March 2007 News Stories

Anchorage Daily News
March 31, 2007

http://www.adn.com/money/industries/oil/story/8753739p-8655200c.html

Oil spill barges lacking storage
PRINCE WILLIAM SOUND: Capacity is found to be lower than regulators thought.
By WESLEY LOY
Anchorage Daily News
Published: March 31, 2007
Last Modified: March 31, 2007 at 01:16 AM

Tanker companies have admitted to the state that their Prince William Sound oil-spill response barges -- vital tools for a cleanup operation -- can't hold as much oil as originally specified.

Now state pollution regulators are mulling whether to hit the ship operators with a violation or fine.

"It's an urgent issue and we are taking action," said Betty Schorr, industry preparedness program manager for the state Department of Environmental Conservation.

The barges would play a critical role in the event of a large spill, serving as holding tanks for oil and oily water skimmed from the Sound.

Tanker operators for oil companies BP, Conoco Phillips, Exxon Mobil and others disclosed in a "notice of nonreadiness" to the state Thursday that barges arrayed around the Sound can hold about 68,700 barrels or nearly 2.9 million gallons less than previously thought.

That trims the holding capacity of the five barges by 10 to 15 percent, Schorr said. The barges, along with powerful tugs and other gear, were deployed around the Sound in the wake of the 1989 Exxon Valdez oil spill, which released about 11 million gallons of crude oil into the water.

The DEC and state lawyers are reviewing the barge capacity shortfall, and might cite the tanker operators Monday with a notice of violation, Schorr said. A civil fine could follow.

"That is a possibility if they're found out of compliance," she said.

Tanker operators said a consultant discovered the capacity shortfall while reviewing the performance of oil-skimming and other equipment on the barges.

At least part of capacity error came from not accounting for the weight of spill cleanup equipment on the decks of the barges, Schorr said.

The tanker companies did the right thing and notified DEC officials, said Anil Mathur, president of Alaska Tanker Co., a Beaverton, Ore., company that hauls North Slope crude oil for BP.

Despite the lower barge capacity, Mathur said tanker operators don't believe they've violated state law on oil spill response preparedness.

"No change in equipment has occurred," Alaska Tanker Co. manager Capt. Tom Colby wrote in the Thursday letter to DEC. "Rather, in the course of efforts to improve our barge system, we unexpectedly discovered that an assumption with respect to barge storage capacity was inaccurate. Out of an abundance of caution we disclosed this information to the department."

Discovery of the capacity error has not halted or slowed down oil shipments out of the Sound, DEC and oil company spokesmen said Friday.

A big reason for that is a raft of extra precautions the tanker companies have voluntarily put into place until the barge matter is settled, Schorr said.

Barges have been repositioned or put on standby in the Sound and in Cook Inlet; tug escorts for loaded tankers have been increased; and a one-way traffic zone for tankers moving through Valdez Narrows has been extended.

The tanker operators, which include Conoco's Polar Tankers Inc. subsidiary, Exxon's SeaRiver Maritime Inc. and others, also originally committed to running oil-laden tankers through the Sound only during daylight, but quickly dropped that measure.

It was a "stupid idea" that could increase traffic congestion and risk as tankers move in and out of Valdez, Mathur said.

One potential solution to the barge problem might be to bring in another barge to boost capacity, he said.

But Mathur said his preference would be to concentrate on preventing spills in the first place, not laying out more money for after-the-fact equipment.

The Prince William Sound Regional Citizens' Advisory Council, which keeps watch over tanker operations, questioned why the shipping companies would not "immediately obtain additional storage capacity to resolve any shortfall."

But council spokesman Stan Jones gave the tanker operators credit for self-reporting the barge shortfall.

"They dug it up themselves, they disclosed it and now they're working supposedly to remedy it," he said.

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

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http://www.adn.com/money/industries/oil/story/8752136p-8653676c.html

Regulators slam oil pipeline fees
By WESLEY LOY
Published: March 30, 2007
Last Modified: March 30, 2007 at 02:51 PM

Lawyers for the Federal Energy Regulatory Commission have again blasted owners of the trans-Alaska oil pipeline for overcharging to move oil through the line.

In a brief filed last week, the FERC lawyers say “the record is woefully inadequate” to support the high rates sought by the pipeline owners, which are BP, Exxon Mobil, Conoco Phillips, Koch Industries and Chevron.

The lawyers urged the five-member commission to reject rates that averaged $4.02 per barrel last year and instead go with a fairer rate set by the Regulatory Commission of Alaska: $1.96 per barrel.

It’s the second time in recent weeks that lawyers for the FERC have weighed in on the legal fight that’s been raging for years in both the courts and before the federal regulatory commission.

The fight involves the pipeline owners, the state, and two nonpipeline owners that rely on the 800-mile line to move oil: refiner Tesoro and North Slope oil producer Anadarko.

At stake is hundreds of millions of dollars for the state, whose oil tax collections go down as pipeline transportation costs go up.

Reporter Wesley Loy can be reached at wloy@adn.com or 257-4590.

Financial Times
March 27, 2007

http://www.ft.com/cms/s/fd80adde-dbff-11db-9233-000b5df10621.html

BP blast probe finds tensions at top
By Sheila McNulty in Houston
Published: March 27 2007 03:00 |
Last updated: March 27 2007 03:00

An internal BP investigation into the Texas City refinery explosion found John Manzoni, the chief executive of refining, should have done a "much deeper dive" into the true state of the facility after "clear warning signals" from previous accidents.

The confidential report concludes that Mr Manzoni - who until late last year was regarded as being near the top of the list to succeed Lord Browne as BP's chief executive - lacked refining experience and failed to obtain information needed to understand better his complex and important refining asset and the risk of a big accident. The report also reveals tensions between him and Mike Hoffman, then group vice-president for refining and marketing, upon whom he chose to rely for information.

These tensions temper the criticism of Mr Manzoni. The report states that the "standoff" between the two contributed to Mr Manzoni's lack of understanding of the risks at Texas City.

The report, dated February 2007, summed up the findings of the team led by BP's Wilhelm Bonse-Geuking. It was appointed to investigate whom to hold accountable for the Texas City blast, which killed 15 people and injured a further 500.

Although the report clears Mr Manzoni of "serious neglect or intentional misconduct,'' it says he should have taken more steps to consider and mitigate the risks long before the disaster occurred.

The report divided individuals into four tiers in descending order of accountability. Mr Hoffman, along with three other senior US executives, were placed in Tier 1 and recommended for dismissal. Tier 1 includes "direct accountability for substantial management activities; aggravating factors generally outweigh mitigating factors". Mr Hoffman retired earlier this year.

The report places Mr Manzoni as the sole executive in a "Tier 2" of responsibility for the accident which means "direct accountability for substantial management activities; balance of aggravating and mitigating factors".

The report notes that Mr Manzoni visited Texas City several times. These visits "ought to have given him some of the missing information (or at least critical clues) that Texas City refinery was in worryingly poor condition, and that there were serious questions concerning its overall operating condition.''

The appropriate response should have been "a much deeper dive into the process safety environment of refining, especially at Texas City, compared with what he did do in response to this incident (increasing inspection and expenditures, as well as emphasising Just Culture)".

The US Chemical Safety Board, the federal agency charged with investigating the blast, last week issued its final report. It found audits and safety reports revealing the deterioration at the site were shared with BP executives in London and with at least one member of the executive board - Mr Manzoni.

Mr Manzoni's secretary said: "We have no comment." BP said: "The team found no evidence that anyone acted in bad faith or violated BP's Code of Conduct. As a matter of policy, BP does not comment on personnel matters.'' Attempts to contact Mr Hoffman proved unsuccessful.

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http://www.ft.com/cms/s/68c2896e-dc00-11db-9233-000b5df10621.html

Trained for the top slot at BP but passed over
after safety breaches on his watch
By Carola Hoyos
Published: March 27 2007 03:00 |
Last updated: March 27 2007 03:00

John Manzoni was until last year the second-most likely man to take over as chief executive of BP, the UK energy group.

That the head of refining and marketing had to bear some responsibility for the refinery explosions that killed 15 people at BP Texas City plant in March 2005 did not stop company insiders from touting his abilities as well as his chances.

Like Tony Hayward, head of exploration and refining, the front-runner who eventually beat Mr Manzoni and three others to be chosen as chief executive-designate, Mr Manzoni was one of Lord Browne's "turtles", a nickname derived from the Teenage Mutant Ninja Turtles.

Turtles were picked out of the pack early to spend time shadowing the chief executive as he worked, from striking deals with rich but unpredictable Russian oligarchs to deciding whether to sell the company's legacy North Sea oil field.

Mr Manzoni holds an honours degree in civil engineering and a masters degree in petroleum engineering from Imperial College, London.

He joined BP in 1983 and spent time working in the North Sea.

Mr Manzoni has been head of investor relations, head of strategy and vice-president of Prudhoe Bay, Alaska, which would be the sceneof leaking pipelines and become the company's second big recent blunder.

He also holds a degree in business management from Stanford University in California and ran BP's integration with Amoco.

Mr Manzoni later oversaw European refining and marketing and gas and power, before being appointed chief executive of refining and marketing in 2002 and a board member in 2003.

He works harder than most of his peers but the performance of BP's refining operations still lags behind that of many of its rivals.

Dynamic, pragmatic, numerate and focused on detail, he is perhaps the quintessential engineer.

Yet, his family line has a literary bent.

In the 19th century, his great, great, great grandfather Alessandro Manzoni wrote The Betrothed, a romantic novel set in 17th century strife and plague-ridden Lombardy.

Giuseppe Verdi's requiem was dedicated to him and first performed in 1874 on the anniversary of his death. The novel is considered one of the greatest works of modern Italian fiction.

Mr Manzoni was unaware of his distinguished ancestry until it was recently pointed out to him by a colleague.

Some outsiders regard Mr Manzoni as slightly more able though less jovial than Mr Hayward.

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http://www.ft.com/cms/s/98a2a46c-dbff-11db-9233-000b5df10621.html

BP and the crude task of balancing cost and danger
By John Kay
Published: March 27 2007 03:00 |
Last updated: March 27 2007 03:00

Last week the US Chemical Safety Board published its review of the fatal explosion at BP's Texas City oil refinery. The board criticised senior executives of the company for demanding cost reductions at the expense of safety. Chemical plants are, by their nature, full of flammable liquids. Airlines carry their customers in fragile metal boxes at speed and altitude. Pharmaceutical products are effective only because they interfere with our bodies.

