensate victims of the
explosion and has worked to resolve claims arising from the incident.
Settlements have been achieved with the families of every worker who died and
with many of the workers who suffered injuries.
• BP has entered a settlement with the U.S. Occupational Safety and Health
Administration resolving more than 300 separate alleged violations of OSHA
safety regulations. BP paid a fine of just over $21 million. The company
agreed to a number of corrective actions, including the hiring and placement
of process safety and organizational experts at the refinery. Under the
agreement, BP does not admit the alleged violations or agree with the way OSHA
has characterized them.
• BP continues to cooperate with the CSB, the U.S. Environmental Protection
Agency and the Texas Commission on Environmental Quality regarding the Texas
City explosion and related concerns.
• BP has endorsed a CSB recommendation urging the industry to revisit
existing standards for the use of temporary buildings inside refineries and
other processing plants. BP has established a new standard for its refining
operations and plans to share it with others in industry.
For further information contact:
Name: Ronnie Chappell
Office: BP Press Office, Houston
Telephone: +1 (281) 366 5174
Office: BP Press Office, London
Telephone:+44 (0)207 496 4076
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Anchorage Daily News
January 24, 2007
http://www.adn.com/money/industries/oil/story/8585798p-8478888c.html
Kuparuk
oil field marks 25th anniversary
MORE TO COME:
Officials say production
not yet to halfway point.
By KRISTEN NELSON
Petroleum News
Published: January 24, 2007
Last Modified: January 24, 2007 at 03:38 AM
The Kuparuk River oil field, the state's second largest, has been in
production for more than 25 years, since Dec. 13, 1981.
It has a lot more anniversaries to go.
"We don't feel we're halfway through the field's life yet, even though we're
at the 25-year anniversary," said Paul Dubuisson, manager of North Slope
operations for Conoco Phillips, the company that runs Kuparuk.
"Today the field continues to be an important legacy asset to our company,"
added Jim Bowles, Conoco's Alaska president.
Kuparuk, discovered in 1969, is located to the west of Prudhoe Bay, the
largest oil field not only in Alaska but the nation.
According to state figures, Kuparuk and related fields had produced almost 2.2
billion barrels of oil through the end of November. By comparison, Prudhoe has
produced more than 11 billion barrels.
The sprawling Kuparuk field has 47 active drill sites and some 1,100 wells,
about half of which produce oil; the others inject water, gas or other
substances back underground, Dubuisson said.
By applying advanced technologies, Conoco engineers see a lot of potential
left in Kuparuk.
"Like most large fields it continues to expand," Dubuisson said. Engineers see
two main targets for getting more out of Kuparuk: Tapping the pools of thick,
sticky oil called heavy crude associated with Kuparuk, and also drilling more
wells to exploit thoroughly the field's conventional oil reservoirs.
New drilling techniques and other innovations have unlocked "a tremendous
amount -- but there's even more there," Dubuisson said.
Three-dimensional seismic surveys conducted in the field two winters ago
allowed Conoco to identify "quite a bit" of potential in the existing field
for more development, which can be done with more drilling and treatments such
as waterflood.
Billions of barrels of heavy crude are contained in West Sak and Ugnu, two
heavy oil accumulations that overlie the deeper Kuparuk reservoir. Because the
heavy oil layers are relatively cold, sticky and hard to pump, Conoco
historically has simply drilled through the West Sak and Ugnu pools to tap the
Kuparuk oil, which is easier to produce.
As the Kuparuk pool plays out, more emphasis will be placed on developing the
heavy crude, Conoco managers say.
West Sak development already is under way at Kuparuk, and someday work might
pick up to develop Ugnu, which lies above West Sak and is an even heavier
grade of oil.
Conoco is making good progress at West Sak, Dubuisson said.
"We brought on another well (Dec. 10) making about 3,000 barrels a day," he
said. "It wasn't that long ago it would have been a couple hundred barrels a
day."
One problem with the heavy crude is that a lot of sand tends to come out of
the ground mixed with the oil. Conoco has improved equipment and found ways to
separate the oil and sand.
"We've gotten very good at managing it," Dubuisson said. "The wells produce
some sand initially when you bring them on, but as you clean them up ... it
goes back to just a very small background level."
State records show West Sak has produced 25.9 million barrels so far, while
Ugnu has produced 1,606 barrels.
Conoco owns 52 percent of Kuparuk and runs it on behalf of other owners
including BP, which owns 37 percent, Exxon Mobil with 6 percent and Chevron
with 5 percent.
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http://www.adn.com/news/alaska/wildlife/bears/polar_bears/story/8586538p-8479596c.html
Polar
bears shift dens off the ice
BEAUFORT SEA:
Study shows that pregnant sows dig in on land; global warming is cited.
By DAN JOLING
The Associated Press
Published: January 24, 2007
Last Modified: January 24, 2007 at 02:24 AM
More pregnant polar bears in Alaska are digging snow dens on land instead of
sea ice, according to a federal study, and researchers say deteriorating sea
ice due to climate warming is the likely reason.
From 1985 to 1994, 62 percent of the female polar bears studied dug dens in
snow on sea ice. From 1998 to 2004, just 37 percent gave birth on sea ice. The
rest instead dug snow dens on land, according to the study by three U.S.
Geological Survey researchers.
Bears that continued to den on ice moved east in the Beaufort Sea off Alaska's
northern coast, away from ice that was thinner or unstable.
"We hypothesized that the sea ice changes may have reduced the availability or
degraded the quality of offshore denning habits and altered the spatial
distribution of denning," said wildlife biologist Anthony Fischbach, lead
author of the study. "In recent years, Arctic pack ice has formed
progressively later, melted earlier, and lost much of its older and thicker
multiyear component."
The study makes no predictions of harm in the short term but suggests the
Beaufort Sea bear population could be harmed if warming continues. Though
bears are powerful swimmers, at some point they might face daunting distances
of open water to reach denning habitat on shore.
"If Arctic sea ice continues to decline, we predict that the proportion of
coastal denning will continue to increase until the autumn ice conditions
prevent pregnant bears foraging offshore from reaching the coast in advance of
denning," Fischbach said.
The study is under USGS review. Fischbach spoke about the study at the Alaska
Marine Science Symposium, which continues through today in Anchorage. The
co-authors are research wildlife biologists Steven Amstrup and David Douglas.
The study is likely to give ammunition to conservation groups calling for
polar bears to be listed as threatened under the Endangered Species Act.
Three conservation groups sued the federal government in late 2005 seeking
protections for polar bears under the law, blaming global warming for the
melting of sea ice, the primary habitat of the animals.
Department of Interior Secretary Dirk Kempthorne in December proposed listing
polar bears as a "threatened" species. A public comment period on the proposal
is open through April 9.
"Threatened" under the law means a species is likely to become endangered in
the foreseeable future. "Endangered" means it is in danger of extinction
throughout all or a significant portion of its range.
The listing is opposed by Alaska Republican Gov. Sarah Palin, who told
Kempthorne by letter that listing polar bears has the potential to damage the
economy of Alaska and the nation without any benefit to polar bear numbers or
their habitat, and that there are no human activities that can be regulated to
effect change.
Conservationists disagree.
"The dire impacts from global warming on America's polar bears continue to
mount: drownings, cannibalism, starvation, reduced cub survival and now
denning dislocation," said Deborah Williams, president of Alaska Conservation
Solutions, an Anchorage-based group aimed at halting climate change. "Clearly,
we need to demand that Congress and the administration protect polar bears,
and our future, by reducing greenhouse gas emissions and listing polar bears
under the Endangered Species Act."
Kassie Siegel of the Center for Biological Diversity, the lead author of the
petition seeking to list polar bears as threatened, said the study underscores
the scope of changes in the Arctic.
"It's such the canary in the coal mine," Siegel said. "If you want to know
what's going to be happening in the rest of the world in 25 years, all you
have to know is what's happening in the Arctic. Everything is changing, and
not for the better."
Alaska polar bears spend most of their lives on sea ice, a marine habitat from
which they hunt for their main prey, ringed seals, plus bearded seals and
other animals.
Typically in November or December, after sea ice has reconnected to Alaska's
coast, pregnant polar bears dig dens where snow has piled into drifts.
Sea ice pushed into shore becomes jumbled into pressure ridges that capture
snow used for dens. However, with new ice, that can happen after bears want to
make dens. On shore, terrestrial features catch snow.
