PIPELINE IN PERIL:
A Status Report on the Trans-Alaska Pipeline

Executive Summary

Prepared by Richard A. Fineberg
for the
Alaska Forum for Environmental Responsibility

September 1996

Contents

Part I. Making Promises and Delivering Oil

Part II. Can a Leopard Change Its Spots?

Part III. Whistleblower and Monitors

Part IV. Conclusions and Recommendations

Part I. Making Promises and Delivering Oil

Chapter 1. Introduction

As TAPS approaches its third decade of operation, this report addresses the following questions:

Chapter 2. The Trans-Alaska Pipeline: History and Economic Context

After oil was discovered at Prudhoe Bay in 1968, the construction of a pipeline to transport the oil off the North Slope was delayed for five years by environmental dispute. TAPS construction, which took place between 1974 and 1977, was marked by continued controversy — most notably over construction-related spills and the absence of a quality assurance program that led to charges that hundreds of mainline field welds joining the pipe together were approved on the basis of fraudulent certification.

Despite these problems and a turbulent first two years of operation, during the pipeline's first two decades the pipeline ran quite smoothly. In the late 1980's, however, Alyeska again ran into controversy. In 1989, when the Exxon Valdez ran aground less than three hours out from the port for which the supertanker was named, Alyeska was totally unprepared to honor its promise to respond to all spills promptly and effectively.

Chapter 2 reviews the history of TAPS and documents a wide range of past examples in which Alyeska's practices have not lived up to prior promises. These examples underscore the importance of ascertaining facts, not rhetoric, in the evaluation of the current condition of TAPS. This chapter also contains a short review of two subjects peripheral to this report: TAPS marine transportation issues (revealing a similar gap between promise and performance) and the unique economic arrangements that underwrite TAPS.

It appears that the guaranteed profit on TAPS allowed by the 1985 pipeline tariff (shipping charge) settlement agreement between the State of Alaska and the TAPS owners and the hidden (or off-book) profit in the dismantling provision of that settlement may be sufficient to nullify any negative economic impacts of increased environmental expenditures. This analysis of North Slope economics suggests that the public and its policy makers need better information on North Slope profitability in order to determine:

Chapter 3. The TAPS Audits

Chapter 3 focuses on the audit performed for the federal Bureau of Land Management (BLM) by the Quality Technology Company (QTC) in 1993. That audit resulted from congressional attention to issues raised by Alyeska quality control inspectors concerning serious TAPS hardware and management deficiencies. The BLM/QTC report painted a grim picture of a likely accident that had already found a place to happen: the 800-mile TAPS corridor across Alaska. BLM/QTC concluded that:

These conclusions confirmed many, though not all, of the original concerned employee allegations.

BLM/QTC's findings were essentially unchallenged by Alyeska and the TAPS owners; indeed, most were confirmed by several internal Alyeska audits. BLM/QTC's findings were also accepted by the government monitors as a valid basis for overhauling Alyeska's hardware and its management structure. As a result, the BLM/QTC audit launched a massive and still on-going corrective action effort that encompasses both technical repairs and organizational restructuring.

Part II. 1994-1996: Can a Leopard Change Its Spots?

Chapter 4. Alyeska's Audi Response Program and the 1995 GAO Report

In response to the BLM/QTC audit and subsequent audit findings, Alyeska created a combined list of 4,920 deficiencies (or audit action items) that needed correction. Alyeska then launched a massive audit resolution program. This highly publicized program — a major focus of its 1994 and 1995 activities — fell significantly short of its goals.

Examination of audit item closure or completion data from diverse, documented, quantitative perspectives indicates Alyeska's clear failure to live up to its promised goals. Alyeska's audit resolution program failures include:

While this analysis appears at first glance to contradict the positive findings of the 1995 GAO report, a careful reading of that report shows that at least partial reconciliation is possible. The Congressional watchdog agency hedged its favorable conclusion with the disclaimer that hardware repairs and system reforms were in process and "the full effectiveness of Alyeska's and JPO's actions cannot be assessed in the short term." By the end of 1995, the data on audit resolution clearly demonstrated that the GAO's mid-year caveat had assumed increasing importance.