Refineries, aircraft and drugs are inherently dangerous. There is no limit to what can be spent to make them safer. But if there were no limit to spending, oil, flying and pharmacology would be prohibitively expensive. To say that safety must always come first, as we are all inclined to do when we hear of a tragic accident, is to indulge in empty rhetoric. It is to ignore the real social, ethical and commercial dilemmas that conscientious commentators, regulators and business people face.

Business activities such as chemicals, flying and pharmaceuticals are heavily regulated. Agencies such as CSB must balance the conflicting public interests in greater safety and cheaper products. Some do so explicitly: their economists try to calculate the monetary value of life, serious accidents and environmental damage. Perhaps companies should make the same assessment?

The Ford Motor Company once did. The company's calculation was the "smoking gun" in what may be the most famous trial in the history of product liability. Richard Grimshaw, a 13-year-old passenger, suffered horrible disfigurement when a Ford Pinto caught fire after a rear-end collision. A Californian jury awarded $125m in punitive damages, but this was reduced on appeal.

Legend has Ford executives marketing a dangerous car after estimating that it would be cheaper to settle with grieving widows than to spend $10 per car protecting the fuel tank. The facts are somewhat different. The offending memo was prepared as part of a submission to the company's safety regulator, the National Highway Transportation Safety Agency. The memo did not estimate the costs to Ford of protecting the fuel tank from the accident that injured Mr Grimshaw, but the cost to the US car industry of reducing the risk of fuel leakage if a car rolled over. The value of life in the calculation, at $200,000, is offensively low: much less than a US jury typically awards, and much less than the jury did in fact award to the family of the driver of the Pinto, who was killed in the accident. But the figure is based on a common methodology used by public agencies in such assessments and its source was the NHTSA itself. Ford's calculation was precisely the one it believed the agency would make.

The Pinto was not a safe car. Small cars on US roads are vulnerable. The Pinto's safety record was neither better nor worse than that of other small cars on American roads at the time.

Making decisions that balance human life against costs is unavoidable. Doctors and politicians, generals and road engineers must do so all the time. Everyone who buys a compact car makes such a trade-off. We wish it were not so. We prefer that the calculations are implicit rather than explicit. We prefer them to be made by public agencies than by private companies. And we deny that we make these judgments ourselves, although we do so every day.

Ford's error in that memorandum was a more subtle one than the story of profit before human life - which may, nevertheless, have been the reality - allows. A private business had asserted the authority which only a political process can make legitimate. The safest course for a company making judgments about public safety - and it is not a very safe course either for the company or the public - is to rise slightly above the standards of its peers.

The unattractive consequence is that safety standards and costs are the outcome not of calculation, but of competition and comparison. BP's mistake was to let standards slip in an environment where financial market pressure to enhance earnings per share meant that competition served to lower standards, not to raise them.

Financial Times
March 26, 2007

http://www.ft.com/cms/s/01342ed8-db2e-11db-ba4d-000b5df10621.html

BP in Alaska is a safety model
By Richard Berkowitz

Published: March 26 2007 03:00 |
Last updated: March 26 2007 03:00

From Mr Richard Berkowitz.

Sir,
In recent months the Financial Times has provided extensive coverage of the failure of BP to address safety issues adequately in its US operations, most notably BP's Texas City refinery and Prudhoe Bay pipelines. The lack of safety measures taken, as reported in the FT, is truly appalling. However, it is contrary to my personal experience with other parts of BP, such as the Alaska Tanker Company, a vessel operator BP helped create, whose ownership is 25 per cent BP, and whose exclusive client in the Alaska oil tanker trade is BP.

The Alaska Tanker Company has won top national honours from the US Coast Guard along with regional and state regulatory agency awards for adhering to the highest safety standards and having a spill prevention record that is unmatched in the world. Despite transporting more than 1bn barrels of oil in a harsh marine environment, ATC has not spilled more than a barrel of oil in each of the last six years and has the enviable record of no spills in the last two years. This achievement is surpassed only by ATC's operations having well over 10m man-hours without a single time-loss incident.

Clearly, this element of BP's business is a model for all of us as they have put an extreme emphasis on personnel safety and operational integrity while maintaining competitive costs with others in the Alaska trade.

Richard Berkowitz,
Director, Pacific Coast Operations,
Transportation Institute,
Seattle, WA 98121, US

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http://www.ft.com/cms/s/8e0efe56-db2d-11db-ba4d-000b5df10621.html

BP investors poised to oppose pay proposal
By Kate Burgess
Published: March 26 2007 03:00 |
Last updated: March 26 2007 03:00

Some shareholders in BP are threatening to vote against the oil company's executive pay proposals in protest at the size of Lord Browne's remuneration package when he leaves in July.

The Local Authority Pension Fund Forum (LAPFF), whose members own about 1.2 per cent of BP and have £70bn in total under management, has said its members would oppose BP's remuneration report at the forthcoming annual meeting because of an "insufficient linkage between executive pay and health-and-safety performance".

Pirc, which advises investors on governance issues, is urging other BP shareholders to follow suit although the Association of British Insurers and Rrev, which advises National Association of Pension Fund members, have passed the oil company's report without critical comment.

The LAPFF's decisionfollows a series of safetyfailures at BP, notably the Texas City refinery blast, which killed 15 people in 2005, and the Prudhoe Bay spill in 2006. The company has been the subject of a series of highly critical reports, most recently this week from the Chemical Safety Board in the US. Last month, a panel led by James Baker, former US secretary of state, concluded that the BP management was to blame for the Texas City refinery explosion.

Pirc has raised questions over the BP board plans, outlined this month, to award Lord Browne shares of up to 7.5 times salary, based on long-term leadership measures and the group's share-price performance between 2007 and 2009, even though he will have left BP by July. The eventual award will be decided in 2009.

Pirc is also concerned about an additional payment of 12 months' pay, a £1.98m bonus and £90,000 of fringe benefits to which Lord Browne is entitled when he leaves in July.

One top-10 shareholder said: "It won't matter what the company has to say about contractual entitlements this is going to go down like a lead balloon in some quarters, notably the US."

The payment is on top of Lord Browne's total £4.5m pay packet in 2006, which was sharply down from the £6.3m he received in 2005. He was also awarded a potential 1.76m in shares in a long-term incentive plan maturing in 2008 and his pension pot is worth £21m.

In answer to previously expressed shareholder concerns, BP has promised that it will make the link between safety and bonuses clearer. Some shareholders have also pointed out that during Lord Browne's long tenure of more than 30 years at BP the share price has risen markedly. Rrev said it welcomed moves to postpone long-term incentive awards until the impact of an executive's actions become apparent even if that is long after the executive leaves.

Wall Street Journal
March 26, 2007

UK's Local Authority Pension Fund To Oppose BP Pay Report
DOW JONES NEWSWIRES
March 25, 2007 7:01 p.m.

LONDON (Dow Jones)--Local Authority Pension Fund Forum said Monday that local authority pension funds will oppose the remuneration report of BP PLC (BP) at the company's upcoming annual shareholder meeting, due to concerns about insufficient linkage between executive pay and health and safety performance.

The LAPFF has recommended that its members, who own an estimated 1.2% of BP shares, vote against the company's remuneration report as a result of the company's failure to clearly tie executive rewards to safety performance.

LAPFF said it is also in contact with other institutional investors in the U.K. and overseas, who share its concerns.

The LAPFF, which was set up in 1991, is a voluntary association of 39 public sector pension funds based in the U.K. Its members currently have combined assets of more than GBP70 billion.

The LAPFF considers that BP's long-term incentive scheme should contain safety-related and other extra-financial performance elements.

"Given the company has stated that the change in its safety culture is a "5 to 10 year journey," LAPFF considers a link between long-term incentives and safety must form part of BP's remuneration policy," LAPFF said in a statement.

The LAPFF also believes extra-financial performance metrics should apply to all executive directors, not only the outgoing chief executive. In particular they should apply to the CEO designate, Tony Hayward, who is set to take over from Lord Browne in July 2007.

"Although the Forum acknowledges that the company has reduced directors' bonuses, it has raised concerns with BP about the reactive nature of the cuts.

"The company has responded by confirming that process safety components will be part of the 2007 annual bonus calculation.

"The Forum believes that this will be in line with BP's commitment to improve process safety. The Forum will assess the stringency of these targets in its analysis of the 2007 annual report," LAPFF said.

LAPFF chairman Darrell Pulk said: "Whilst we welcome the company's openness to investor engagement, and decision to include process safety as a factor in determining future bonuses, we have no choice but to oppose the remuneration report in this instance.

"It is important the investors give the company a clear message - if safety culture is to be at the heart of the business going forward, then it must also be inherent in the board's remuneration policy," Pulk said.

The LAPFF said it has been talking to BP for six months over the company's response to recent safety failures, including the Texas City Refinery blast in March 2005 and the Prudhoe Bay spill in July 2006.

The company has been criticized for its management of safety issues in reports by former U.S. Secretary of State James Baker and, more recently, the Chemical Safety and Hazard Investigation Board.

BP's annual shareholder meeting is scheduled for April 12.

-By Lilly Vitorovich, Dow Jones Newswires; 44-0-207 842 9290; lilly.vitorovich@dowjones.com

Anchorage Daily News
March 24, 2007

http://www.adn.com/money/industries/oil/pipeline/story/8734851p-8636461c.html

Exxon, BP proposals frustrate legislators
NO SPECIFICS: Changes sought in pipeline bill but no details are given.
By SABRA AYRES
Anchorage Daily News
Published: March 24, 2007
Last Modified: March 24, 2007 at 01:38 AM

JUNEAU -- In testimony before state lawmakers Friday, both Exxon Mobil and BP called for changes to proposed legislation aimed at setting criteria for building a natural gas pipeline from the North Slope.

Representatives from the two companies made their pitch before the Senate Resources Committee, but the day ended with some lawmakers frustrated at what they said was the lack of specifics in their appeal.

Exxon Mobil and BP representatives agreed a producer-owned pipeline would be the best value for both the state and North Slope gas producers. But applicants who bid to build and operate the pipeline project should be allowed to set their own terms of inducements and financial certainties instead of being restricted by the criteria laid out in Gov. Sarah Palin's Alaska Gasline Inducement Act, the companies told the committee.

"The best way to allow competition is to allow applicants to come up with whatever inducements they feel are necessary," David Van Tuyl, the commercial manager for BP's Alaska Gas division, said during his testimony on the governor's gas line bill.

Palin's AGIA bill sets out requirements and incentives for applicants wishing to bid on a state license to build a gas line. But both BP and Exxon Mobil said the proposed legislation also needed more clarification on how the state would ensure financial stability for the project.

Uncertainties about the bill's financial terms pose serious risks for potential pipeline builders, said Martin Massey of Exxon Mobil.