"They're generally using coastal bluffs and the river bluffs," said study
co-author David Douglas. "Along the big rivers, they have bluffs that catch
snow."
The USGS estimates the Beaufort Sea polar bear population at 1,526. In the
study, researchers determined that denning distribution had shifted, based on
satellite radio tracking of 89 bears in northern Alaska that led them to 124
dens between 1985 and 2004.
They believe pregnant bears shifted onto shore because the sea froze later,
creating few pressure ridges. Also, more old ice that may have had pressure
ridges had melted.
"The first-year ice would just be forming," Douglas said. "It's very flat,
unless there's been an early winter that allows it to thicken enough and
actually ridge up and then catch snow."
They did not speculate whether bears might be harmed in the short term.
"The big issue is, the long term may be coming sooner that we thought it was,"
Fischbach said.
"If the foraging areas get so far off shore they (bears) cannot reach the
coastal areas in advance of denning, and at the same time they'll be facing
deterioration of the offshore denning habitat, then we would expect there
would be reproductive consequences to the population."
Researchers rejected two alternative hypotheses for the shift to land --
hunting and the presence of more whale carcasses on beaches. Canada and the
United States minimized hunting about 30 years ago but the denning shift
occurred less than a decade ago. They also observed that just 5 percent of
"pre-denning" females passed within 5 kilometers of a carcass site, compared
to 30 percent of females that did not den that year.
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Reuters News
January 23, 2007
http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2007-01-23T190313Z_01_N23273043_RTRIDST_0_ALASKA-OIL-OUTPUT-UPDATE-1.XML
UPDATE 1-
Alaska oil
output cut 14 pct Friday on ship snag
Recasts, adds details)
NEW YORK, Jan 23 (Reuters) - Oil production on the Alaska North Slope was
curbed by 14 percent for four days beginning on Friday after tanker scheduling
problems led to high inventories at the port of Valdez, regulators said on
Tuesday.
"The producers were asked to curb production to 86 percent last Friday but
they were released to produce at 100 percent this morning," said a spokeswoman
for the Joint Pipeline Office in Anchorage.
Oil production in Alaska dropped below 700,000 barrels per day on Jan. 19
compared with average production in December of 825,000 barrels per day (bpd).
Inventories at the port of Valdez have been higher than usual and near the
terminal's 6.7 million barrel capacity since early January, according to state
data.
Two Alaska Tanker Company 1.3 million barrel capacity crude oil tankers that
carry Alaskan crude oil to U.S. refineries for the oil major BP Plc (BP.L:
Quote, Profile , Research) were withdrawn from service earlier this month
after the ships lost anchors at sea in rough weather.
Alaska Tanker believes the anchors were lost due to metalurgical flaws and
plans to replace the anchors on all four of its new tankers.
BP owns a 25 percent stake in Alaska Tanker. Keystone Shipping company and a
unit of Overseas Shipping Group, Inc. (OSG.N: Quote, Profile , Research) each
hold 37.5 percent shares in the company.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Houston Chronicle
January 21, 2007
http://www.chron.com/disp/story.mpl/business/4486108.html
BP
workers ill-trained for dangers, report says
Baker panel criticizes lack of hands-on exercises
By ANNE BELLI
Copyright 2007 Houston Chronicle
When a unit at BP's Texas City refinery unexpectedly shut down during a power
outage a few weeks ago, newly hired operators froze in confusion, not knowing
how to handle the potentially dangerous situation.
"I never saw so many scared faces in my life," said one seasoned operator.
"These were brand-new operators. Some of these guys had not been trained, and
they did not know what to do," said the operator, who spoke on condition of
anonymity out of fear of retribution.
Indeed, BP's training of its workers who operate and oversee some of the most
dangerous equipment in the country falls short of providing them with the
expertise they need to safely do their jobs, said a panel of experts headed by
former Secretary of State James A. Baker III.
The safety review panel was formed at the behest of federal investigators
looking into the March 2005 blast at the Texas City plant, where 15 people
were killed and scores more seriously injured.
BP spokesman Scott Dean confirmed that an outage happened a few days before
Christmas but said that all units were brought down and restarted safely and
without incident.
"Regardless of someone's opinion of how people appeared, they did react,
followed procedures and took action in a professional and safe manner," Dean
said. "No one was injured, and there was no significant environmental impact
apart from the flaring that was reported and standard practice when you have a
power failure."
Spreading the blame
Nonetheless, in its scathing report, released after a 15-month
investigation, the panel lambasted BP's training programs not only at the
Texas City site but also at four other refineries the company operates
nationwide saying that a lack of knowledge among workers, supervisors and
managers was at the root of many safety woes.
"The panel believes that the effects of widespread deficiencies in process
safety training and education have manifested themselves in a number of ways
at BP's U.S. refineries," the report states.
BP has acknowledged training shortfalls at Texas City, and the Baker report
notes several steps that the company already has taken to beef up its
education programs nationwide.
Among the encouraging moves is that a new company vice president in the Safety
and Operations Group told panelists that better training for supervisors "is
one of the first programs" that would be implemented, the report says.
Further, the company has said it has implemented a new "leadership
development" program and other enhanced training initiatives at Texas City.
"During the past 18 months, BP has made significant progress in implementing a
comprehensive program at its Texas City refinery that includes investment in
people, plant and process," Dean said.
But the Baker panel's report indicates that the oil giant whose refineries
have the capability of processing roughly 1.3 million barrels of crude a day
into gasoline, jet fuel and other products has widespread training problems
to fix.
Inexperienced trainers
According to interviews with workers, newly hired operators sometimes were
trained by inexperienced supervisors, the report said. Operators were promoted
to supervisor positions without being required to demonstrate that they
understood the units they were overseeing. And engineers "routinely indicated
that they believed they were not given sufficient training to do their jobs."
Outdated manuals were being used, and workers often asked in vain for more
mentoring, the report says.
At Texas City, more than one in three hourly operators or 35 percent agreed
in a survey done by the panel that "the training that I received does not
provide me with a clear understanding of the process safety risks at my
refinery."
There and elsewhere, training too often has meant requiring workers to take
self-administered computer courses while mentoring and so-called "gun drills"
designed to simulate emergencies don't happen often enough, the report said.
"At most of BP's U.S. refineries the implementation of and over-reliance on
BP's computer-based training contributes to inadequate process safety training
of refinery employees," the panel found.
Computer training seemed to be preferred, the panel found, because it provided
a quick and easy way to prove compliance with federal training regulations to
inspectors. But what on paper was adequate training in reality was not, it
added.
The report indicates that Texas City workers agree.
"In operations, it can't be like that," said the experienced operator who
witnessed the recent power outage. "It has to be hands-on. You have to have
face-to-face training. One operator is responsible for thousands of valves,
and you can't have a computer explain all of that."
Training funds decline
Part of BP's training problems, the panel concluded, stems from a lack of
financial backing and work force.
That was especially evident at Texas City, where the training budget plummeted
from $2.8 million in 1998 to $1.7 million in 2005, the year of the blast, the
report stated. Full-time employees devoted to training also dipped from 28 to
nine in the same period. Even then, some of those training coordinators spent
as little as 5 percent of their time actually training, the report said.
Steve Erickson, executive director of the Gulf Coast Process Technology
Alliance, said BP isn't the only oil company that has reduced training
positions in recent years as more training has been done by computer.
Erickson, whose alliance advocates the hiring of degreed process technicians,
said computer training is a good alternative to classroom training when it
comes to "general" instruction. But computers should not take the place of
well-qualified people who know the peculiarities of a specific plant's
equipment, he said.
He said simulators, similar to those used in the aviation industry, are very
helpful because they teach workers how to react in emergency situations.
Simulation technology had been "horrendously expensive" but has become more
affordable in recent years, Erickson said.
Union officials hope to finalize new training agreements with BP at a meeting
at the end of this month, said Kim Nibarger, coordinator of the United
Steelworkers' Triangle of Prevention Program.
He said the union safety trainers have long favored a more hands-on approach
to training than the use of computer programs and testing.
"We train on the small-group level," he said. "That's the way adults learn."
anne.belli@chron.com
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Wall Street Journal
January 18, 2007
Afternoon
Refining
Industry Grapples With Baker Findings On BP
DOW JONES NEWSWIRES
January 18, 2007 5:33 p.m.
By Beth Heinsohn and Jessica Resnick-Ault
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--BP PLC (BP) has vowed to implement recommendations
contained in this week's independent safety report of its refineries, but it
isn't clear yet how much impact the report will have on the industry as a
whole.