Examples of audit items with delays past mid-1996 — delays which perpetuate operating risks — include the following:

The risks from the postponed completion of these audit "fix" items are compounded by continuing delays in completing the following:

Examples of long-delayed top-priority items also include:

Consideration of these unfinished, top-priority items indicates that even as steps are supposedly being taken to avoid a disaster, the pipeline people may be courting one. A pipeline with essential components suffering from prolonged repair delays is clearly less able to cope with unexpected problems. For example, the risks associated with electrical system and gate valve repairs — two operating components whose repairs have been delayed — are compounded when the pipeline still lacks items such as drawings that identify and locate hardware accurately and complete lists that prioritize and assure adequate preventive maintenance on essential equipment.

Meanwhile, Alyeska is initiating other actions that require sweeping changes in operating procedures. These include the pipeline company's decision to shut down two pump stations during the summer of 1996 (followed, in all probability, by two more in 1997). Pump station closings will alter pipeline flow scenarios, requiring workers to devise new operating practices. These operational changes will be taking place while deep personnel cuts continue. Introducing these major changes to a system that already has difficulty fixing existing problems can only add to the perils of running the aging pipeline that carries nearly ten percent of the nation's oil across Alaska.

In view of the disparity between Alyeska's goals and its actual results, the company's subsequent self-congratulatory advertisement claim in early 1995 that "in 1995 we exceeded expectations" is puzzling. In fact, the striking gap between Alyeska's public pronouncements and reality places the pipeline, Alaska's environment and TAPS workers at risk and constitutes another broken promise to Congress and the public.

Chapter 5. The Alyeska Quality Program

The state-federal Joint Pipeline Office (JPO), Alyeska and its owners all have placed great reliance on a sound quality assurance/ quality control program to keep the aging pipeline running safely and efficiently. A revision of QA-36, Alyeska's basic quality program document, was seen by all parties as fundamental to resolving Alyeska's problems.

The importance of the quality program was understood when Alyeska received permission to build the pipeline in 1974. The right-of-way agreement with the federal government and lease with the State of Alaska — both signed by representatives of Alyeska's seven owner companies — contain virtually identical language requiring Alyeska to establish a comprehensive quality assurance program to insure full compliance with the environmental protection and technical stipulations of those agreements. Nonetheless, the evidence presented here points to significant weaknesses in Alyeska's new quality program, formally and unconditionally approved by JPO on April 8, 1996. These weaknesses fall into two broad categories: procedural and cultural.

Procedural Elements. In May 1995, JPO required that the new quality program be "in place, operational and consistently followed" by midnight on March 31, 1996. Using criteria for approval established by JPO and agreed to by Alyeska, this chapter identified two major inconsistencies in JPO's final approval of the quality program:

Cultural Aspects. JPO offered no compelling data to support its conclusion that Alyeska employees had, in JPO's phrase, "bought in" on the quality program. JPO said its decision was based on what the monitors termed Alyeska's "extraordinary" efforts in both implementation and culture change. But there are several reasons to question whether those efforts demonstrate that Alyeska is fully committed to the new quality program. Among the indications that JPO may be relying on a "buy-in" that is at least in part illusory:

Perhaps the TAPS quality program can best be understood in terms of the old "stick and carrot" routine. In the current pipeline variant, JPO threw away the stick when it exchanged its conditional endorsement of the Alyeska quality program in May 1995 for final and unconditional approval in April 1996. For TAPS employees, the carrot was the pipeline company's fat year-end bonus — not to mention increased chances of surviving imminent personnel cuts. The reward was to be earned in part by supporting the new quality program. What was not clear was whether the Alyeska carrot was dangled to induce quality or quiescence.

Chapter 6. Operating TAPS: Shutdowns and Other Potentially Serious Incidents

This chapter introduces the reader to the range of problems associated with TAPS operations by analyzing the existing shutdown record and developing a list of potentially serious incidents that occurred during the operation of TAPS during 1994 and 1995. The problems discussed and catalogued here demonstrate the erosion of the critical margins of safety that are supposed to protect Alaska's environment, Alyeska's work force and the North Slope's contribution to this nation's oil supply.

TAPS shutdowns are occurring with increasing frequency. According to Alyeska data:

During 1994 and 1995 a potentially serious incident occurred somewhere along the line on the average of three times a month, or once every ten days. (For the purposes of this report, a potentially serious incident was defined as a crude oil spill or release of other hazardous materials, a fire, lost or malfunctioning communications systems essential to safe operation of the pipeline or any other incident that causes an unplanned pipeline shutdown or idling of mainline pumps.) The reported incidents included:

This list of incidents was assembled from a variety of sources and should be regarded as an indicative rather than an exhaustive tabulation. While it is difficult to draw conclusions about TAPS from these events, they illustrate the range of potential problems associated with operating the pipeline and the frequency with which such events occur during TAPS operations. Few of these incidents caused serious human injury or harm to the environment; but under other circumstances, many had the potential to become major catastrophes.