The bill has a provision for a 10-year freeze on gas production for producers willing to commit their gas to the project. But producers indicated Friday they would prefer a longer, locked-in rate from the state.

The companies also said the bill's provision requiring the pipeline owner to share the cost of any capacity expansion via transportation fees could increase the financial risks.

"We are willing to take on the geologic, cost and future commodity rate risks, but we can't take on the risk of any unknown changes to the fiscal terms," Massey said.

A plan proposed last year by former Gov. Frank Murkowski teamed the state's three largest producers -- Exxon Mobil, BP and Conoco Phillips -- together to build the pipeline. The contract would have allowed a 30-year tax freeze on oil and a 45-year tax freeze on gas. The contract was criticized by lawmakers for giving away the state's ability to tax its largest revenue sources.

Lawmakers Friday pushed the producers to be more specific in what sort of financial stabilizing terms they would prefer. Both Van Tuyl and Massey, however, hedged on giving specifics, saying there were several possibilities that could make the project's risks manageable.

"I don't think we need new legislation," Van Tuyl said. "But I believe AGIA can be amended to allow the project applicants to specify what that risk-reward ratio should be."

The vagueness of both Exxon Mobil's and BP's request provoked frustration among several of the committee's members. Some members tried various ways of questioning to get the producers to clearly spell out what financial terms they would prefer to be included in AGIA.

Their attempts failed.

"I would genuinely like to see what kind of inducements they want or need," said Sen. Bill Wielechowski, D-Anchorage. "We have a process here where people can come forward with suggestions on legislation. We can do this without the producers, but I think it's preferable to do it with them."

At least one natural gas exploration company expressed concern Friday about a producer-owned pipeline.

Anadarko Petroleum Corp., which is currently exploring in the North Slope, said an independently operated pipeline would provide more access to the pipeline's capacity for explorers coming on line after the pipeline's construction.

"An independent pipeline owner is motivated to solicit more capacity," Mark Hanley, the public affairs manager for Anadarko, told lawmakers.

Legislators will conduct a second public hearing on AGIA today, followed by more committee hearings on the bill next week.

Sen. Charlie Huggins, R-Wasilla, has said that as chairman of the Resources Committee, he would like to see AGIA get to the Senate floor before the end of April.

Daily News reporter Sabra Ayres can be reached at sayres@adn.com or 1-907-586-1531.

Alaska Report
March 23, 2007

http://www.alaskareport.com/do77779.htm

Exxon Valdez oil remains. Why?
March 23, 2007
Courtesy of Far North Science
By Doug O'Harra

More than 18 years after the tanker Exxon Valdez ran aground on Bly Reef and spilled at least 11 million gallons of crude oil into Prince William Sound, buried remnants of largely unweathered oil continue to foul certain beaches and harm marine life.

The persistence of 85 tons of oil from the spill has surprised many scientists and confounded expectations that most of the crude would have long since disappeared and left the Sound's marine species completely recovered.

Scientists at Auke Bay Laboratory in Juneau have tracked the fate of the crude oil for a decade. A study released in February, led by chemist Jeff Short, found alarming amounts of oil at 10 beaches studied in 2001 and 2005.

This remaining oil about 26,600 gallons from the original 11 million appears to be declining at only about 4 percent per year. It has seeped four to 10 inches beneath the surface, where it continues to leach into ocean and get ingested by sea life.

"Such persistence can pose a contact hazard to inter-tidally foraging sea otters, sea ducks, and shorebirds, create a chronic source of low-level contamination, discourage subsistence in a region where use is heavy and degrade the wilderness character of protected lands," wrote Short and eight co-authors in the study, published Feb. 15.

Now, to help sort out why the oil still lingers, the Exxon Valdez Oil Spill Trustee Council has awarded a three-year $1.2 million grant to researchers at Temple University.

"Every indication tells us that the oil should have biodegraded," says principle investigator Michel Boufadel, chair of Civil and Environmental Engineering in Temple's College of Engineering, in a release. "But what we've seen is there are still plenty of places where the oil still exists."

A release from Temple University science writer Preston Moretz explains what's up:

During the next two summers, Boufadel and graduate students will travel to Prince William Sound for 20 days and 50 days, respectively, to conduct field studies, take samples and try to get an understanding of the motion of the water and effects of the waves along the beaches.

"Our goal is to understand what is happening at the oil-water interface, since that is where the biodegradation of oil typically occurs," said Boufadel, an expert in oil spill remediation. "We will be examining the biodegradation from both sides of that interface from inside and outside the oil patches."

Boufadel said the researchers currently believe that micro-organisms, which would typically consume the oil, may play a key role in the oil's lack of biodegradation along the beaches.

"You would expect that over 17 to 18 years, the micro-organisms that live in water along the beach would eat the oil; that they would consume it completely," Boufadel said. "That did happen at many locations, but at these particular locations that we will be examining, there have been some limitations on that occurring."

Boufadel hypothesizes that the micro-organisms, which live in the water and need other nutrients to be able to consume the oil, may not be getting enough nitrogen, phosphorus or oxygen in order to do that. Or, he adds, a layer or sort of "skin" may have developed around the oil patches, making them impenetrable by the micro-organisms.

Boufadel also believes that environmental factors such as temperature could be inhibiting the micro-orgamisms. "There may be enough nutrients, but the temperature may be so low that these micro-organisms cannot grow fast enough to consume the oil that lingers on these particular beaches," he said.

-----------------------------------------------------------
Most of Far North Science is written and edited by Doug O'Harra, a writer and journalist based in Anchorage, Alaska.

Anchorage Daily News
March 23, 2007

http://www.adn.com/money/industries/oil/prudhoe/story/8729830p-8630578c.html

FBI digs deeper in probe of North Slope
DEC: Political appointees accused of punishing state regulators who got tough.
Daily News staff and wire reports
Published: March 22, 2007
Last Modified: March 22, 2007 at 02:03 PM

NEW YORK -- The FBI is investigating whether Alaska political appointees improperly punished state regulators who tried to enforce environmental rules against oil companies operating in Alaska.

The inquiry, which is being conducted by the Federal Bureau of Investigation and the U.S. attorney's office in Anchorage, is connected to an ongoing criminal investigation of BP for allowing pipelines it operates to corrode enough to cause a large oil spill on Alaska's North Slope in 2006. Similar pipeline corrosion discovered later that year forced the partial shutdown of Prudhoe Bay, the most productive U.S. oil field.

Now, the actions of the Alaska Department of Environmental Conservation, which is responsible for overseeing oil operations in the state, have come under scrutiny from federal investigators, according to a story from Dow Jones Newswires.

Critics of the department say senior political appointees are partly to blame for the state's environmental woes such as last year's oil spills. They say these appointees repeatedly shielded oil companies from enforcement actions that would have required better maintenance and oversight of the industry's facilities and pipelines.

"We're aware of the allegations, and we are looking into it," said FBI spokesman Eric Gonzalez. He declined to comment further.

One DEC critic is Susan Harvey of Eagle River, who quit the department in 2002 after she said her responsibility for North Slope oil spill prevention and response was taken away. Harvey has said she believes it was because of her firm stance as a regulator. She also has said she received a federal subpoena and has talked with investigators.

The FBI has interviewed Steve Taylor, the director of environmental policy at BP Alaska in 2001, about a meeting he had in September 2001 with Michele Brown, then DEC commissioner, in her office. Taylor said that, during the meeting, a lobbyist with the Alaska Oil and Gas Association telephoned Brown complaining about Harvey's enforcement of environmental rules. Judy Brady, the lobbyist, asked Brown to remove Harvey from her job overseeing the oil companies on the North Slope, Taylor said.

Harvey often didn't see eye-to-eye with oil company officials. In October 2000, for example, Harvey's office prohibited BP's offshore Northstar field from producing oil when the Arctic ice was partially thawed because the company had failed several drills testing its ability clean up a spill in those conditions. Harvey says her staff also resisted efforts by Phillips Inc., now part of Conoco Phillips, to extend the winter drilling season, due to concerns that companies wouldn't be able to clean a spill in warmer weather when the tundra was thawing.

"Brady was complaining about Susan Harvey and demanding they get rid of Susan," Taylor said. This type of pressure from Brady, he added, "was not an uncommon thing."

Taylor has since retired from BP, though he still consults for the company, he said.

Brady, a former state natural resources commissioner, adamantly denied the allegation that she tried to get rid of anyone, and said the telephone call described by Taylor never happened. She said her group didn't attempt to remove Harvey from her job.

"You'd be a fool to do such inappropriate things," she said.

At the time, Brady said, her organization was trying to iron out with state officials a clearer understanding for oil companies of how DEC would apply requirements for spill response plans. Several companies were concerned that the rules seemed inconsistent, she said.

The goal was to get a better process, not get rid of regulators, Brady said.

Brown, the former DEC commissioner, said she recently was interviewed by FBI agents, but mostly they wanted to review how the state and oil industry developed a 1999 "charter agreement" that, among other things, required regular reports from BP and what is now Conoco on how they were dealing with corrosion in pipelines.

The agents said the state is not the target of the investigation, Brown said.

As for Harvey, she tended to overreach in her regulatory demands and seemed to have an inflated sense of her own importance within the DEC organization, Brown said. Under Harvey, reviews of industry "contingency" or spill-response plans lagged by two years or more, Brown added.

"Her tendency was, there is my way and there is only my way and you will do it my way," Brown said.

DEC spokeswoman Lynda Giguere issued a statement Wednesday:

"To our knowledge, the FBI is not investigating senior DEC political appointees concerning allegations they punished regulators for being tough on the oil industry. Rather, the FBI as part of the federal grand jury investigation of BP's actions on the North Slope has interviewed past and current DEC employees concerning BP's North Slope oil spills."

Giguere said state law forbids the department from discussing Harvey or other personnel matters.

BP spokesman Daren Beaudo said the company wasn't aware of any federal investigation into state environmental regulators and declined to comment further.

Conoco Phillips and Exxon Mobil Corp. hold stakes in the Prudhoe Bay field, which is operated by BP.

An Exxon Mobil spokeswoman said the company didn't seek to have Harvey removed from her position at the department overseeing the North Slope, nor has it been contacted by the FBI.

A Conoco spokesman didn't a return a call seeking comment.

According to performance assessments reviewed by Dow Jones Newswires, Harvey's supervisors at the department gave her an "outstanding" rating in all four performance categories for the year preceding Aug. 15, 2001. But a later review for the period between August and December 2001 said her performance was "average" and rated her "unacceptable" in "interpersonal relationships" and "supervisory."

Harvey's disintegrating relationship with her supervisors came at a time when tensions between her office and the oil industry were mounting.