Some industry consultants predicted the report, commissioned in the wake of a
fatal BP refinery accident in March 2005, would prompt dramatic change in the
industry.
But the report, which suggested that BP's problems may be shared by other
refiners, has raised a tricky question for industry officials, who say they
are taking its findings seriously, even as they defend their operations.
The suggestion that BP's deficiencies may exist elsewhere in the industry "may
be an unfair statement," said NPRA executive vice president Charlie Drevna,
but the industry still needs to take heed. "If you're ever satisfied, you've
lost the game," he added.
Industry Stands Up For Safety Programs
As expected, the long-awaited Baker report harshly criticized the British oil
giant, concluding that BP has "material process safety deficiencies" at all
five U.S. refineries and lambasting BP for excessive cost-cutting at the
plants.
Process safety involves steps companies should take to reduce the inherent
risk of working with explosive chemicals, heavy machinery and other industrial
hazards arising from events outside the control of workers.
BP's focus on improved personal injury rates distracted the company from
looking at indicators related to process safety at its U.S. refineries. The
company's reliance on this data "combined with an inadequate process safety
understanding created a false sense of confidence that BP was properly
addressing process safety risks," according to the report.
But Baker also suggested that BP is not the only company with problems.
"We are under no illusions that the deficiencies we have identified are unique
to BP," said Baker, who declined to elaborate on BP's performance relative to
peers during a news conference Tuesday in Houston. Baker was commissioned to
lead the panel in the wake of a deadly March 2005 blast at BP's Texas City
refinery that killed 15.
Besides NPRA's Drevna, who hailed the refining industry's "commendable
history" of safe operations, its sister group, the American Petroleum
Institute, also defended the industry. In 2005, the refining industry saw 1.4
occupational injuries and illnesses per 100 full-time employees, compared with
a rate of 6.3 for all U.S. manufacturing employees, API said.
But a consultant who contributed to the Baker report warned that almost every
refiner has reduced personnel and technical resources at the same time that
the public is demanding fewer incidents.
"You can't just keep rolling along with fewer resources and hope for these
incidents not to occur," said Jack McCavit of Texas-based J.L. McCavit
Consulting LLC.
McCavit is a former chemical company operations manager who has urged
professional groups in the industry to come up with process safety guidelines.
In a forthcoming book based on work he did at Celanese Chemical Co. McCavit's
suggestions include greater frequency of safety system checks between audits
done every three years.
"We hope we've got some ways to help people evaluate their (safety) culture,
and things they can do to improve their culture," he said.
Safety Changes Seen Ahead
Changes to oil companies' safety systems are likely on the way, possibly for
bottom-line reasons, said industry consultant George Pilko, chairman of
Houston-based Pilko and Associates.
"This is one of those watershed events, particularly considering the threat of
criminal prosecution that hangs over BP," Pilko said.
Given the scrutiny BP executives came under as a result of the Texas City
accident, top management at oil companies will likely review environmental,
health and management systems as well as safety regimes, he said.
Pilko's group has advised top U.S. energy companies, including BP, Valero
Energy Corp. (VLO), ConocoPhillips (COP), ExxonMobil and Marathon Oil Corp. (MRO)
on environment, health and safety.
"They'll do some extensive benchmarking and senior executives and outside
directors will want to know," Pilko said, referring to oil companies with
refining operations.
-By Jessica Resnick-Ault, Dow Jones Newswires; 713-547-9208;
jessica.resnick-ault@dowjones.com
-By Beth Heinsohn, Dow Jones Newswires
201-938-4435;
beth.heinsohn@dowjones.com
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Wall Street Journal
January 18, 2007
Report Shows
Downside Of BP CEO's Refinery-Light Strategy
DOW JONES NEWSWIRES
January 18, 2007 7:30 a.m.
(This article was originally published Wednesday)
By John M. Biers
Of DOW JONES NEWSWIRES
HOUSTON (Dow Jones)--In July 1999, BP PLC's (BP) Chief Executive Lord John
Browne announced a bold plan for improving returns at BP that included a
"strategic decision" to sharply reduce global refining capacity in the
expectation of persistently weak profit margins.
Browne's agenda, which included a plan to reduce refinery capacity by about a
third, was generally praised by industry watchers at the time, generating
headlines like "BP Amoco stays step ahead in oil super-league."
But with Tuesday's release of an independent report harshly critical of BP's
U.S. refining division, the focus returned to the operational downside of
Browne's downstream-light approach - a strategy that also misread the recent
surge in refining assets that has generated talk of "the golden age of
refining" after a long slump.
The report, by former Secretary of State James Baker's commission, faults a
corporate culture that viewed refining as a "tolerated cousin," in the words
of some BP refining officials quoted in the report, indicting a pattern of
underinvestment that marred employee morale. BP commissioned the report after
a March 2005 Texas refinery accident killed 15 workers.
"BP has not always ensured that its U.S. refineries had sufficient staff and
capability to promote strong process safety performance," the report said.
The effect of ongoing staff cuts was "a collective loss of human expertise in
the refining business, both in the line and in supporting functions," it said.
The Baker report noted that BP's two most senior executives over refining,
Browne and Global Downstream Chief John Manzoni, came from the exploration and
production wing of the business and had no prior refining experience. Although
the Baker panel "would not necessarily" expect those two officials to have
been process safety experts, it called the lack of a senior advocate for
refinery process safety "a corporate blind spot."
Browne announced last week that he will step down in July, more than a year
ahead of schedule. Although he has been credited with a number of landmark
strategic moves, his last years with the company had been plagued by accidents
and governance problems in the U.S.
Refining "has never had high visibility within the company under Browne's
term," said James Halloran, who holds 4.3 million shares of BP at National
City Private Client Group in Ohio. The Baker report "gives (BP) cover for
things they should have done (including) a decent process for how they invest
capital."
"I don't think BP has adapted to the greater earnings power for refining, in
terms of placing greater emphasis on it," Halloran said.
BP spokesman Ronnie Chappell said BP is investing aggressively in refining,
noting the company's commitment to boost annual U.S. refining spending by $500
million for the next four years. Although the company sold some refineries
after its Amoco and Arco acquisitions, BP began increasing investment in
refining soon after that, "well in advance of refinery margins being as
healthy as they are today," he said.
"These are businesses we are investing in and working to keep viable and
competitive," Chappell said.
On Tuesday, Browne categorically denied that the company put profits over
safety.
Regarding the report's observations on senior leadership, Chappell said John
Mogford has been appointed a senior vice president with authority over process
safety issues. Browne and Manzoni are both "talented, skilled and capable"
executives seasoned in many key facets of oil and gas, a vast and complex
industry, he said.
In identifying "material process safety deficiencies" at all five of BP's U.S.
refineries, the Baker report notes that BP's Texas City refinery faced
persistent budget pressure. The accident-plagued Texas plant moved
aggressively to meet a post-merger 25% cut in the capital budget, even after a
period of lean spending while the plant was still owned by Amoco. The plant
faced more pressure in 2002, the report said.
In keeping with its charter with BP, the Baker panel didn't weigh in on
whether cost-cutting caused the March 2005 explosion at Texas City. The U.S.
Chemical and Hazard Investigation Board has alleged this causality, while BP
has contested it.
Many of these issues came together in BP's Ohio refinery, where employee
surveys commissioned by Baker showed that frequent refinery management
turnover and anemic spending left workers thinking that "Toledo was merely a
training ground that did not fit into BP's long-term plans, and this damaged
the general morale of the Toledo workforce," the report said.
-By John M. Biers, Dow Jones Newswires; 713-547-9214;
john.biers@dowjones.com
xxxxxxxxxxxxxxxxxxxx
Alaska Gov
Emphasizes Need For Natural Gas Pipeline
DOW JONES NEWSWIRES
January 18, 2007
JUNEAU, Alaska (AP)--Gov. Sarah Palin told lawmakers Wednesday to soon expect
legislation outlining the process for a natural gas pipeline.
In her first State of the State address, Palin minced no words about her
priorities for this year's legislative session, which began on Tuesday.
"This gas line, it's going to fuel our homes, our economy, and careers for
Alaskans - for generations," she said. "This gas line is critical not just for
our future, though, but for the nation's future."
A statewide gas line is considered to be a potential boon to the state's
economy, somewhat akin to that of Prudhoe Bay's oil production at its peak.
But the pipeline would also take on national importance as the country works
to lessen its dependency on foreign energy supplies.