After planned maintenance shutdowns in 1994, 1995 and 1996, Alyeska also encountered problems re-starting the line. For example, what should have been a routine start-up May 7, 1996 turned into a near disaster as Alyeska's managers scrambled to develop emergency operating procedures to prevent the second major mishap in as many months. Under the new quality program, these procedures should have been in place before the operation began.

To understand the significance of this information on TAPS operations, one additional factor must be considered: Alyeska's consistent efforts to cut costs and personnel. Alyeska is in the process of reducing its base operating costs (exclusive of the audit "fix-up" expenses, which are segregated as special items), from $581 million in 1994 to $409 million in 1999. Large cuts are being made to both the Alyeska work force and the work force of its contractors. Alyeska reduced its staff from 1,352 people in October 1994 to 1,053 by the end of 1995, with a target of 839 employees in 1999. Over the next three years, Alyeska also intends to reduce its contractor work force. While it is not clear from this total what part of the contract employee reduction is associated with audit-related projects, it is evident that Alyeska intends to operate with significantly fewer employees.

These cuts are particularly disturbing because BLM/QTC observed that it was often the expertise and dedication of veteran Alyeska employees that saved the poorly maintained pipeline from disaster. One cost advantage of down-sizing is that it replaces senior personnel with lower-paid, less experienced personnel. Another money-saving scheme is to "outsource" to contractors. But by this process, the individuals who have been around long enough to understand the problems are liable to be replaced by new contract employees who haven't.

Alyeska officials maintain they would never jeopardize safety or the environment to save money. But the conflict between these two goals is inevitable. In view of the range and frequency of shutdowns, the large number of potentially serious incidents, and the problems associated with recent start-ups, it is difficult to believe that Alyeska has raised TAPS hardware, maintenance and operations to the level necessary to meet its environmental obligations while aggressively reducing the work force that performs the many tasks necessary to the safe transport of oil from Prudhoe Bay to Valdez.

Chapter 7. Leak Detection

According to the 1972 Final Environmental Impact Statement on TAPS, "fast, accurate, and sensitive detection of leaks" is one of four basic oil spill response measures. The federal right-of-way agreement and state lease granting Alyeska permission to build and operate the pipeline recognized this fact by including stipulations requiring oil spill detection measures.

Despite its importance to environmental safety, pipeline leak detection rests in something of a regulatory void. The federal Office of Pipeline Safety (OPS) does not exercise specific statutory or regulatory jurisdiction over leak detection. Pipeline safety codes contain no requirements for a small leak detection system.

Detection of small leaks is of particular interest for two reasons. First, a spill that may look quite large from an environmental perspective may be quite small when compared to TAPS' 1996 average daily shipment of 1,500,000 barrels. For this reason, those concerned about oil spills should not assume that economics will function to fill the regulatory vacuum of leak detection. Second, a small spill undetected over time may become a large spill.

Before construction, Alyeska promised that its state-of-the-art leak detection system would be able to detect leaks as small as 750 barrels (31,000 gallons) per day (bpd). Alyeska's system has never lived up to this promise. The company's 1977 boast that "no spill is likely to flow unnoticed for more than a few minutes" was discredited two years later when the 1979 Atigun Pass spill went for two to four days before it was spotted by a passing helicopter. That spill — 1,500 barrels by Alyeska's count and 5,000 by the government's — never triggered the leak detection system alarm. By late 1995, the pipeline leak detection system approached the accuracy promised prior to construction on approximately one day out of 30. Even with improvements in computer capabilities over the past 20 years, Alyeska's small leak detection system still doesn't work very well. One of the 96 top-priority audit action items summarized small leak detection system concerns. According to that audit finding, the leak detection system was incapable of detecting leaks smaller than 1,500 barrels per day. A new leak detection system failed its field test in August 1995. As of May 1, 1996 the top-priority small leak detection audit item was still open.

In November 1995, the small leak detection system established the following performance record:

Leak detection system performance is tied to the improvement of two other key components of the communications system: the Supervisory Communications and Data Acquisition (SCADA) system and remote gate valve (RGV) communications and operations components. Both systems are undergoing complete overhauls because of persistent problems and will not be completed for several years.