"There was a decade of neglect of environmental enforcement," Harvey said in an interview. "We were making headway too fast. Some huge shift happened in the fall of 2001. All of a sudden, I'm a rogue employee."

Daily News reporter Wesley Loy contributed to this story. He can be reached at wloy@adn.com or 257-4590.

Houston Chronicle
March 23, 2007

http://www.chron.com/disp/story.mpl/business/4654446.html

Lawmakers pummel OSHA
House members say inspections were too infrequent at BP plant
By KRISTEN HAYS and DAVID IVANOVICH
Copyright 2007 Houston Chronicle

WASHINGTON House members skewered the U.S. Occupational Safety and Health Administration on Thursday, lambasting the agency's infrequent inspections at BP's aging Texas City refinery before the explosion that killed 15 workers two years ago today.

OSHA appeared to be more of a target than even London-based BP in the first of several House Education and Labor Committee hearings on the blast.

Rep. Phil Hare, D-Ill., said Congress needs to "take a long look at OSHA and its effectiveness," and "start kicking some OSHA people in the kneecaps."

Retired U.S. Navy Adm. Frank "Skip" Bowman, who served on an independent review panel chaired by former Secretary of State James A. Baker III that criticized the company for safety lapses at its U.S. refineries, told the committee that OSHA's reactionary approach to oversight was "incredible" to him.

"We are constantly shooting behind the duck," he said.

No representatives of OSHA or BP testified, but committee spokesman Aaron Albright said they will likely get their chance.

"We are looking into future hearings with OSHA, BP and other refinery executives," he said.

OSHA released a statement after the hearing that said the agency makes refinery worker safety a priority, and the hearing reinforces that effort.

Edwin Foulke Jr., assistant secretary of Labor for OSHA, said in the statement that the agency has increased inspections, conducting 100 last year and 50 so far this year. OSHA also has trained more than 160 staff in principles of comprehensive inspections focused on overall safety management or operation of equipment and handling of hazardous materials rather than slips and falls. By August, OSHA will have 280 such trained inspectors, he said.

"These staff will ensure that under a new national emphasis program, every refinery under OSHA's jurisdiction is inspected," the statement said.

BP spokeswoman Sarah Howell said company officials have taken responsibility for the accident and are "working with regulators and other authorities to understand all the facts and address all the concerns."

"We're in action," Howell added. "We are addressing them. We're moving forward with what we said we would do."

The hearing came a day before the two-year anniversary of the blast and two days after the U.S. Chemical Safety and Hazard Investigation Board unveiled its final report. That report said cost-cutting, poor investment in training and mechanical integrity and a lack of safety vigilance caused the blast.

Only nine inspections

CSB Chairwoman Carolyn Merritt testified before the panel that the investigation found that from 1995 to 2005, OSHA conducted only nine planned, comprehensive inspections anywhere in the country, and none in the refining sector.

And while OSHA conducted unplanned inspections at the Texas City refinery in response to accidents, complaints or referrals, Merritt said such examinations are typically narrower in scope and shorter than planned inspections.

About a year after the blast, OSHA issued citations alleging more than 300 violations of the agency's standards, imposed a $21.3 million fine the largest in its history and ordered safety improvements.

But such penalties have little impact on massive corporations, she said.

In 1992, OSHA issued what's known as the Process Safety Management standard, which requires refineries to implement 14 management strategies to try to prevent catastrophic accidents like the blast two years ago.

But OSHA has not focused on enforcing that rule. Without adequate enforcement, Merritt said, it devolves into essentially a voluntary program.

"The problem with voluntary programs," Merritt noted, "is that not everybody volunteers."

Red Cavaney, president of the American Petroleum Institute, the oil industry's trade organization, faced some heated questions of his own after touting the group's 500 safety standards for its members to follow.

"Somehow, they can also be ignored without any repercussions to the company," said Rep. George Miller, D-Calif., chairman of the committee.

But API is not a regulatory body. The industry is regulated by OSHA and other federal bodies as well as state agencies.

"With all due respect, Mr. Cavaney, that didn't happen. That didn't happen until this place blew up," Miller said.

"I understand," Cavaney said.

Guidelines on trailers

One issue the trade group plans to re-examine and issue new guidelines on this spring is the use of trailers in refineries and chemical plants.

All of the workers killed and many of those injured in the Texas City blast were in or near trailers, Merritt said.

Because a trailer can shatter during an explosion, a worker inside is more likely to be killed or injured than a person standing in the open, Merritt said.

Eva Rowe, whose parents died in the blast, recounted the disaster in a halting, emotional voice. She asked that OSHA increase safety and inspections at all refineries as the CSB report recommended.

"It is of little comfort to us, but we hope that, through legislation, to ensure more stringent worker health and safety standards, that their deaths won't be in vain," she said.

On Friday, Rowe and her attorney, Brent Coon, will appear at the Texas Capitol to promote a "Remember the 15" bill in the Legislature. Coon told the committee the bill addresses issues of safety during unit startups, proper training, tracking of near misses and replacement of antiquated equipment.

kristen.hays@chron.com

david.ivanovich@chron.com

Kristen Hays reported from Houston and David Ivanovich reported from Washington.

Wall Street Journal
March 22, 2007

UPDATE:
FBI Interviews Former Official About Oil Spills
DOW JONES NEWSWIRES
March 22, 2007 4:31 p.m.

(Updates with comments from Susan Harvey and statistics from the Alaska Department of Environmental Conservation)

NEW YORK (Dow Jones)--The former commissioner of the Alaska Department of Environmental Conservation has said she has been interviewed by FBI agents investigating the oil spills that occurred on the state's North Slope last year.

But the FBI agents said the state wasn't a target of the investigation, Michele Brown, the former commissioner, told the Anchorage Daily News in an article published Thursday.

Dow Jones Newswires reported Wednesday that the FBI is investigating political pressure placed on regulators at the department before last year's spills, which were caused by severe corrosion on North Slope pipelines operated by BP PLC (BP).

Critics say this pressure from top officials at the department discouraged enforcement actions that might have prevented the spills. FBI spokesman Eric Gonzalez said the agents are examining these allegations about the department and wouldn't comment further.

One allegation being examined is an episode that occurred in December 2001, when Brown removed Susan Harvey, a civil servant, from her job overseeing oil spill prevention and response for companies on the North Slope. The FBI has interviewed several people familiar with that incident, including Steve Taylor, the former director of environmental policy at BP.

Taylor told Dow Jones Newswires that he was interviewed by the FBI about a meeting he attended at Brown's office in September 2001, when a lobbyist for the Alaska Oil and Gas Association called asking to have Harvey removed from her job. Judy Brady, the lobbyist, disputes Taylor's account, saying she never called the department to pressure Brown.

Brown told the Anchorage Daily News that Harvey was removed because her stance on the department's regulatory authority was too aggressive. Brown also said Harvey's reviews of oil-spill response plans took too long.

Harvey disputed that her department took too long to evaluate spill response plans. She pointed to department statistics showing that spill plan review times actually declined in 2000 and most of 2001, under her supervision, from nearly 300 days for plans submitted in 1999 to less than 200 days for plans submitted in 2000.

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

Xxxxxxxxxxxxxxxxxxxxxx

UPDATE:
US House Panel Mulls Action In BP Refinery Fire Wake
DOW JONES NEWSWIRES
March 22, 2007 2:31 p.m.
(Updates with comments from lawmakers and API President Red Cavaney)
By Maya Jackson Randall
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)--Two years after a fatal explosion at BP PLC's (BP) Texas City refinery, U.S. lawmakers are mulling what kind of legislation is needed to improve workplace safety and prevent similar tragedies from occurring.

At a House Education and Labor Committee hearing on the accident Thursday, lawmakers criticized federal regulators at the U.S. Occupational Safety and Health Administration, or OSHA, for failing to conduct thorough, pre-emptive safety inspections at refineries.

They also suggested that the oil industry has enabled bad industry behavior and argued that trade group American Petroleum Institute should do more to encourage member companies to meet safety standards.

"I think the situation screams out for legislation," said new Committee Chairman George Miller, D-Calif. "Clearly, the status quo is unacceptable."

Miller said he's not sure yet what kind of legislation is necessary but that the committee will hold additional hearings on the issue.

Oil-refining activities have always been considered dangerous due to the presence of high temperatures and noxious gases, but critics say refinery workers are facing increased risks against the backdrop of strong oil-product demand and finite processing capacity in an industry known for strict cost discipline.

But over the years, the oil industry has turned OSHA, the federal agency charged with protecting workers, "into a starved lapdog," said Rep. Rush Holt, D-N.J.

Holt asked American Petroleum Institute President Red Cavaney if he would support actions meant to ensure that OSHA strengthens its enforcement capabilities, increases staff training, and report safety warnings.

"I just don't know," Cavaney responded.

After the hearing, Cavaney told reporters that API wouldn't lobby Congress for budget measures that would provide OSHA greater funding, but the group wouldn't protest such moves either.

"We would not complain if they got more and more funding and had more resources," he said.

The hearing focused on a report the U.S. Chemical Safety Board released Tuesdaythat blamed BP budget cuts, investment failures, understaffing and safety deficiencies for the accident, which has been described as the worst U.S. workplace accident since 1990. The March 23, 2005 BP explosion killed 15 people and injured 180 others.

Eva Rowe, whose parents died as a result of the accident, urged lawmakers to craft new federal policies that would force corporations to better protect their workers from deadly accidents.

"It is of little comfort to us, but we hope that, through legislation to ensure more stringent worker health and safety standards, that their deaths won't be in vain," Rowe said in prepared testimony. "Today, I come to Congress asking that you mandate by law a change in corporate culture, by requiring that all corporations place worker safety before profits."

Federal Regulators In Focus

Chemical Safety Board Chairman and Chief Executive Carolyn Merritt, another witness at the hearing, told lawmakers that OSHA needs desperately to beef up oversight.

"Federal regulators didn't conduct any comprehensive, planned process safety inspections at the Texas City Refinery," said Merritt in her written testimony. "The Chemical Safety Board believes that OSHA should also pay increased attention to preventing less frequent, but catastrophic, process safety incidents such as the one at Texas City."

Merritt urged Congress to give the federal worker safety agency "appropriate support, resources and encouragement." She said the agency should hire or develop specialized inspectors.

"It sounds like we have a cultural problem within OSHA," said Rep. Howard McKeon of California, the senior Republican on the committee.

He argued that third-party consultants should be inspecting refineries around the country.

"Had such a third party audit been undertaken, it is not out of the realm of possibility that BP would have done more to rectify ongoing problems of which it had been made aware," he said.

Meanwhile, Cavaney of the API said energy companies are making changes in light of the 2005 tragedy. They've been examining their safety procedures, and the industry as a whole will be reviewing the Chemical Safety Board's safety recommendations, he said.