In calling for lawmakers to consider her legislation, Palin is asking them to
revisit one of the most contentious issues left over from Frank Murkowski's
administration.
Murkowski reached an agreement with BP PLC (BP), Exxon Mobil Corp. (XOM) and
ConocoPhillips (COP) to build a pipeline from the North Slope through Canada
and into the Midwest.
The line would ultimately have delivered 4.5 billion cubic feet of natural gas
a day, which is about 7% of the current U.S. demand.
But lawmakers felt the deal gave too many considerations to the big firms,
including locking in tax rates for several decades.
That will change, Palin told lawmakers.
"The deal was a 'no deal,"' she said. "And our Legislature was handed a plan
that even exceeded the administration's authority. Remember, in exchange for
those unnecessary concessions, the producers didn't have to commit to
preparing applications, much less build a gas line."
Palin's solution: a bill that will re-establish project criteria which energy
companies must meet in exchange for inducement incentives from the state.
Palin calls it the Alaska Gasline Inducement Act, or AGIA.
Successful passage essentially means replacing the Stranded Gas Act, the
foundation for Murkowski's deal, though it would not represent a repeal.
"The centerpiece of this is to induce construction of the gas pipeline. A gas
line constructed on our terms, without selling Alaska's sovereignty," Palin
said.
"This law allows transparent and competitive processes," she said. "It jump
starts progress with incentives, and it strikes the right balance on a project
for the state, the nation, the project proponents and the producers. It will
be good for all."
The bill will be introduced this session, and right now is being scrutinized
for its legality, strategy and efficiency, she said while imploring lawmakers
to be diligent.
"We must be realistic about the complexity of this. It won't happen with the
snap of a governor's fingers. It can't happen overnight," she said.
Energy analysts have estimated there to be about 35 trillion cubic feet of
proved natural gas reserves in the North Slope, but they believe that figure
will rise in the future.
Palin's AGIA plan requires whoever builds the pipeline to ensure long-term
exploration that includes more development on the North Slope.
The proposed gas line has implications on the nation's growing dependency on
imported natural gas supplies, which stand at about 15%, according to the
Energy Department.
That figure could grow to about 25% by the time any Alaskan gas line gets
built within the next 10 to 12 years, analysts said.
For now, most imported natural gas comes from Canada with a small percentage
arriving in tanker carrying liquefied natural gas, also known as LNG.
"It would be a critical component to our supplies," said Ed Kelly, vice
president of North America Gas & Power for consultant Wood Mackenzie in
Houston.
"It would allow natural gas to remain an economic source of power generation
and heat in the economy-at-large," he said.
Kelly weighed in on the pipeline prospects without knowing of Palin's plans,
but it's been a topic he and other energy analysts have carefully watched for
several years.
Several years ago, natural gas prices were too low to justify the massive
investment required to move fuel from the North Slope to the Lower 48.
Today, prices are in the $6-plus range per thousand cubic feet, well below the
December 2005 peak of $15.38 but still nearly three times that of five years
ago.
Thus, a successful pipeline development in Alaska represents a "secured energy
source," Kelly said.
"I think prices will keep on creating a signal for this development," Kelly
said. "It would reduce our need for LNG."
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Financial Times
January 18, 2007
http://www.ft.com/cms/s/1298cc02-a699-11db-937f-0000779e2340.html
Satisfying BP investors will be hard
By Ed Crooks and Carola Hoyos
Published: January 18 2007 02:00 |
Last updated: January 18 2007 02:00
As James Baker was delivering his politely excoriating verdict on BP's safety
culture and leadership, analysts were judging its qualities as an investment.
Many of their views were positive. Citigroup, UBS and Deutsche Bank were among
those making or reiterating "buy" recommendations on the shares. After a
period of sustained underperformance, on many yardsticks BP's shares now look
cheap, they believe.
The problem for the company's cheerleaders is timing. BP's strategy - getting
safety and operations right and steadily increasing production - is unlikely
to pay off fast enough to satisfy investors.
One BP shareholder told the Financial Times that Tony Hayward, the new chief
executive from the summer, "won't have the luxury of a year".
That pressure has inspired a variety of ideas for a dramatic move to transform
negative perceptions of BP.
Use of its strong balance sheet to buy back a block of shares or pay a special
dividend, a merger with another oil major or even a break-up have all been
suggested. For their proponents, these ideas are more appealing than the long,
hard slog that lies ahead.
The immediate financial cost of responding to Mr Baker's recommendations is
modest for a company of BP's size. It is to raise spending on its US
refineries from $1.2bn in 2005 to $1.7bn (£863m) a year during 2007-10 to
improve their integrity and reliability. An extra dollar on the price of oil
would be enough to pay for all that.
However, that may under-state the trauma BP has undergone, not just from the
Baker report but from everything that has happened since the Texas City
explosion in March 2005. Everything it does is now under scrutiny.
Like other big oil companies, BP sits on much ageing infrastructure. As the
oil price has risen and technology has improved, squeezing the last drops of
oil out of declining fields has become profitable. Rigs, pipelines and other
hardware have been pushed to last for longer than intended when they were
built.
Replacing that hardware will take time, during which the dangers of a repeat
of problems such as the corrosion discovered in Alaska last year and accidents
such as the explosion at Texas City will remain.
Wherever there is a marginal call to be made, managers will feel pushed
towards the safer, more expensive option. Mr Hayward made that explicit last
year when he questioned BP's "mantra of more for less": trying to do 100 per
cent of a job with 90 per cent of the resources.
Other problems also overshadow BP. Like every other oil company, its shares
are highly dependent on the price of crude, which fell sharply on Tuesday
after Saudi Arabia, the dominant member of the Organisation of the Petroleum
Exporting Countries, said it saw no need for the oil producers' group to cut
its output any further.
There are persistent fears over the future of TNK-BP, the 50 per cent-owned
Russian joint venture which was BP's greatest success in the first half of the
decade.
Most recently, investors have worried about its disappointing production
performance. Since 2004, BP's output has been stuck at about 4m barrels of oil
equivalent per day and it has several times fallen short of analysts'
expectations and its own targets.
Eventually, perhaps towards the end of the year, the good news is likely to
start to flow. Production will start rising visibly, as new projects in
Azerbaijan, Angola and the Gulf of Mexico come on stream and ramp up output.
But BP's recent history is an object lesson in what can go wrong between
finding oil in the ground and turning it into money.
Hence renewed calls for a quick fix. BP has been advised either to get bigger,
by merging with another "super major" oil company, or smaller, by splitting
its downstream business such as refineries from its upstream exploration and
production activities.
But both those routes are fraught with difficulty. A mega-merger with Royal
Dutch Shell, for example - which was contemplated by BP in 2005 - would run
into competition problems in Europe and the US. Disposals might get round that
obstruction, at the cost of losing much of the benefit of the merger.
Break-up of the company, as suggested by Cazenove analysts, would be a gamble.
Oil companies like to be able to extract the profit from the value chain
between the oil well and the petrol pump wherever it can be found. If BP were
the only super-major to split itself up, it could expose itself to rough
treatment from competitors.
Financial solutions would be easier. Awash with cash thanks to the high oil
price, BP has been buying back its shares. In the past two years it has spent
more than $27bn on buy-backs, apparently to little effect.
Jonathan Wright of Citigroup argues that, rather than making steady purchases,
it should announce a single tender offer for a significant quantity of its
shares, or pay a special dividend.
If returning $27bn to investors has been ineffectual, however, there can be no
guarantee that returning similar sums in a slightly different way will be any
more successful. It seems that on the slow and steady road to recovery, the
short cuts are all blocked off.
Xxxxxxxxxxxxxxxxxxxxxxx
http://www.ft.com/cms/s/60ca6944-a699-11db-937f-0000779e2340.html
BP'S
OPTIONS - PROS AND CONS
Published: January 18 2007 02:00 |
Last updated: January 18 2007 02:00
*Tender offer for 10 per cent of its share capital
Pro
Would be a high-profile event and answer investors' concerns about
undergearing
Con
The buy-back programme so far has appeared ineffectual: would this do any
better?
*Special dividend
Pro
May be a better way to return cash to shareholders and would appeal to
income investors
Con
Would create tax problems. The special dividend might have to be cut or
dropped if oil prices fall further
*Mega merger
Pro
Another high-profile move that could change investors' perceptions.