Alyeska's plan to shut down four pump stations, already underway, requires increased use of the flow additive DRA. The additive makes oil easier to pump but more difficult to measure. As of January 1996, there was no indication that JPO had explored the ramifications of this added problem for the new leak detection system.

Finally, the surprising fact that nobody at Alyeska is properly trained to remove critical leak detection probes for maintenance is an example of the kind of gap in technical knowledge that results from Alyeska's relentless pressure, discussed earlier, to reduce personnel and expenditures.

Chpater 8. Remote Gate Valves

To control oil flow on the 800-mile TAPS, 151 valves are strategically located along the pipeline. 62 of these valves are remote gate valves (RGVs). On command, a gear forces a giant steel slab down, cutting off pipeline flow and, in the event of an oil spill, limiting drainage after valve closure. RGVs also permit staged shutdown, preventing over-pressuring of the pipeline during emergency closure. The RGVs are controlled and monitored from Valdez.

Originally installed as a safety device, TAPS' RGVs have become something of a two-edged sword. Due to a variety of communications problems, unplanned RGV closure poses the threat that the pipeline will be over-pressured if upstream pumps continue to push oil downstream, where it stacks up behind the unintentionally closed valve.

In 1994 and 1995, RGV communication loss or malfunction occurred on the average of once a month. Eleven of those failures occurred on the south slope of the Brooks Range, where special handling of oil flow is required to avoid the build-up of excess pressure that could rupture the line as the oil toboggans downhill from Atigun Pass, the highest point on the line. Effects of a major spill along this stretch could impact environmentally sensitive Koyukuk or Yukon River drainages.

To cope with this pressure build-up, Pump Station #5 was built to divert oil to its special storage tank, which holds three times as much oil as other pump station relief tanks. In May 1996, Alyeska took the relief tank at Pump Station #5 out of service for repairs. This action exacerbated the environmental risk created by the perpetual problems that already diminish margins of operating safety on the south slope of the Brooks Range. These problems include:

Chapter 9. The Valdez Marine Terminal Vapor Recovery System

The vapor recovery system (VRS) is an extensive set of piping and machinery at the Valdez Marine Terminal (VMT). The VRS has two primary functions: (1) to prevent buildup of hydrocarbon vapors in the storage tanks that might cause a fire or explosion; and (2) to control release of those vapors from the tank farm. Some 27,000 feet of piping carries tank farm gasses to and from the eighteen storage tanks and the components of the VRS system.

Due to corrosion, the VRS system leaks. In 1986, an internal Alyeska memo warned that eight sections of high pressure pipe had failed, posing a safety hazard that required repair or replacement. A follow-up inspection later that year forecasted that the pipe failure rate would increase significantly by 1990.

Since startup in 1977, 40% of the VRS lines have been replaced — half with corrosion-resistant stainless steel, half with the same kind of leak-prone, carbon steel used in initial construction. Temporary repairs, which may be in place for eighteen months or longer, are typically made with epoxy and sheet metal clamped to the pipe.

Despite earlier warnings and partial pipe replacement, the VRS system is still prone to leak: 20 leaks in the vapor recovery system were reported between late 1994 and the end of 1995.

In February 1995, JPO investigated the VRS in response to a complaint from representatives of the Alaska Forum for Environmental Responsibility. The monitors learned that:

By June, 1995, the following information was added to the record:

In and of itself, the record of 20 line breaks in a system that is supposed to prevent the buildup of dangerous hydrocarbons and control their emission into the atmosphere constitutes cause for concern. More troubling is the fact that the VRS problems were occurring in close proximity to the site of ongoing major electrical repairs, a possible source of an ignition spark.

On September 23, 1995, Alyeska shut down the Valdez Marine Terminal West Tank Farm and cordoned off the area when a worker smelled hydrocarbon vapors that quickly soared well above explosion-enabling concentrations. Crews wearing fireproof suits and masks were brought into the isolated area to locate the leak. About 50 VMT workers were tested for exposure to benzene.

This serious near miss is noteworthy for a number of other reasons. First, even though the problem had been known to Alyeska managers since 1986, tank farm VRS leaks fall into a class of problems that did not receive scrutiny from 1993 BLM/QTC and were not identified as a top-priority item in subsequent audits. Second, Alyeska's poor record-keeping and reporting on this problem occurred two years after the BLM/QTC audit identified the importance of documenting and tracking problems to ensure an appropriate response.