-By Maya Jackson Randall, Dow Jones Newswires; 202-862-9263; Maya.Jackson-Randall@dowjones.com

Juneau Empire
March 22, 2007

http://www.juneauempire.com/stories/032207/sta_20070322022.shtml

FBI probes pressure on oil regulators
Agency asks if political appointees acted
improperly before Prudhoe spill

By MATTHEW DALTON
Dow Jones Newswires

NEW YORK - The FBI is investigating whether Alaska political appointees improperly punished state regulators who tried to enforce environmental rules against oil companies operating in Alaska, according to people contacted by investigators.

The inquiry, which is being conducted by the FBI and the U.S. Attorney's office in Anchorage, is connected to an ongoing criminal investigation of BP for allowing pipelines it operates to corrode enough to cause a large oil spill on Alaska's North Slope in 2006. Similar pipeline corrosion discovered later that year forced the shutdown of Prudhoe Bay, the most productive oil field in the United States.

Now, the actions of the Alaska Department of Environmental Conservation, which is responsible for overseeing oil operations in the state, have come under scrutiny from federal investigators, though it's unclear whether current or former state officials would face criminal charges.

Critics of the department say senior political appointees are partly to blame. They say the appointees repeatedly shielded oil companies from enforcement actions that would have required better maintenance and oversight of facilities and pipelines.

"We're aware of the allegations, and we are looking into it," said FBI spokesman Eric Gonzalez. He declined to comment further.

One incident that has caught investigators' attention occurred in December 2001, when the department shifted responsibility for oil spill prevention and response on the North Slope.

Michele Brown, who was then the department's commissioner, took away that job from Susan Harvey, a civil servant, and gave it to a person appointed by Brown. Environmentalists have long claimed that Harvey's oversight of the North Slope was stripped because Alaska oil producers complained that her interpretation of the state's environmental rules was too harsh.

ConocoPhillips and Exxon Mobil Corp. hold stakes in the Prudhoe Bay field, which is operated by BP.

Harvey resigned from the department in March 2002, convinced, she said, that its leadership wouldn't allow her to enforce environmental laws against the oil industry.

The FBI has interviewed Steve Taylor, the director of environmental policy at BP Alaska in 2001, about a meeting he had in September 2001 with Brown in her office. Taylor said that, during the meeting, a lobbyist with the Alaska Oil and Gas Association telephoned Brown complaining about Harvey's enforcement of environmental rules. Judy Brady, the lobbyist, asked Brown to remove Harvey from her job overseeing the oil companies on the North Slope, Taylor said.

Harvey often didn't see eye-to-eye with oil company officials. In October 2000, for example, Harvey's office prohibited BP's offshore Northstar field from producing oil when the Arctic ice was partially thawed, because the company had failed several drills testing its ability clean up a spill in those conditions.

Harvey says her staff also resisted efforts by Phillips, now part of ConocoPhillips, to extend the winter drilling season, due to concerns that companies wouldn't be able to clean a spill in warmer weather when the tundra was thawing.

"Brady was complaining about Susan Harvey and demanding they get rid of Susan," Taylor said. This type of pressure from Brady, he added, "was not an uncommon thing."

Taylor has since retired from BP, though he still consults for them, he says.

Any convictions from this FBI investigation could influence what is seen as a favorable regulatory environment that the oil industry has enjoyed since the discovery of Prudhoe Bay itself in the 1960s.

Alaska officials have sought to protect the state's oil and mining industries from tough environmental regulation by the federal government. And the state's dependence on oil taxes means that policymakers are wary of imposing rules that they believe would hamper output.

A person familiar with the investigation said the U.S. attorney's office in Anchorage has issued a grand jury subpoena for documents related to the removal of Harvey and her staff.

Brady, in an interview, said the telephone call described by Taylor never happened. She said her group didn't attempt to remove Harvey from her job.

"No one would ever ask someone to be removed in a regulatory sense," Brady said.

Brown, who now heads the United Way chapter in Anchorage, didn't return several calls seeking comment.

A spokeswoman for the Alaska Department of Environmental Conservation acknowledged that current and former department officials have been interviewed by the FBI, but said the interviews were related to BP's oil spills on the North Slope and not about pressure put on staff by political appointees. Lynda Giguere, the spokeswoman, said state law forbids the department from discussing Susan Harvey or other personnel matters.

BP spokesman Daren Beaudo said the company wasn't aware of the federal investigation and declined to comment further. An ExxonMobil spokeswoman said the company didn't seek to have Harvey removed, nor has it been contacted by the FBI. A ConocoPhillips spokesman didn't a return a call seeking comment.

According to performance assessments reviewed by Dow Jones Newswires, Harvey's supervisors at the department gave her an "outstanding" rating in all four performance categories for the year preceding Aug. 15, 2001. But a later review for the period between August and December 2001 said her performance was "average" and rated her "unacceptable" in "interpersonal relationships" and "supervisory."

Harvey's disintegrating relationship with her supervisors came at a time when tensions between her office and the oil industry were mounting.

"There was a decade of neglect of environmental enforcement," Harvey said in an interview. "We were making headway too fast. Some huge shift happened in the fall of 2001. All of a sudden, I'm a rogue employee."

BP was upset over a report prepared by Coffman Engineers, a consulting firm hired by the state, on the oil giant's program to monitor and prevent pipeline corrosion. A final draft of Coffman's report, submitted to the Alaska environmental department in November 2001, said that BP's corrosion-monitoring program "makes it difficult to develop a qualitative understanding of the basis for their corrosion strategy."

Harvey said that BP officials approached her saying that the corrosion report was too negative and should be toned down. Harvey refused to change the report because it was produced by an outside consultant, not the department.

After she was stripped of her duties overseeing the North Slope, the department released a revised report from Coffman in which many of the negative comments were deleted. Coffman officials have said that they changed the report after discussing complaints with BP.

The Coffman reports have been subpoenaed as part of the federal investigation into the corrosion that caused the spills.

Wall Street Journal
March 22, 2007

FBI Interviews Former Official About Alaska Oil Spills -Paper
DOW JONES NEWSWIRES
March 22, 2007 11:44 a.m.

NEW YORK (Dow Jones)--The former commissioner of the Alaska Department of Environmental Conservation has said she has been interviewed by FBI agents investigating the oil spills that occurred on the state's North Slope last year.

But the FBI agents said the state wasn't a target of the investigation, Michele Brown, the former commissioner, told the Anchorage Daily News in an article published Thursday.

Dow Jones Newswires reported Wednesday that the FBI is investigating political pressure placed on regulators at the department before last year's spills, which were caused by severe corrosion on North Slope pipelines operated by BP PLC (BP).

Critics say this pressure from top officials at the department discouraged enforcement actions that might have prevented the spills. FBI spokesman Eric Gonzalez said the agents are examining these allegations about the department and wouldn't comment further.

One allegation being examined is an episode that occurred in December 2001, when Brown removed Susan Harvey, a civil servant, from her job overseeing oil spill prevention and response for companies on the North Slope. The FBI has interviewed several people familiar with that incident, including Steve Taylor, the former director of environmental policy at BP.

Taylor told Dow Jones Newswires that he was interviewed by the FBI about a meeting he attended at Brown's office in September 2001, when a lobbyist for the Alaska Oil and Gas Association called asking to have Harvey removed from her job. Judy Brady, the lobbyist, disputes Taylor's account, saying she never called the department to pressure Brown.

Brown told the Anchorage Daily News that Harvey was removed because her stance on the department's regulatory authority was too aggressive. Brown also said Harvey's reviews of oil-spill response plans took too long.

"Her tendency was, there is my way and there is only my way and you will do it my way," Brown told the newspaper. Brown also said that Harvey seemed to have an inflated sense of her own importance, the newspaper reported.

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

Xxxxxxxxxxxxxxxxxxxxxx

US House Panel To Mull Action In Wake Of BP Refinery Fire

DOW JONES NEWSWIRES
March 22, 2007 11:11 a.m.
By Maya Jackson Randall
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)--Two years after a fatal explosion at BP PLC's (BP) Texas City refinery, U.S. lawmakers Thursday are poised to consider whether new laws are needed to prevent similar tragedies and improve workplace safety.

Oil-refining activities have always been considered dangerous due to the presence of high temperatures and noxious gases, but critics say refinery workers are facing increased risks against the backdrop of strong oil-product demand and finite processing capacity in an industry known for strict cost discipline.

Eva Rowe, whose parents were killed in the March 23, 2005, explosion, will be one of several witnesses testifying on Capitol Hill Thursday.

She'll be urging lawmakers to craft new federal policies that would force corporations to better protect their workers from deadly accidents.

"It is of little comfort to us, but we hope that, through legislation to ensure more stringent worker health and safety standards, that their deaths won't be in vain," Rowe said in prepared testimony submitted to the House Education and Labor Committee. "Today, I come to Congress asking that you mandate by law a change in corporate culture, by requiring that all corporations place worker safety before profits."

The committee Thursday morning is holding an oversight hearing of the accident that killed 15 people and injured 180 others.

In a report released Tuesday, the U.S. Chemical Safety Board blamed BP budget cuts, investment failures, understaffing and safety deficiencies for the accident, which has been described as the worst U.S. workplace accident since 1990.

Federal Regulators In Focus
In addition to sharply criticizing the London-based energy giant, the board also raised questions about federal regulators' role in ensuring that BP met safety rules. The U.S. Occupational Safety and Health Administration, or OSHA, is charged with enforcing safety standards that aim to protect worker safety and health.

"The Chemical Safety Board report paints an extremely troubling picture of gross negligence on the part of BP and OSHA," said Committee Chairman George Miller, D-Calif., in a statement earlier this week. "We can't bring back the 15 men and women who died in the Texas City explosion, but in their honor, we can and must take steps to prevent future tragedies."

Chemical Safety Board Chairman and Chief Executive Officer Carolyn Merritt, another witness at the hearing, is prepared to tell lawmakers that OSHA needs to take serious steps to beef up oversight.

"Federal regulators did not conduct any comprehensive, planned process safety inspections at the Texas City Refinery," said Merritt in her written testimony. "The Chemical Safety Board believes that OSHA should also pay increased attention to preventing less frequent, but catastrophic, process safety incidents such as the one at Texas City."

Merritt said the federal worker safety agency should hire or develop specialized inspectors.

She also urged Congress to give the federal worker safety agency "appropriate support, resources and encouragement."

"Devastating accidents" in the petrochemical industry continue to take place despite a 1992 standard issued by OSHA that aims to ensure safe and healthful workplaces, said Kim Nibarger, a member of the United Steelworkers, in her written testimony. United Steelworkers represents workers in various industries, including the petrochemical, plastics tires and steel sectors.