Opportunities
for large cost savings
Con
BP's record does not create confidence that integration of a merger would
be successful. A deal with a another 'super major' such as Royal Dutch Shell
would run into serious competition problems
*Break-up
Pro
BP's current value is less than the sum of its parts. Separate upstream
and downstream businesses would be valued more
highly by the market
Con
Purely upstream company could have more volatile earnings. Opportunities
for synergy between upstream and downstream would
be lost
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http://www.ft.com/cms/s/385d072e-a698-11db-937f-0000779e2340.html
BP COMES IN FOR
TOUGH CRITICISM AS US OPERATIONS FAIL TO LEARN LESSONS FROM GRANGEMOUTH
INCIDENTS
By Ed Crooks
Published: January 18 2007 02:00 |
Last updated: January 18 2007 02:00
Some of the toughest criticism in James Baker's report on the safety of BP's
US refineries comes from the company's failure to learn from a series of three
incidents at its petrochemical complex at Grangemouth, Scotland, in 2000,
writes Ed Crooks.
Between May 29 and June 10 of that year, the complex (pictured right) - which
has since been sold by BP - was hit by a power distribution failure, a
medium-pressure steam main rupture and a fire in an operating unit that
tookmore than seven hours to put out.
No-one was killed or seriously injured, but the Health and Safety Executive
concluded that was only due to "good fortune". BP was fined £1m as a result of
two charges related to the fire and the steam main rupture.
In its report on Grangemouth, published in 2003, the HSE said it "seeks to
reassure the public" by demonstrating that "a number of lessons have been
learned both by BP and by the regulators".
But those lessons were missed by BP's similar businesses in the US.
For example, one of the problems at Grangemouth was found to be that the
management was too focused on safety indicators based on personal injuries and
not on the risk of serious incidents: exactly what the Baker panel found in
the US.
Its report said: "The panel believes that in its response to Grangemouth, BP
missed an opportunity to make and sustain company-wide changes that would have
resulted in safer workplacesfor its employees and contractors."
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Houston Chronicle
January 17, 2007
http://www.chron.com/disp/story.mpl/business/4475794.html
Workers
in U.S. felt lack of trust, survey says
By BRETT CLANTON
Copyright 2007 Houston Chronicle
PHOTO
http://images.chron.com/photos/2007/01/16/4819192/311xInlineGallery.jpg
FULL BAKER Report
http://www.bp.com/bakerpanelreport
BP's failure to create a
"positive, trusting and open" culture at some of its U.S. refineries may have
contributed to broader safety problems, a highly critical report on the
British oil giant said Tuesday.
Indeed, some BP workers said they feared being punished for reporting safety
incidents, while others said inconsistent or unwieldy reporting procedures
kept them from coming forward, according to a survey of nearly 7,500 BP
refinery employees and contractors in the U.S.
The survey was part of a sweeping review of BP's safety practices at its U.S.
refineries. An independent panel, which was recommended by the U.S. Chemical
Safety and Hazard Investigation Board and led by former Secretary of State
James A. Baker III, conducted the review after the March 2005 accident at BP's
Texas City refinery killed 15 workers and injured scores more.
The survey's results underscored one of the panel's key findings: That BP did
not establish effective or reliable ways to track "process safety" procedures
across its five U.S. refineries.
Process safety in a refinery involves the prevention of leaks, spills,
equipment malfunctions, corrosions and other potential hazards that can lead
to catastrophic accidents.
BP Group Chief Executive John Browne said Tuesday the company supports the
panel's recommendations and will implement them soon.
"We will use this report to enhance and continue the substantial effort
already under way to improve safety culture and process safety management at
our facilities," Browne said.
The report by the panel also said that "the single most important factor in
creating a good process safety culture is trust."
Labor and management
Yet when the panel reviewed survey responses, read thousands of company
documents and interviewed BP employees, it found that the culture within
several of BP's U.S. refineries often discouraged open and honest
communication between labor and management.
That is much less so at BP's Cherry Point, Wash., and Carson, Calif.,
refineries, based on the panel's research. But the positive culture at those
plants was likely in place before they were acquired by BP from Arco, the
panel said in its report.
BP has not established positive, open and effective safety cultures at
refineries in Whiting, Ind., Toledo, Ohio, and Texas City, according to
employees there, the report said.
In the survey, 44 to 60 percent of operators and maintenance and craft
technicians in Toledo and Texas City said they believed management was more
concerned with "assigning blame or issuing discipline" than correcting
hazards.
About 72 percent of BP's U.S. refinery work force of 10,300 responded to the
survey, which was conducted in May.
When BP has tried to foster more openness in safety-reporting procedures, it
has not worked, according to refinery employees. A computer-based system is
not used frequently enough to be relevant and is not user-friendly, while an
anonymous hot line run by a third party is rarely used and often not trusted
by workers, the report said.
Not sharing information
In addition, BP is not communicating investigation results to employees
and it is not sharing important safety information among other U.S.
refineries, the report said.
That may change under a new agreement in principle worked out between the
United Steelworkers and BP and announced by the union Tuesday.
The two sides will craft a comprehensive joint safety initiative, said the
union, which represents 4,300 workers at BP's U.S. refineries.
"Nothing can mitigate the 2005 tragedy," said United Steelworkers President
Leo Girard, referring to the Texas City accident in a statement. "But our new
agreement with BP shows the company's willingness to work with the union to
address the root causes of the explosion, not just in Texas City, but
throughout the corporation."
brett.clanton@chron.com
Xxxxxxxxxxxxxxxxxxxx
http://www.chron.com/disp/story.mpl/front/4475824.html
BP flaws
unattended for years, report says
Baker panel says safety lapses found at all five U.S. refineries
By ANNE BELLI
Copyright 2007 Houston Chronicle
Near catastrophes went uninvestigated.
And known equipment problems such as thinning pipes and vessels went
unrepaired for up to 10 years.
These are just some of the bleak discoveries detailed in a highly critical
report released Tuesday on BP's five U.S. refineries.
Although some of the plants had more woes than others, a Houston company
specializing in so-called "process safety" which concerns equipment and
operations found what it called serious lapses at all of the refineries, not
just in Texas City where 15 people were killed in a March 2005 explosion.
The findings by ABS Consulting are the backbone of Tuesday's report made
public by the BP U.S. Refineries Independent Safety Review Panel, chaired by
former Secretary of State James A. Baker III and charged with evaluating the
oil giant's commitment to safety.
The panel was formed by BP last year at the urging of federal investigators
looking into the root cause of the Texas City blast, the worst in the U.S. in
more than a decade.
In unveiling the panel's findings and recommendations, Baker said the panel
found that BP focused more on personal safety issues, such as slips and falls
and vehicle accidents, rather than process safety. Because the company's
personal safety record improved in time, management had a "false sense of
confidence that it was properly addressing process safety," Baker said.
In addition, the panel found a general lack of emphasis on process safety on
the part of BP's London-based senior management including outgoing Chief
Executive John Browne.
"Browne is generally noted for his leadership in various areas, including
reducing carbon dioxide emissions and developing the use of alternative
fuels," the 300-page report states. "In hindsight the panel believes that if
Browne had demonstrated comparable leadership on and commitment to process
safety, that leadership and commitment would likely have resulted in a higher
level of process safety performance in BP's U.S. refineries."
Safety underfunded
Baker and other panel members also said at a morning news conference held
at the downtown Hyatt Regency that while they found no evidence BP executives
intentionally underfunded safety improvements, they nonetheless failed to
dedicate enough of the company's vast profits through the years in that area.
BP "did not always ensure that adequate resources were effectively allocated
to support or sustain a high level of process safety performance," the report
states.
That should change, Baker said.
"We believe that if BP implements these recommendations fully that they could
become a leader in the industry," Baker said.
In a video news conference at the nearby Hilton Americas shortly after the
panel released its report, Browne said he took responsibility for the
company's oversights and had already begun to implement changes.
"If I had to say one thing which I hope you will all hear today it is this: BP
gets it. And I get it too. This happened on my watch, and as chief executive,
I have a responsibility to learn from what has occurred," he said.
Under pointed questioning by reporters, Browne denied that he or any official
put production and profits above personal safety, or that he or any senior
manager rejected any specific request for funding of process safety. He also
said that his decision to move up his retirement from 2008 to this summer had
nothing to do with the Baker report.
He vowed that BP would implement all of the panel's 10 recommendations,
including the most strict that the oil giant appoint an independent monitor
to report back to the board on the status of the its implementation of the
panel's recommendations.