Perhaps most disconcerting is the failure of government monitors — both JPO and the Alaska Department of Environmental Conservation — to take prompt and decisive action to mitigate the problem and prevent recurrence until well after the September 23 incident. By the time JPO finally sought action, the year was practically over. JPO requested complete pipe replacement in 1996. Alyeska asked for more time to respond — and got it. In late January 1996, JPO approved Alyeska's two-year schedule for replacing sections of the leaky VRS piping.

Chapter 10. TAPS Electrical Problems and the ANSC Project

The 1993 BLM/QTC audit confirmed a wide range of electrical problems that had previously embroiled Alyeska's inspectors in controversy. Electrical problems in proximity to hydrocarbon vapors could result in fire or explosion. Absent such an event, the failure of electrical system components could interrupt communications or electric power vital to pipeline operations.

Spurred by these concerns, in late 1993 Alyeska launched a major, line-wide inspection to assess compliance with the present or then-current version of the National Electrical Code (NEC). After identifying over 5,000 electrical deficiencies at Pump Station #8 and 20,000 individual code violations at the Valdez Marine Terminal (VMT), Alyeska decided, with Joint Pipeline Office (JPO) concurrence, that it would be more appropriate to switch to the less stringent Alaska Occupational Health and Safety (AKOSH) code. While AKOSH borrows from the NEC, as applied on the pipeline the new project — known by the acronym ANSC (for AKOSH/NEC Safety Compliance) — it omits many of the NEC provisions that would have required expensive rewiring and construction.

Electrical system repairs constitute the largest activity in the TAPS audit response program. By the time the ANSC inspection was complete, 48,110 individual items had been identified as failing Alyeska's ersatz electrical inspection code (21,742 at the VMT alone). According to the General Accounting Office, some 17,000 of the 48,000 electrical deficiencies were "housekeeping" items that could be fixed on the spot by simple measures such as replacing missing screws on cover plates or tightening grounding connections. That left more than 31,000 electrical deficiencies line-wide to be fixed.

In 1994 and 1995, several knowledgeable, concerned and credible inspectors charged that the ANSC was a paper-shuffling subterfuge that allowed Alyeska to avoid the requirements of state law and placed the pipeline, workers, the public and the environment at risk. Three of these inspectors no longer work on the pipeline.

Two examples selected as case studies of TAPS electrical repairs failed to provide credible assurance that these repairs were conducted safely. Consider the seemingly simple "fix" involved in the replacement of a nameplate on a transformer in the Power/Vapor Area of the Valdez Marine Terminal (this item was used as a test case to see whether the cumbersome ANSC paperwork accurately reflected events in the field):

Documentation of a second example — this one involving a potentially dangerous installation of a new wire to an already overloaded and out-of-code junction box at the VMT — proved equally difficult to obtain. In this instance, the record showed that:

If ANSC efforts were so difficult to trace and so badly botched on these two simple and straightforward examples, could Alyeska, government monitors or the public have confidence regarding the outcome of more complicated and serious deficiency identification and repair? Other documents and examples reviewed for this report supported the questions raised by the two examples. In numerous instances, the required documentation of electrical repairs supposedly assured by the new quality program was sadly lacking.

Despite the glaring holes in the documentary record, JPO monitors have been staunch public defenders of Alyeska and the ANSC program. Yet, while conducting the research for this report, JPO frequently seemed office-bound and lacked thorough knowledge of the original situation, the status of the corrective action or, therefore, the possible implications.

The consistent recurrence of work performed in violation of code and/or work procedure requirements should give overseers — and the public — pause for concern about the safety of TAPS electrical systems. These problems, in turn, may have serious ramifications for operational safety and pipeline control.

Part III. Whistleblowers and Monitors

Chapter 11. Employee Concerns and Employee Concerns Programs

Concerned employees, often called "whistleblowers," have been a problem for Alyeska's management since 1975, when workers protested their instructions to falsify x-ray records to fulfill construction requirements. A decade later, independent Virginia oil broker Charles Hamel used information from concerned employees to bring Alyeska violations of its air and water quality permits to the attention of Congress. In 1990, Alyeska hired a special arm of the Wackenhut Corporation security firm to conduct an industrial espionage campaign, ostensibly to find the sources of company leaks to Hamel. When the pipeline company's espionage escapades came to light, Alyeska issued a public apology and eventually settled lawsuits against Hamel and six Alaskans who were objects of the spying effort. Subsequently, Alyeska's failure to resolve the repeatedly expressed concerns of seven quality inspectors prompted a new round of congressional hearings and the BLM/QTC audit in 1993.