"Unfortunately, it takes a major event like the one we saw in Texas City for these incidents to get any real notice," said Nibarger, adding that between January and mid-February, there were already 43 incidents of pipeline leaks, chemical releases, plant mishaps and fires.

Meanwhile, Red Cavaney, the head of Washington-based oil industry group American Petroleum Institute, says energy companies are making changes in light of the 2005 tragedy. They've been examining their safety procedures, and the industry as a whole will be reviewing the Chemical Safety Board's safety recommendations, he said in prepared testimony.

-By Maya Jackson Randall, Dow Jones Newswires; 202-862-9263; Maya.Jackson-Randall@dowjones.com

Corrected March 22, 2007 11:16 ET (1516 GMT)

Chemical Safety Board Chairman and Chief Executive Officer Carolyn Merritt, another witness at the hearing, is prepared to tell lawmakers that OSHA needs to take serious steps to beef up oversight.

(In "US House Panel To Mull Action In Wake of BP Refinery Fire," published at 10:08 a.m. EDT, Chemical Safety Board Chairman and Chief Executive Officer Carolyn Merritt's name was misspelled.)

Reuters news
March 22, 2007

Alaska oil pipeline completes corrosion tests
Wed Mar 21, 2007 6:51 PM ET
By Yereth Rosen

ANCHORAGE, Alaska, March 21 (Reuters) The
operator of the Trans Alaska Pipeline System (TAPS) has successfully completed "smart pig" runs that were conducted ahead of schedule because of growing concerns about pipeline corrosion, regulators said Wednesday.

But Alyeska Pipeline Service Co. has yet to complete its analysis of the data collected by the runs of the smart pigs, sophisticated plug-like devices that electronically sense and record anomalies inside the pipe, the regulators said.

Smart pigs were sent down the 800-mile (1,300 km) oil artery late last fall, after the discovery of widespread pipeline corrosion and a pipeline leak at Prudhoe Bay prompted a partial shutdown of the nation's biggest oil field, said Rhea DoBosh, spokeswoman for the state and federal agencies that oversee TAPS.

"The corrosion at Prudhoe Bay, that really unsettled everybody. We did not want to see any impact to TAPS because of that," said DoBosh, who works for the Joint Pipeline Office, the consortium of federal and state agencies that regulate the pipeline and its Valdez marine terminal.

While last fall's smart-pig run through the northern part of the pipeline was completed successfully, a separate smart-pig run through the southern part of the pipeline failed to collect usable data, DoBosh said.

Alyeska completed a separate smart-pig run of the southern section last Thursday, DoBosh said. "What the early indications are is that the run was good. They got good data," she said.

Alyeska normally has 180 days in which to analyze data collected by smart pig runs, she said.

The smart pigs are usually run through the oil line every three years, and its last smart-pig run was in 2004, DoBosh said. But the Joint Pipeline Office requested an accelerated analysis last year.

Alyeska is owned by oil companies with interests on the North Slope. Major owners are BP Plc , ConocoPhillips and Exxon Mobil.

WAXY BUILDUP

Last fall's smart-pig run of the southern part of the pipeline ran into difficulty because waxy buildup coated part of the pig, making it impossible to properly collect data, DoBosh said.

Since then, Alyeska has increased the frequency of its cleaning-pig runs through the line, she said. "They're doing more cleaning pig runs than they used to. Every three to five days is the sequence," she said.

Previously, according to company officials, the cleaning pigs were run about every week.

Lower throughput in the pipeline, a consequence of maturing fields, has resulted in cooler oil and more buildup of wax, DoBosh said.

Meanwhile, Alyeska remains on the lookout for a piece of a cleaning pig that was lost somewhere in the line last December, she said.

The pig broke apart during its run, and a metal ring was not recovered. But the company believes the ring may be hidden in the large volume of wax that was pushed out of the line, DoBosh said.

"They sent all of that wax down to Seattle," she said. "They've going to filter through that and see if they can find it."

Although regulators are curious about the metal ring's fate, there are no worries that its loss will hurt the pipeline, DoBosh said.

"It's never been considered an integrity threat. Even though it's a piece of metal, it's still pliable," she said.

U.S. Hs. of Rep., Education & Labor
Full Committee Hearing
Thursday, 3/22/07

Hearing on "The BP-Texas City Disaster and Worker Safety," scheduled at 10:00 a.m. in room 2175 Rayburn H.O.B.
Archived Webcast ››
http://boss.streamos.com/wmedia/edwork/fc/fc032207.wvx

CSB Congressional Testimony
http://www.chemsafety.gov/index.cfm?folder=news_releases&page=news&NEWS_ID=358

Testifying before House Committee on Education and Labor, Chairman Carolyn W. Merritt Calls for Increasing Oversight of Refining Industry by OSHA

For more information, go to: Chairman Merritt's Written Testimony
http://www.csb.gov/news_releases/docs/MerrittLaborCommitteeTestimony3.22.07.pdf

Washington, DC, March 22, 2007 - Carolyn W. Merritt, Chairman of the U.S. Chemical Safety Board (CSB), told a congressional committee today there should be increased oversight of the oil refining industry by the Occupational Safety and Health Administration (OSHA) in order to prevent accidents such as the one that occurred at the BP refinery in Texas City, Texas, in 2005. She spoke before the House Committee on Education and Labor, chaired by U.S. Rep. George Miller of California who convened the hearing "to examine what we can learn from the missteps that preceded this disaster in order to help prevent future ones."

Chairman Merritt said the CSB's exhaustive investigation into the BP accident, the results of which were released two days ago in Texas City, showed the company had not followed OSHA process safety regulations, and that OSHA had not adequately inspected the facility to see if BP was complying with those regulations. As a result, she said, cuts in training, staffing, maintenance, equipment modernization, and safety, which the investigation found were a result of significant budget cuts ordered by BP, left the Texas City facility vulnerable to catastrophe.

Ms. Merritt said, "The CSB found that regulatory oversight of this refinery was ineffective. In recent years, OSHA has focused its inspections on workplaces with high injury rates, but these rates do not predict the likelihood of a catastrophic process accident at a facility."

Ms. Merritt noted that the BP facility, like thousands of other petrochemical plants, is regulated under OSHA's Process Safety Management standard, issued in 1992. "Rigorous application and enforcement of this rule - including its preventative maintenance and incident investigation requirements - would almost certainly have prevented this tragedy," she said. She noted the BP refinery had a long history of deadly accidents and dangerous hydrocarbon releases from the same equipment that was involved in the Texas City accident.

The work of the CSB received bipartisan praise from committee members for the CSB's investigation of the BP tragedy and other accidents. Several expressed concern about the paucity of regulatory inspections in the petrochemical industry.

Chairman Miller said, "Protecting the safety of refinery and chemical workers is reason enough to get this right. But the safety of our refineries and chemical facilities also has broader implications for the communities surrounding these plants. The disaster at BP Texas testifies to the steep price we pay as Americans for not enforcing the nation's laws that are supposed to protect working men and women in this country." He said further hearings may be convened.

Following Chairman Merritt's testimony, other panelists addressed the committee, including Eva Rowe, who lost both parents in the explosion. They were among the 15 contract workers meeting in work trailers at the time of the blast. The CSB found the trailers were sited in a hazardous location at the plant, near a blowdown drum which spewed highly flammable hydrocarbons that were ignited by an idling pickup truck. The agency has recommended to the American Petroleum Institute (API) that trailer siting guidelines be revised.

Other panelists included Kim Nibarger, health and safety specialist for the United Steelworkers (USW), Frank L. "Skip" Bowman, retired admiral and member of the BP Refineries Independent Safety Review Panel, which was instituted on the recommendation of the CSB and headed by former U.S. Secretary of State James Baker III, and Red Cavaney, American Petroleum Institute president and CEO.

The CSB is an independent federal agency charged with investigating industrial chemical accidents. The agency's board members are appointed by the president and confirmed by the Senate. CSB investigations look into all aspects of chemical accidents, including physical causes such as equipment failure as well as inadequacies in regulations, industry standards, and safety management systems.

The Board does not issue citations or fines but does make safety recommendations to plants, industry organizations, labor groups, and regulatory agencies such as OSHA and EPA. Please visit our website, www.csb.gov.

For more information, contact Sandy Gilmour at (202) 261-7614 / (202) 251-5496 cell.

Wall Street Journal
March 21, 2007

Worker Fatigue, Labor Shortage Blamed For Accidents At BP
DOW JONES NEWSWIRES
March 21, 2007 7:24 p.m.

ANCHORAGE, Alaska (AP)--Long hours are the norm at the Prudhoe Bay oil field, but veteran workers for field operator BP PLC (BP) said a labor shortage has made conditions ripe for fatigue-related accidents similar to one that killed 15 employees in the company's Texas plant in 2005.

The lack of highly skilled technicians at well pads and oil collection centers coincided with an uptick in construction and pipeline inspections following two spills at Prudhoe Bay last year.

The company has failed to fill about a dozen vacancies for highly skilled technicians, despite repeated requests from its union since September, said Kris Dye, president of United Steelworkers 4959.

A report released this week by the U.S. Chemical Safety and Hazard Investigation Board said operators of the isomerization unit linked to the fatal blast in Texas City, Texas, were likely fatigued when they started the equipment, triggering the fatal explosion that also injured 170 people.

BP officials said at least nine new technicians, each with more than 10 years of experience, will be starting work in the Arctic oil field by April 10, along with about two dozen other workers.

"The process has taken longer than we would have expected or would have liked," said BP spokesman Daren Beaudo. "But we believe we've found a solution to bridge the gap."

Two inspectors from the state Division of Oil and Gas visited Prudhoe Bay last weekend, partially in response to information from industry watchdog Chuck Hamel detailing the safety concerns on the union's behalf, said Joe Balash, special assistant to to Gov. Sarah Palin.

The union, which represents 230 of the company's 1,300 Alaska employees, had been concerned about the labor shortage for about a year before an oil spill in August prompted BP to temporarily halve production at the U.S.'s largest oil field. An earlier spill of up to 267,000 gallons in March was the North Slope's largest. Both were traced to corrosion in pipelines that had been poorly maintained for years.

The technicians run facilities that process a billion cubic feet of natural gas and 50,000 to 100,000 barrels of crude oil a day.

"We're dealing with very explosive and dangerous processes and you wouldn't have to do too much to have something really bad happen," said Dye, who has worked for BP at Prudhoe Bay for 21 years.

Dye said he doesn't think the worker shortage had anything to do with the spills, but now there aren't enough workers to accommodate the recent increase in corrosion monitoring at Prudhoe.