He noted that the company has committed an average $1.7 billion a year for the
next four years to improve safety at its U.S. refineries.
"As the report acknowledges, BP has made significant changes to its process
safety systems and culture since the accident at Texas City," Browne said.
"But we can do more. And we will do more."
Indeed, "there is still much work for BP to do in order to achieve process
safety excellence," said the report filed by ABS, which was hired by the Baker
panel as its technical consultant.
In addition to Texas City, BP's U.S. refineries are located in Carson, Calif.;
Whiting, Ind.; Toledo, Ohio, and Cherry Point, Wash., and when fully operating
they process roughly 1.3 million barrels of crude oil a day.
ABS teams visited each of the refineries except Texas City.
In that case, the consultants reviewed another company's outside review of the
plant conducted as part of the BP's settlement with the U.S. Occupational
Safety & Health Administration.
Among the consultants specific findings:
•In the Texas City, Carson and Whiting plants, known equipment problems
such as thinning pipes and vessels went unrepaired for months, even years. In
Texas City, nearly 200 thickness defects were unaddressed for up to eight
years, for example.
•In all refineries except Texas City, the consultants found that BP's tests of
critical alarms and "emergency shutdown devices" were either improperly
conducted or overdue.
•"Action items" resulting from audits or near-miss investigations intended to
improve safety often went uncompleted for months or even years, or were
overlooked altogether at all five refineries. For example, in Carson about
half of the action items generated between 2001 and 2004 remained open at the
time of the team's visit last spring. At Toledo and Whiting, some items were
left uncorrected for more than a year.
•At all refineries, BP did not adequately inspect important refinery process
equipment, resulting in extensive backlogs. "Some of these backlogs included
hundreds of items overdue for long periods (i.e years)," the report said. In
Texas City, nearly 400 pressure vessels, piping, relief valves, storage tanks
and other pieces of equipment were overdue, for example.
•After discovering dangerous problems in the pressure relief systems in
Whiting, the team found similar problems in Carson, Texas City and Toledo, as
well as a lack of understanding of the risks involved.
•Near misses at all five refineries were not properly investigated, and in
some cases not even reported. The team found that "BP was systematically
missing opportunities to learn from near misses."
Report draws praise
BP's failure to learn from near misses in Texas City has been a concern of
federal investigators at the U.S. Chemical Safety and Hazard Investigation
Board, which urged creation of the Baker panel. Investigators have said that
the equipment that exploded there had had previous upsets in the months and
years before the blast.
CSB Chairman Carolyn Merritt applauded the Baker panel's report. "Safety
culture is created at the top, and when it fails there, it fails workers far
down the line," she said. "That is what happened at BP."
Officials with the United Steelworkers said they also applaud the report and
are hopeful it paves the way for a better relationship between the plants'
hourly workers and BP management. After Browne's news conference, the union
announced that it had reached a pact with management on a new safety
initiative.
But union officials and others said that the real proof of whether BP makes
process safety a priority will come months and years from now.
Safety review panel member and retired U.S. Navy Admiral Frank "Skip" Bowman
said that's why the panel recommended that BP's board appoint a monitor for
the next five years.
"Of course, we will all be watching," he said.
anne.belli@yahoo.com
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http://www.chron.com/disp/story.mpl/business/4475793.html
British
press slams company on issues raised in Baker report
By GREGORY KATZ
Copyright 2007 Houston Chronicle Europe Bureau
LONDON The London-based multi- national oil giant BP suffered one of its
darkest moments Tuesday as British press commentators focused on safety
shortcomings spotlighted in a report issued Tuesday.
The study of BP's U.S. refinery operating procedures was viewed as a major
setback for BP, one of Britain's leading companies, and for outgoing CEO Lord
Browne, who had been hailed as one of the country's most successful
businessmen until a series of setbacks that began nearly two years ago with a
deadly explosion at BP's Texas City refinery.
A banner headline on the Web site of the usually pro-business Telegraph
newspaper screamed "BP's Day of Shame" and chronicled the many criticisms of
the company, which has greatly expanded its range of operations during
Browne's tenure.
The BBC called the report issued by a panel chaired by former Secretary of
State James A. Baker III "extremely savage" in its portrayal of BP's handling
of its five refineries in the U.S., and the widely viewed Sky News cable
channel said the report constitutes a "devastating blow to the oil giant's
reputation."
There was widespread speculation in the press that Browne had announced last
week he would be retiring 17 months early because of the negative impact the
Baker report would have on his ability to run the company, but analysts
cautioned there was no proof of this theory.
"It's difficult to know if he retired early because of this report," said
Jonathan Wright, an oil analyst with Citigroup in London. "There are
suspicions about that, but nothing in the report makes it seem that he had to
go. No one's been singled out."
"It's probably not as damning as some people might have feared. They are not
blaming people, they are making recommendations for improving performance and
they are saying it's not just BP at fault and that other companies could
benefit as well."
He said the financial community is generally comfortable with the announcement
that Tony Hayward will replace Browne as CEO, but pointed out that Hayward as
BP's chief of exploration and production has not been able to meet targets for
development of new oil fields in the Gulf of Mexico.
"Hayward is not untarnished," Wright said. "We've had problems on his watch,
with the Alaska issues, and with the Gulf of Mexico fields. He hasn't really
delivered on the growth promises of the company. But he's certainly competent,
and he's used to responsibility. He may have a different style than Browne and
listen more."
Despite the panel's findings and the harsh reports in the British press, BP's
standing in the financial community will remain fairly high, said Robert Mabro,
retired director of the Oxford Institute for Energy Studies in England.
He said BP's standing with the public affected by the explosion had fallen
dramatically but its status in Britain's business community remained high.
"The people who are unhappy are the people who had relatives who died, the
people who were wounded, of course they are angry, but the financial sector
doesn't care about that," Mabro said. "BP's reputation in the financial world
is undamaged."
gregory.katz@chron.com
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http://www.chron.com/disp/story.mpl/business/4475931.html
BP
chief's earlier departure is progress
By LOREN STEFFY
Copyright 2007 Houston Chronicle News Service
Last week, before the Baker-led independent panel released its assessment of
BP, Browne announced he would move up his departure as the oil company's chief
executive by more than a year. At a news conference Tuesday, he insisted the
two events are unrelated.
Nevertheless, the Baker report, released Tuesday, is a referendum on Browne's
leadership. On the one hand, the Browne era built BP into a global energy
powerhouse and repainted it "green."
On the other, Browne's achievements rested on a corporate hierarchy blind to
one of the most fundamental elements of refining petroleum: making sure it
doesn't blow up.
Talking to reporters, Baker stressed that the panel didn't find that BP cut
funding for safety programs, a point reiterated later to me by Bob Malone,
head of BP's U.S. operations. The money was available, Malone said, but it
wasn't always spent properly.
A consultant's report accompanying the panel's findings outlines problems that
show how the money wasn't spent equipment deficiencies, a backlog of
inspections for key pieces of machinery and alarms that weren't tested.
BP has already taken steps to address many of the issues and has vowed to
embrace all of the panel's suggestions.
The report called for a more fundamental shift as well. BP needs to change its
attitude about safety. It needs to emphasize process safety as much as it did
personal safety. The latter is basically worker injury reports, a quantifiable
statistic that, the Baker panel found, BP tracked faithfully. But the process
safety, the overriding plan to avert catastrophes, got short shrift.
In other words, BP needs a cultural change.
"Culture is forever," said former Sen. Slade Gorton,
R-Wash., a panel member. "Complacency is a great danger. This is a job that's
literally going to last forever."
Later, Browne spoke to reporters about the Texas City explosion for the first
time, almost two years after the blast killed 15 people and injured scores
more.
"As chief executive, I have a responsibility to learn from what has occurred,"
he said via video link from London. "BP gets it, and I get it, too."
Those are strong, well-scripted words, but as Baker panel members noted, we
won't know if BP gets it for years to come. Browne successor and protégé Tony
Hayward wasn't at the news conference, so we didn't get to hear his commitment
to change.
One aspect of BP?
Baker's report focused only on the refining business. Browne reinforced
that point, noting that "this report is about an aspect of BP."
We are left to extrapolate from the panel's findings whether the inattention
to safety at refineries points to some larger pattern, a systemic failing
across all BP's divisions.
Browne and Malone insist safety problems at refineries don't, for example,
correlate to pipeline corrosion in Alaska.