This report examined the more recent experiences of employees who have expressed concerns about TAPS operations. Despite the U.S. Department of Labor's initial findings in favor of 11 out of 15 TAPS employees who blew the whistle, only one has been re-employed, while two others who were never terminated have been successfully restored to their former status. Many of the other complaints resulted in protracted litigation that ended in a negotiated settlement between Alyeska and its contractors, with the result that the worker can never work on the pipeline again.

Based on these data, it appears that the TAPS worker who is compelled to blow the whistle to remedy potential pipeline problems can anticipate that he or she:

At the same time, the massive paperwork trail that tracks the pipeline program and hardware repair efforts has grown so cumbersome that it is easy to lose sight of this fact: The BLM/QTC and Alyeska audits of TAPS and the massive audit resolution program previously discussed confirmed many of the specific concerns that TAPS whistleblowers brought to Congress in 1993. The major effort to overhaul the Alyeska quality program also confirmed the seriousness of the deficiencies raised by the twelve quality inspectors. And some issues that concerned employees raised in the early 1990's continue to be problems on TAPS in 1996. In sum, the documentary record reviewed for this report provides strong argument for taking seriously the complaints of TAPS concerned employees who become whistleblowers.

Despite this substantial body of evidence that gives credence to whistleblower concerns, JPO still tended to downplay employee concerns during the research for this report. In some instances, JPO dismissed legitimate whistleblower complaints as motivated by self-interest.

It is difficult to reconcile Alyeska's treatment of the concerned workers turned whistleblower with the company's stated position. Alyeska's official position on whistleblowers is now positive, as exemplified by the establishment of an Employee Concerns Program and a Business Practices Office and numerous articles in the bi-monthly employee newspaper, The Insider. At the same time, concerned employees continue to express to this researcher a strong skepticism of Alyeska's intentions and its employee concerns program.

Definitive judgment on concerned employee issues is beyond the scope of this report. Nevertheless, interviews and documentary review of a broad range of TAPS issues suggests this conclusion: Alyeska has attempted to solve the TAPS whistleblower issue in part by public pronouncements and in part by shooting enough messengers that those remaining may keep their heads down to preserve their jobs, despite Alyeska's stated policy.

Chapter 12. Monitoring TAPS

The TAPS owners promised to protect the 800-mile corridor and surrounding lands with the safest delivery system possible. Government monitors are responsible for seeing that the owners do so. The Joint Pipeline Office (JPO), a collaborative effort of 11 state and federal oversight agencies, serves as the public's eyes, its ears and, as necessary, its regulatory arm. To the extent that TAPS warrants public attention, these additional factors call for careful consideration of JPO's conduct:

The TAPS regulatory system has had a rocky history. During construction of the pipeline, a storm over falsified welding certification put the massive construction monitoring program at the heart of national headlines and congressional hearings. After construction, the government monitoring effort languished. Following Alyeska's delayed response to the 1989 Exxon Valdez spill, quality control inspector complaints and congressional inquiries led to a revitalization of virtually moribund TAPS monitoring efforts. In 1990, the Alaska State Pipeline Coordinator's Office joined with its counterparts in the federal Bureau of Land Management to form the consolidated state-federal JPO.

Since 1990, JPO has taken action on a wide range of technical and organizational issues. To its credit, JPO:

At the same time, however, JPO:

To praise the creativity, energy, intelligence and intentions that JPO personnel and their leaders have contributed to this effort is not to judge the outcome a success. Increased staff, greater funding, new programs and huge volumes of technical paperwork do not, in and of themselves, guarantee effective oversight.

In addition to the findings summarized above, two theories of regulatory process suggest that JPO's activities deserve close scrutiny:

JPO's centralized operation was dealt a serious blow when the vanguard of the Alaska Department of Environmental Conservation (ADEC) TAPS contingent moved out of the JPO Anchorage office as part of an agency reorganization. ADEC carries out enforcement responsibilities for oil spills and contingency plans, as well as clean air and water, in Alaska. In several areas, ADEC has failed to take strong, timely action: regarding vapor recovery system problems, the need for tractor tugs to escort tankers through Prince William Sound and Alyeska's efforts to economize on oil spill response personnel. When ADEC fails to act, JPO must use what leverage it can muster to ensure that Alyeska fulfills its obligations to protect Alaska's environment.