The x-ray units used by corrosion detection crews trigger fire alarms inside Prudhoe's massive oil collection centers, so the alarms and sprinkler system must be turned off for hours while the pipes are being examined. But there are barely enough workers to patrol the networks of indoor pipes while the fire safeguards are down, said Dye, the chief operator at one of the collection centers.

"If we don't have enough operational folks there, we'd put ourselves at risk," Dye said.

About 120 technicians at oil collection centers and well pads are working back-to-back 18-hour days, with 12 hours off between sets. Normally, they work 12-hour shifts for two weeks straight and then get two weeks off.

"We are concerned because people have said flat out, 'I can't work any more overtime,'" Dye said. "We need people with 10-year plus experience who we can bring up to speed pretty quickly and take care of these people who are walking around with a glazed look in their eyes."

In its final report on the March 23, 2005, explosion at BP's refinery in Texas City, the U.S. Chemical Safety and Hazard Investigation Board said the operators had been working 12-hour shifts for 29 or more consecutive days when the explosion occurred.

"Fatigue causes cognitive fixation and impaired judgment and could lead operators to fixate on one operational parameter...to the exclusion of other indicators," said CSB investigator Cheryl MacKenzie.

The CSB noted that fatigue-prevention regulations have been developed for aviation and other transportation sectors but there are no such guidelines widely used and accepted in the oil and chemical sector.

The report criticized the Occupational Safety & Health Administration for failing to inspect plants with enough care and frequency to prevent major accidents. Alaska's Occupational Safety and Health office, which is certified and funded by the federal OSHA program, said it hadn't heard of the union's safety concerns.

"I've not received any complaints from the union about overtime potentially contributing to hazards," said Chief of Enforcement Steve Standley. "We've not been included in that loop at this point."

Last fall, representatives for the steelworkers union went on recruiting trips to BP facilities in Texas City, Texas; Whiting, Ind.; Toledo, Ohio, and Carson, Calif.; and convinced at least four people to apply for a transfer to Prudhoe Bay.

"We're not normally involved in the hiring process," Dye said. "But it was an important enough safety issue to us that we said we would go out and beat the bushes to find people to work in Alaska."

Hiring was slowed by fallout from the shutdown as well as the holiday season, according to an internal memo sent to workers.

Company ombudsman Stanley Sporkin, a retired federal judge, said the company has had a hard time finding qualified people who are willing to work in such a harsh and remote environment.

"It takes a long time because it's not easy to fill these positions," said Sporkin, who is based in Washington, D.C.

Since the Prudhoe Bay shutdown last fall, BP pledged to replace 16 miles of corroded pipeline by the end of 2008. The repairs and upgrades are expected to cost about $250 million. The London-based company manages Prudhoe Bay for co-owners ConocoPhillips (COP) and Exxon Mobil Corp. (XOM), and several smaller companies.

Guardian Unlimited
March 21, 2007

http://business.guardian.co.uk/story/0,,2038680,00.html

Blame for BP disaster laid at the feet of Lord Browne and his board
Report says 15 died in blast because cost cuts compromised safety and warnings were ignored
Andrew Clark
Wednesday March 21, 2007
The Guardian

The four BP oil workers who were filling a vertical tank with chemicals when it exploded in America's worst industrial accident for a generation had all been working 12-hour shifts for more than four weeks without a day off.

In a final report into the Texas City disaster, which killed 15 people through "blunt force trauma" as they were hit by flying metal two years ago, American regulators have called on the oil industry to impose airline-style limits to the days and hours worked by staff who are in critical safety roles.

BP comes in for scathing criticism in the US Chemical Safety and Hazard Investigation board's study, published in Houston yesterday. The investigators concluded that cost cuts mandated by the company's London headquarters contributed to the tragedy - and that bosses ignored successive warnings that an accident was imminent. "The Texas City disaster was caused by organisational and safety deficiencies at all levels of BP Corporation," the board says. "Warning signs of a possible disaster were present for several years, but company officials did not intervene effectively to prevent it."

The board's verdict is the final flurry in a blizzard of regulatory action since the explosion. BP has already been fined $21m (£11m) for 301 "egregious, wilful violations" of safety rules by the Occupational Safety and Health Administration - the biggest penalty in the body's 35-year history.

In January, an independent panel headed by the former secretary of state James Baker accused BP of suffering a "corporate blindspot" on safety. The company's chief executive, Lord Browne, announced he was bringing forward his retirement and management in the US was reorganised.

According to the chemical safety board, a series of circumstances collided on the day of the explosion - March 23 2005 - when the 52-metre (170ft) tower, known as a blowdown drum, was being refilled with liquid hydrocarbons after a maintenance shutdown.

A night employee, who had worked 12-hour shifts for 33 consecutive days, began filling the tower. But inadequate notes were left for a day operator who took over at 6am on his 29th consecutive day of duty.

Two managers, who were supposed to be overseeing events, had worked 37 and 31 days respectively and a supervisor hurried away from work early for a family medical emergency.

"Evidence suggests that the operators' fatigue degraded their judgment and problem-solving skills, hindering their ability to determine that the tower was overfilling," says the report, which adds that misleading readings from poorly maintained measurement equipment added to the problem.

When the tower was full to bursting, about 7,600 gallons of unstable chemicals shot into the sky over 107 seconds, causing a six-metre geyser. A cloud of flammable vapour formed over the refinery, which was ignited by a spark from a truck idling nearby.

Most of the 15 people killed were in administration trailers placed too close to the tower, which instantly disintegrated. A further 180 people were injured, 70 vehicles were damaged and windows shattered as far away as three-quarters of a mile.

The board lays blame squarely at the feet of Lord Browne and his colleagues in London, saying: "The BP chief executive and the BP board of directors did not exercise effective safety oversight."

After its merger with Amoco in 1999, BP ordered a 25% cut in costs. At Texas City, capital spending had already been reduced by 84% in eight years.

The refinery's training budget was halved over the five years to 2004 from $2.8m to $1.4m and its 28 staff were cut to eight. The company relied heavily on cheaper computer-based training which focused on "memorising facts" and box-ticking rather than troubleshooting.

Because of a lack of attention to the subject, staff were given the impression that safety procedures were "not strict instructions but outdated documents to be used as a guideline".

In 2002, a senior BP executive in Houston warned that ageing infrastructure at Texas City was "in complete decline" and just five months before the disaster, an internal plant safety meeting included a slide warning: "Texas City is not a safe place to work."

Among the board's recommendations are calls for BP to encourage guilt-free reporting of incidents and to appoint a non-executive director with direct experience of process safety.

The board also calls on both the petroleum industry and American unions to develop fatigue prevention guidelines limiting hours and days of work.

During maintenance periods, BP allowed its staff to work up to 84 hours per week and put no limit on consecutive days' duty.

The chemical safety board points out that nuclear workers are limited to 14 days' work, pilots can only work 100 hours per month, merchant sailors are restricted to 70 hours per week and under European law, long-distance hauliers may not drive for more than 60 hours per week.

BP is facing a slew of lawsuits from people injured at Texas City. Lord Browne admitted in January that he felt a "deep and moral responsibility" for the company.

"I always feel that when anything goes wrong, I have let the staff down."

Response: BP rejects findings

BP reacted angrily to the report of the Chemical Safety and Hazard Investigation Board (CSB), saying last night it "strongly disagreed" with many of its contents and findings. A statement from head office gave no details of what it objected to but the oil group is understood to have communicated those concerns to the CSB.

"Notwithstanding the company's strong disagreement with some of the content of the CSB report, particularly many of the findings and conclusions, BP will give full and careful consideration to the CSB's recommendations, in conjunction with the many activities already under way to improve process safety management," the statement said.

The company has previously said budget cuts were not a "critical factor" behind the accident and its December 2005 investigation found that instruments had functioned properly

BP said it had accepted complete responsibility for the March 23 2005 explosion and fire at the Texas City refinery and had apologised to those harmed. "While we cannot change the past or repair all the damage this incident caused, we have worked diligently to provide fair compensation, without the need for lengthy court proceedings, to those who were injured and to the families of those who died," it said.

On the CSB's recommendation, BP had created an independent panel, led by former US secretary of state James Baker, to assess process safety management and safety culture at all of its US refineries and was implementing the recommendations in full, it said.

"We have completed and made public the results of our own investigation of the incident and, as CSB chairman [Carolyn] Merritt has publicly recognised, BP cooperated in an unprecedented way with the CSB investigation." Terry Macalister

Financial Times
March 21, 2007

http://www.ft.com/cms/s/d8be9ece-d750-11db-b9d7-000b5df10621.html

Cost-cutting blamed for BP refinery explosion
By Sheila McNulty in Houston
and Ed Crooks in London
Published: March 21 2007 02:00 |
Last updated: March 21 2007 02:00

Cost-cutting at BP's Texas City refinery left it vulnerable to a catastrophe before the explosion in March 2005 that killed 15 people, a US government agency said yesterday.

The Chemical Safety and Hazard Investigation Board blamed "safety deficiencies at all levels of the BP corporation'' for the accident and called on the board to appoint an extra member with expertise in safety.

The CSB said its two-year inquiry revealed an inadequate response to several audits revealing safety lapses, failure thoroughly to investigate and respond to previous accidents, the ignoring of federal regulations and a focus on production rather than safety.

BP said it accepted responsibility for the explosion but disagreed with some of the CSB report, particularly many of the findings and conclusions.

In spite of its disagreement, BP said it would give full and careful consideration to the CSB's recommendations, alongside the steps it was taking to improve safety.

Carolyn Merritt, CSB chairman, said: "The March 23 2005 accident at BP was avoidable. It was the inevitable result of a series of actions by the company. Among other things, they cut costs that affected maintenance and safety [and] they ignored the implications of previous incidents that were red warning flags. There was a broken safety culture at BP."

The explosion, in which 500 people were also injured, was the worst US industrial accident in 15 years.

The CSB interviewed 370 witnesses, reviewed more than 30,000 documents and tested equipment at the facility before publishing its final report.

The 335-page report called for better incident reporting - without fear of retaliation - and use of new indicators to measure safety performance. The CSB indicated regulators had failed to provide comprehensive scrutiny of the facility.

Ms Merritt said: "The combination of cost-cutting, production pressures and failure to invest caused a progressive deterioration of safety at the refinery.''

The CSB said audits and studies revealing serious safety problems at BP were shared with executives in London and provided to at least one member of the executive board - John Manzoni, chief executive of refining and marketing.

Don Holmstrom, the CSB's supervisory investigator, said "Our findings show that both BP group executives and Texas City managers became aware of serious process safety problems at the refinery beginning in 2002 and continuing through March 2005.'' He said they failed to apply lessons from three incidents at BP's refinery in Grangemouth, Scotland, in 2000.