Both, however, have a common denominator in maintenance. If the company
tolerated a backlog of inspections at its refineries, would it have demanded
timely ones on its pipelines?
Both require a vigilance that, in reading the Baker report, seems to have been
lacking at BP. That's not to say it didn't care about safety or maintenance.
It merely had other priorities.
Perhaps those priorities were growth, perhaps they were international
expansion, perhaps they were the much-hyped environmental commitment.
Regardless, Browne's legacy, his accomplishments and innovations, will be
shrouded by the failures that surfaced at the end of his tenure.
Blueprint for industry
The Baker report's findings weren't surprising. Its recommendations were
sound. Baker himself suggested they could become a blueprint not just for BP,
but for the entire refining industry.
First, though, BP has to follow them. It will be years before we know if
that's happening. The signs, Malone told me, are largely intangible to
outsiders.
Last week, though, before the recommendations were even public, came the
strongest sign of BP's commitment to change. The man ultimately responsible
for the shortcomings that spawned the Texas City disaster hastened his exit.
Loren Steffy is the Chronicle's business columnist. His commentary appears
Sundays, Wednesdays and Fridays. Contact him at
loren.steffy@chron.com.
His blog is at
http://blogs.chron.com/lorensteffy/
.
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Anchorage Daily News
January 17, 2007
http://www.adn.com/money/industries/oil/story/8568661p-8462276c.html
BP
ignored big safety issues at fatal Texas blast site
15 DIED: Baker
group says company fixated on individuals, not processes, at its
refineries.
By JOHN PORRETTO
The Associated Press
Published: January 17, 2007
Last Modified: January 17, 2007 at 02:07 AM
HOUSTON -- British oil company BP failed to emphasize safety at its U.S.
refineries before the 2005 Texas City explosion that killed 15 people,
according to a report released Tuesday by an independent panel led by former
U.S. Secretary of State James A. Baker III.
The panel, in a statement summarizing its 300-plus page report on BP's
operations, said the company had made strides in personal accident prevention
but came up short on the bigger picture.
"The panel maintains a central theme that prior to the Texas City tragedy BP
emphasized personal safety and had achieved significant improvements in
personal injury rates, but the company did not emphasize process safety," the
statement said. "BP mistakenly interpreted improving personal injury rates as
an indication of acceptable process safety performance at its U.S.
refineries."
The 11-member panel made 10 recommendations, including that an independent
monitor report to the company's board of directors for five years.
"BP gets it, and I get it too," BP CEO John Browne told reporters by video
link from London. "I recognize the need for improvement."
Browne, who got the report from Baker on Sunday, called the report a
"hard-hitting and critical analysis that focused on deficiencies and
negatives."
Browne defended the company's overall safety record, which the Baker report
acknowledged was sufficient in terms of personal injury prevention and
environmental safety.
But on so-called process safety, "it wasn't excellent enough," Browne said.
"And the standard is excellence."
The chief executive said the company would implement the panel's
recommendations, including the independent monitor. But he said the company
needs to compare Baker's report with a companywide safety examination that
began soon after the Texas City explosion; he gave no time frame for making
the changes Baker's group suggested.
Baker has led the panel investigating corporate management at Houston-based BP
Products North America following the March 2005 blast that killed 15 people
and injured more than 170 others.
The U.S. Chemical Safety and Hazard Investigation Board, known as the CSB,
urged BP in August 2005 to hire outside experts to look at the company's
oversight of safety management systems and make its findings public -- similar
to an investigation at NASA following the space shuttle Columbia tragedy.
The panel, announced in October 2005, has traveled to BP's five U.S.
refineries and interviewed hundreds of employees.
"BP tended to have a short-term focus in its U.S. refining operations, and its
decentralized management system and entrepreneurial culture delegated
substantial discretion to U.S. refinery plant managers without clearly
defining process safety expectations, responsibilities or accountabilities,"
the panel said in the report.
Baker, a senior partner at the Houston-based Baker Botts law firm, was White
House chief of staff and treasury secretary in the Reagan administration and
secretary of state in the first Bush administration. The release of the BP
report was twice delayed because of his work with the Iraq Study Group, which
made its recommendations to President Bush last month on how to revamp U.S.
policy in Iraq.
The release of the report comes less than a week after London-based BP said
that Browne, its chief executive, would step down by the end of July, more
than a year ahead of schedule.
John Manzoni, the company's head of refining and marketing, said Tuesday he
had no plans to resign.
The 2005 explosion has so far cost the company around $2 billion in
compensation payouts, repairs and lost profits. BP has settled hundreds of
lawsuits related to the accident, putting aside $1.6 billion just to resolve
legal disputes.
Based on its investigation, the CSB has criticized BP for its safety systems
at Texas City, about 40 miles southeast of Houston, finding the company
fostered bad management at the plant and failed to fix problems.
In September 2005, the U.S. Occupational Safety and Health Administration
found BP committed more than 300 willful violations of its rules and fined the
company $21.3 million.
BP's own December 2005 report blamed failures by management at the refinery,
saying it didn't make safety a priority, tolerated risks and failed to
communicate. But BP added it "found no evidence of anyone consciously or
intentionally taking actions or decisions that put others at risk."
The CSB has credited BP for cooperating with its investigation, making
sweeping changes in how it recognizes potential hazards and hiring the Baker
panel.
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http://www.adn.com/news/environment/story/8568696p-8462286c.html
Tug will
help ships cope with Inlet ice
PRESSURE:
Standby boat has been recommended to avoid catastrophes.
By WESLEY LOY
Anchorage Daily News
Published: January 17, 2007
Last Modified: January 17, 2007 at 02:22 AM
A powerful tugboat is headed to Cook Inlet to help shepherd oil tankers in
dangerous, ice-choked waters.
The move by Tesoro Alaska Co., which has a refinery and tanker dock at
Nikiski, drew applause from U.S. Coast Guard officers and oil industry
watchdog groups.
All say a tug could help avert a catastrophic shipwreck and oil spill by
standing by to corral a distressed or runaway ship.
Watchdogs called for a tug and other measures after a Jan. 9 incident in which
lines securing the tanker Seabulk Pride to the Nikiski dock were strained --
with one snapping -- when heavy, tide-driven ice pushed up against the ship.
It was the same tanker that broke away entirely from its moorings in similar
icy conditions last February, allowing the powerless ship to drift onto a
beach just north of the dock. Rescuers using tugs brought from Anchorage and
elsewhere mounted a frantic and ultimately successful effort to refloat the
600-foot tanker, which was loaded with nearly 5 million gallons of petroleum
products.
British consultants who studied Tesoro's dock and mooring procedures reported
in December that "ships using the berth have an unacceptably high risk of
breakaway." They suggested increasing the number of mooring lines and having a
tug stand by as ways to improve shipping safety.
Coast Guard Capt. Mark DeVries said Tuesday he's pleased that Tesoro is
bringing in the tug. He said the company told him the tug would be in Cook
Inlet at least through the winter when shifting ice can blanket parts of the
Inlet.
The 5,500-horsepower tractor tug, operated by Crowley Maritime Corp., is
coming up from Seattle and is due in Cook Inlet this week, ahead of the next
oil tanker scheduled to arrive at the Tesoro dock late this month, DeVries
said.
"I'm quite excited," he said. "We all can sleep a little bit easier knowing
that if something goes wrong, we've got that extra asset down there."
Jim Butler, a Kenai representative for Seabulk Tankers Inc., operator of the
Seabulk Pride and other ships calling in Cook Inlet, said the company supports
Tesoro's move to bring in the tug.
"It's an important tool," Butler said.
Whether a tug remains in Cook Inlet in future years is part of a larger debate
now going on about shipping safety, he said.
Tesoro spokesman Kip Knudson said his company is paying for the tug, named the
Protector, but he didn't know the cost. The contract is for this winter only,
he said.
"It's certainly going to add another layer of protection to our marine
operations," he said.
Officials with the Cook Inlet Regional Citizens Advisory Council, a
Kenai-based oil industry watchdog group, praised the decision to bring in the
tug.
"Tugs play a role everywhere that oil tankers port in the U.S., and it's time
Cook Inlet saw similar safeguards, especially during winter months when ice
becomes such a hazard," said Michael Munger, the group's executive director.
The tug is expected to be used at the Nikiski dock and possibly at the Drift
River dock on the west side of Cook Inlet, the council said.
While Cook Inlet has tugs based in Anchorage and other ports, the one Tesoro
is bringing in is much more powerful, said the Coast Guard's DeVries. The tug
is similar to Crowley tractor tugs used to escort the larger oil tankers in
Prince William Sound, he said.
Bob Shavelson, with the Homer-based environmental group Cook Inletkeeper, also
hailed the tug's coming.
"This is a huge step for industry because historically they have denied tugs
make things safer," he said
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Wall Street Journal
January 17, 2007
Safety Report
Will Test BP's Incoming CEO
By CHIP CUMMINS
January 17, 2007; Page A14
LONDON -- BP PLC'S effort to minimize damage from a critical independent
safety review of its U.S. operations presents the first big test for BP's next
chief executive, Tony Hayward.
The London-based oil titan, reacting to the review released yesterday by an
independent panel, promised to embrace a number of sweeping changes at its
U.S. oil refineries, including engaging an independent body to monitor safety
practices at the company. The panel, led by former U.S. Secretary of State
James Baker III, sharply criticized practices at BP's American refineries,
saying the company lacked strong leadership on safety.
The panel said it found significant problems at BP's five U.S. refineries. BP
commissioned the panel after an explosion at its plant in Texas City, Texas,
killed 15 workers in March 2005. "BP has not provided effective process safety
leadership and has not adequately established process safety as a core value
across all its five U.S. refineries," the report said.
Mr. Baker, in a news conference in Houston yesterday, said BP appeared to take
safety seriously. But he said the company focused on "personal safety"
improvements, for instance tracking statistics such as frequency of accidents
and days lost to injuries. Such statistics led to a "false sense of
confidence" in the company's safety culture and didn't enable the company to
develop adequate, corporatewide safety procedures, Mr. Baker said.
The report also cited BP for not always ensuring that adequate funding and
manpower were devoted to safety. But the panel never found that BP
"purposefully withheld resources" that shortchanged safety, Mr. Baker said.
BP itself has issued stinging self-critiques of its Texas City plant after the
accident. The U.S. Occupational Safety and Health Administration and the U.S.
Chemical Safety and Hazard Investigation Board have both alleged specific
safety shortfalls in Texas. Officials at the chemical-safety board, for
instance, said that BP's cost cutting there played a direct role in causing
the accident, an allegation BP has denied and that the Baker report said it
couldn't substantiate.
The report is the most recent rebuke to longtime BP CEO John Browne. Last
week, Lord Browne said he would step down about a year and a half earlier than
expected. It comes amid other major problems for the company in the U.S., from
oil spills and corrosion in Alaska to alleged improper energy trading, a
charge BP denies.
Still, the Baker report contained little in the way of dramatic revelations,
and its findings weren't as blistering as many BP executives and industry
experts had anticipated. Thus, the publication of the report could provide the
company an opportunity to show investors and regulators that it is acting
quickly to shore up what has become a big American liability: safety.
The effort will be the first big test for a new management team led by Mr.
Hayward that is gearing up to take over from Lord Browne. Currently BP's head
of exploration and production, Mr. Hayward will take over as CEO in August.
Mr. Hayward will have to deliver on BP's promises to improve safety and make
the structural and cultural changes pushed by the Baker panel. BP said
yesterday it had already moved to shore up safety at its plants and was
spending more money on its refineries.
The company said it would embrace all of the panel's recommendations,
including agreeing to an outside body to monitor safety for five years. That
recommendation was reported over the weekend by The Wall Street Journal. The
Baker panel said that the outside body should report periodically to the board
about how well the company is living up to its promises to improve safety and
that BP should make those findings public.
Write to Chip Cummins at
chip.cummins@wsj.com
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As BP's Hayward
Takes Helm,
His Priorities Should Be Clear
January 17, 2007
Dealing with a damning report on your company's operations is hardly the best
way to start life as a chief executive-in-waiting. But that is precisely the
situation facing Tony Hayward, whose appointment at BP to succeed Lord Browne
came on the eve of the Baker report on the oil giant's safety record in the
U.S.
Mr. Hayward's priorities should be clear. First, improve safety. The oil giant
has been sweating its assets in order to boost returns. That helps explain the
problems at the Texas City Refinery and its Alaskan pipeline. In a letter
leaked from BP's intranet just before Christmas, Mr. Hayward admitted that
getting 100% of the task completed with 90% of the resources doesn't always
work. BP has already upped spending on improving safety at U.S. refineries to
$1.7 billion, but the figure could still rise.
Throwing money at the problem probably won't be enough. BP's culture needs to
change, too. The oil giant became increasingly dominated by a "Yes, Lord
Browne" culture. The scale of change isn't as big as that confronting rival
Shell after its reserves debacle in 2004. But it isn't trivial.
Third, Mr. Hayward needs to address the problem of falling production. As the
current head of the exploration-and-production division, pumping barrels is
presumably something he should be good at. Here, Mr. Hayward should benefit
from Lord Browne's legacy: BP has a strong foothold in Russia, and a few juicy
projects in the pipeline. Some big ones, like Atlantis in the Gulf of Mexico
or various fields in Azerbaijan, are due to come on-stream in late 2007 and
2008. Although he's set up reasonably well, there may be operational or
political slip-ups for Mr. Hayward to manage.
What about something more radical? That may not be Mr. Hayward's priority now.
BP has looked at more extreme options in the past -- such as a merger with
Royal Dutch Shell, or even breaking itself up into two smaller and more
manageable companies. But even BP, which has a deserved reputation for being
responsive to investor concerns, hasn't gone that far. Yet.
---- Fiona Maharg-Bravo, Simon Nixon and John Christy
For a complete set of BreakingViews comments, see
www.breakingviews.com.
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BP Seen Little
Damaged By Baker Report On Safety-Analysts
DOW JONES NEWSWIRES
January 16, 2007 12:36 p.m.
By James Herron
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--U.K. oil and gas giant BP PLC (BP) will suffer little
further damage to its reputation and share price from the Baker report into
safety at its U.S. refining operations, industry analysts said Tuesday.
The report, led by former U.S. Secretary of State James Baker and released
Tuesday by BP, said investigators found "significant" problems at five BP
refineries in the U.S. and said company goals, such as cost-cutting, often
overrode safety concerns at its plants.
"Maybe it could have a short-term negative impact on the share price and
reputation, but it won't make people more reluctant to invest in BP," said
Antoine Leurent, analyst at KBC Peelhunt in Paris, referring to the Baker
report.
BP shares closed down 1.46% at 541 pence Tuesday, but said shares in Total SA
(TOT) and Exxon Mobil Corp. (XOM) fell by a similar proportion. "There is a
huge weight on the oil price, and everything is going down in the sector," he
said.
"It looks like a non-event," of the report. "The stock market doesn't care,
apparently."
Peter Hitchens, an analyst at Teather and Greenwood in London, said that BP
has already implemented many of the safety improvements suggested in the Baker
report. The company's promise of increased expenditure on refinery safety to
$1.7 billion from $1.2 billion is "money that would have been spent anyway,"
he said.
"As expected, the report is effectively saying toughen up safety, and that's
it," Hitchens said.
But BP won't emerge totally undamaged, said a U.S.-based industry analyst. The
Baker report's findings probably were what prompted BP CEO John Browne's early
retirement, the analyst said, and it could also put pressure on John Manzoni,
head of refining and marketing at the company.
Browne said Friday he will retire at the end of July, 17 months earlier than
expected. BP said current Head of Refining and Marketing Tony Hayward will
then succeed Browne in the top post.
Browne said Tuesday, however, that the Baker report was unrelated to his
retirement date, which he had decided in early December to advance.
"It will take years (for BP) to have their reputation cleaned," said Leurent
of KBC Peelhunt. It took two or three years for ExxonMobil to restore its
image after its big Alaskan oil spill in 1989, he said. There is also
potential for outstanding complaints related to BP's 2005 Texas City, Texas,
refinery explosion to "revive the bad news" for BP this year, he said.
None of the analysts above changed their ratings or target prices for BP based
on the Baker report.
The Baker report was prompted by a huge explosion at BP's Texas City refinery
in March 2005, which killed 15 workers and injured more than 170. The blast
occurred after gases spewed from an overfilled refinery unit and ignited.
The U.S. Chemical Safety and Hazard Investigation Board said cost-cutting had
compromised safety at the refinery and urged BP in August 2005 to hire outside
experts to look at the company's safety management.
BP asked Baker to chair a panel to investigate safety at BP's five U.S.
refineries in October 2005.
Company Web site:
http://www.bp.com