The US House of Representatives committee on energy and commerce is to review BP's performance and see whether it has implemented lessons learned from the explosion and last year's Prudhoe Bay oil spill.

xxxxxxxxxxxxxxxxxxxxxx

http://www.ft.com/cms/s/97b6f65a-d751-11db-b9d7-000b5df10621.html

BP report exposes the fatal risks of cost-cutting
By Andrew Hill
Published: March 21 2007 02:00 |
Last updated: March 21 2007 02:00

So long after the event, it is easy to assume there is nothing new in the US Chemical Safety and Hazards Board's report on the BP refinery accident - 335 pages long, two years in the making. The company's response to the report of the BP-appointed independent panel, led by James Baker; the planned replacement of Lord Browne as chief executive; his successor Tony Hayward's insistence on putting safety and reliability at the centre of the corporate culture: all show how BP is raising its game. Some of the CSB's recommendations - for instance, the appointment of a board member with process safety expertise - seem almost superfluous.

But the CSB, unlike the Baker report, does finally go to the heart of what many suspected was the problem that led to the Texas City disaster: "a combination of cost-cutting, production pressures and failure to invest".

The report deliberately mentions no names but its conclusions, some of which are disputed by BP, read like an indictment of the very attributes for which Lord Browne used to be lauded: his strategic vision - which saw the opportunity for BP to pounce on Amoco, owner of Texas City; his quest for higher production; his ability to wring savings out of the combined group.

All companies wage a constant battle to save money and improve margins. The perils of squeezing costs too hard are rarely as high - in human terms - as those faced by BP and its rivals. But still, the conclusions of the CSB report should resonate for chief executives well beyond the oil sector.

Wall Street Journal
March 21, 2007

US Rep Dingell: To Review BP's Performance After Mishaps
DOW JONES NEWSWIRES
March 21, 2007 7:30 a.m.
(This article was originally published Tuesday)
By Ian Talley
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)--The chairman of the U.S. House of Representatives Committee on Energy and Commerce said Tuesday he plans to hold more hearings on the lessons learned from major mishaps at BP PLC's (BP) Texas City, Texas, refinery and Prudhoe Bay, Alaska, oil fields.

Rep. John Dingell, D-Mich., said he hoped to review whether the company's performance since the incidents had improved.

The announcement followed a Chemical Safety and Hazard Investigation Board, or CSB, report published Tuesday that found the company didn't take sufficient action to ensure plant safety at the ill-fated Texas City refinery, despite repeated warnings about mechanical integrity problems in the years leading to a fatal March 2005 accident.

Fifteen people were killed and 180 workers were injured in the March 23, 2005, explosion at BP Texas City, which is located just south of Houston.

Last year, Congress held numerous oversight hearings on BP's Prudhoe Bay oil leak, which temporarily shut down the U.S.'s largest producing field. Investigations revealed the company had known about the potential for such leaks but hadn't adequately addressed the problem before the leak occurred.

According to the CSB report, cost-cutting by corporate leaders, inadequate corporate oversight, outdated mechanical equipment and a culture that discouraged the reporting of safety problems were central causes of the Texas City explosion. Repeated budget cuts left the Texas City refinery "vulnerable to a catastrophe," the report said.

Dingell said he intends to hold hearings soon to review BP's performance and determine whether the company has implemented lessons learned from both the Texas City explosion and last year's major oil spill at Prudhoe Bay, his office said in a statement.

"The most tragic thing about what happened in Texas City is the fact that this disaster could have been prevented," Dingell said. "We are committed to making sure BP implements the changes necessary to secure their oil refineries and, more importantly, protect American workers."

Dingell's office said that though previous investigations had been conducted by the Occupational Safety and Health Administration, CSB found that OSHA failed to identify the likelihood for a catastrophic accident and take necessary enforcement action, despite obvious warning signs and the fact that 10 fatalities have occurred at the BP Texas City refinery over the past two decades.

"In light of the Texas City blast and the Prudhoe Bay spill, BP's management must make safety their top priority," Dingell said. "The millions of dollars in fines that were levied against BP after the explosion have done little more than close the door after the horse had left the stable.

"It's clear that both additional oversight measures and sweeping cultural changes are critical," he said.

On Thursday, the House Education and Labor will hold a hearing called "BP Texas City Disaster and Worker Safety." Witnesses will include Eva Rowe, whose parents were killed in Texas City explosion; Carolyn Merritt, the head of CSB; and Red Caveny, the president of the American Petroleum Institute.

George Miller, chairman of the Education and Labor Committee, said, "The Chemical Safety Board report paints an extremely troubling picture of gross negligence on the part of BP and OSHA." He said the hearing would "examine what we can learn from the missteps that preceded this disaster in order to help prevent future ones."

"We can't bring back the 15 men and women who died in the Texas City explosion, but in their honor, we can and must take steps to prevent future tragedies," Miller added.

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

(John Biers in Houston contributed to this report.)

Houston Chronicle
March 20, 2007

http://www.chron.com/disp/story.mpl/front/4645814.html

Cost-cutting, lax oversight blamed for deadly BP blast
By ANNE BELLI
Copyright 2007 Houston Chronicle

RESOURCES
BP's statement about the final report
http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7031189

BP-Baker safety review panel report
http://www.bp.com/bakerpanelreport
Read the statements made by CSB
http://images.chron.com/content/news/photos/06/10/31/Statements.pdf
Federal recommendations after investigation
http://images.chron.com/content/news/photos/06/10/31/CSBBlowdownRecs.pdf

While hourly operators working on the unit that exploded made mistakes, the true, root cause of the blast was management's lack of commitment to safety, largely evident through years of drastic cost-cutting at the refinery while turning a blind eye to repeated warning signs that a catastrophic event loomed, investigators with the U.S. Chemical Safety and Hazard Investigation Board said.

And while they stopped short of laying blame at the feet of the Occupational Safety & Health Administration, investigators noted years of lax oversight at the plant, even after numerous fatalities there, and recommended that regulators significantly step up their enforcement of federal health and safety laws governing the petroleum refining industry.

The 335-page report, the most exhaustive ever conducted by the 9-year-old safety board, comes nearly two years to the day of the blast, which killed 15 people, injured hundreds more and led to troubling discoveries about one of the world's largest oil companies.

"The combination of cost-cutting, production pressures and failure to invest caused a progressive deterioration of safety at the refinery," CSB Chairman Carolyn Merritt said, who added that senior BP officials, including outgoing chief executive John Browne, were aware of that deterioration and allowed it to persist.

Investigators are set to present their findings and recommendations at what is expected to be a widely-attended public hearing tonight, when the full chemical safety board will vote on whether to accept them.

Operators were starting up the plant's isomerization unit just after lunch on March 23, 2005 when they accidentally overfilled a raffinate splitter tower with highly flammable hydrocarbons.

The materials then overflowed into a pressure relief system called a blowdown drum, which quickly filled and, and rushed up a stack that vented to the atmosphere. Liquids and vapor clouds formed on the ground, while unsuspecting workers went about their business. An idling truck or some other source ignited the materials, causing a series of blasts heard and felt up to five miles away.

All of those killed were working in or around construction trailers parked near the unit. Most of the fatalities were inside a trailer parked just 121 feet away, investigators have said.

The chemical safety board in October issued widespread preliminary findings that key equipment malfunctioned, workers lacked sufficient training, the trailers were parked too close to the process unit, the blowdown drum was and should have at least been fitted with a flare, and even that BP was in a cost-cutting mode at the time of the accident.

But Tuesday was the first time that investigators went so far as to directly tie those cost cuts to the accident, as well as blame BP management for the blast.

Specifically, the investigators reported nine "key findings" dealing with the accident's root cause. Among them:

• Cost-cutting orders from senior executives in BP's London headquarters impaired safety at the Texas City refinery, the largest in the company's portfolio. Those executives also failed to provide effective safety leadership.

• BP's board of directors failed to provide effective oversight.

• Plant managers focused on reducing the number of on-the-job injuries and illnesses instead of larger "process safety" problems that lead to fires and explosions.

• The plant's general attitude toward maintenance was not to fix equipment until it stopped working.

• Safety procedures were often checked off even when they weren't completed.

• BP workers were discouraged from reporting near-misses, and those that were often went uninvestigated.

• While the company went to the trouble to conduct safety audits, surveys and studies in the years before the blast, their findings were largely ignored.

The federal investigators also will ask the chemical safety board to approve several recommendations to not only BP, but also OSHA, the United Steelworkers, the American Petroleum Institute and the Center for Chemical Process Safety, which is an arm of the American Institute of Chemical Engineers.

BP should appoint a non-executive member to its board to monitor process safety, improve its incident reporting program to encourage workers to speak up when they discover safety lapses, ensure that equipment is properly tested and maintained, improve operator training programs to include the use of simulators and ensure that supervisors are adequately trained and present during hazardous operations, such as start-ups.

Many of those recommendations were included in a January report by an independent panel of experts headed by former U.S. Secretary of State James A. Baker III and charged with examining BP's corporate safety culture.

But what the Baker report didn't include was harsh words for OSHA, which CSB investigators said today fell short of providing adequate oversight of the troubled Texas City refinery.

Although the agency slapped BP with a record $21.4 million fine after finding more than 300 willful violations resulting from the blast, the agency had gone six years before conducting a planned inspection of the plant, investigators said. Regulators also refused to provide some requested information to the CSB, the investigators said.

A Houston Chronicle review of OSHA records showed that regulators hadn't conducted unplanned inspections of the vast majority of the area's refineries in the last five years. And those inspections that were conducted were mostly reactionary, meaning they were performed only after a complaint, accident or referral.

CSB investigators recommend that OSHA significantly strengthen enforcement of refineries by conducting more planned inspections as well as hire more inspectors specifically trained under the agency's process safety management regulations.

It also recommended that OSHA amend those regulations to require companies to review safety policies and management changes following mergers and acquisitions. BP acquired the Texas City plant in 1999 following a merger with Amoco.

Investigators also recommended that the overall industry make changes.

The American Petroleum Institute should work with the United Steelworkers to create specific "performance indicators" to measure process safety at refineries, as well as develop fatigue prevention guidelines.

And finally, the Center for Chemical Process Safety should issue new industry guidelines to address safety issues that arise from mergers and acquisitions as well as personnel and budget changes.

"It is my sincere hope and belief that our report and the recent Baker report will establish a new standard of care for corporate boards of directors and CEO's throughout the world," Merritt said. "Process safety programs to protect the lives of workers and the public deserve the same level of attention, investment and scrutiny as companies now dedicate to maintaining their financial controls."