JPO has an unenviable and sensitive political task which is compounded by the enormity of the problems it faces obtaining the information required to make informed, balanced decisions on issues that are frequently technical and controversial. If the intended goals of the TAPS monitoring effort are safe pipeline operations, environmental protection and a safe workplace (the latter achieved in part by ensuring a viable employee concerns program), the data and analysis presented in this report suggest that the JPO has yet to reach its goals. The agency's challenge is to ensure that its actions conform to Alyeska's stated goal for its quality program: "Know what's right, do what's right and prove it.

Part IV. Conclusions and Recommendations

Chapter 13. General Conclusions

Despite Alyeska's repeated promises, the outlay of hundreds of millions of dollars and the oil industry's lavish public relations campaigns, this report presents evidence that Alyeska's recent efforts to refurbish the pipeline — and its image — do not ensure safe and reliable transport of the crude oil that TAPS carries. The evidence also demonstrates that Alyeska's efforts are not sufficient to protect the environment TAPS crosses and the health and safety of its workers from the increased risks of an aging pipeline. The facts on which these conclusions are based are presented in the preceding chapters and deal primarily with the activities and events of 1994, 1995 and the first half of 1996.

The first significant oil loss from the pipeline in more than a decade — an estimated 476 barrel (20,000 gallon) spill — resulted from a problem in one of 42 buried pipeline check valves near Black Rapids Glacier, in central Alaska, April 20, 1996. On February 6, 1996, TAPS monitors had written Alyeska a letter expressing concern about Alyeska's cancellation of a program to investigate problems with valves in the buried portion of the pipeline. Three weeks after the April 20 spill and three months after receiving the letter from the monitors, Alyeska was still trying to decide whether to accelerate a five-year schedule to investigate the extent of its — and Alaska's — problem with buried pipeline valves.

The data presented in this report indicate that the April 1996 spill was not an isolated incident. Rather, it was the most recent in a series of potentially serious and increasingly frequent operating problems that plague the aging oil delivery system. Throughout 1994 and 1995, TAPS experienced more than three potentially serious operating problems per month. Few of these problems caused oil spills and none caused contamination beyond the confines of the Alyeska right-of-way. However, these incidents caused Alyeska to shut down the 800-mile pipeline or a number of its huge pump station jet turbines on the average of once a month. While data are not available for earlier years, it appears that operating problems on the nineteen-year-old pipeline are occurring with increasing frequency.

A brief look at one aspect of the potentially serious problems associated with the planned shutdown and re-start of the pipeline in May 1996 demonstrates the gravity of the risks inherent in TAPS operations. During the May 7 re-start, one of the mainline pumps at Pump Station #8 overheated. The valves that were supposed to isolate the pump house failed and oil continued to flow into the pump room, which quickly filled with heavy smoke. Having just taken the big pressure relief tank at Pump Station #5 off-line and with Pump Station #7 also out of service, the only pressure relief tank between Atigun Pass and Pump Station #8 was at Pump Station #6. That tank did not have spare capacity to handle the emergency shutdown. In apparent violation of quality program requirements and common sense, Alyeska had not prepared procedures to deal with this possibility. Therefore, technicians had to meet in the midst of the developing mini-crisis to devise emergency operating procedures while the pipeline operators sought to avert a repeat of the disastrous 1977 start-up explosion that killed one person and destroyed substantial portions of Pump Station #8.

Despite the frequent occurrence of operating problems, Alyeska is initiating other actions that require sweeping changes to established operating procedures. These include the pipeline company's decision to shut down two pump stations during the summer of 1996 (followed, in all probability, by two more in 1997). The station closings will alter pipeline flow scenarios, requiring workers to establish and learn new operating practices. These operational changes will be taking place while large-scale, line-wide personnel cuts continue. Introducing these major changes to a system that has experienced demonstrable difficulties fixing its existing problems can only add to the perils of running the aging Trans-Alaska pipeline that carries nearly ten per cent of the nation's oil.

These events also raise questions about the effectiveness of the JPO, the state-federal oversight agency formed in 1990. Just two weeks before the April 1996 spill, JPO gave its final approval to the implementation of Alyeska's new quality assurance program, which consists of operating procedures that are supposed to prevent pipeline problems. In May 1995, JPO approved the new program provisionally. Under the terms of that conditional approval, Alyeska was supposed to demonstrate that the new program was "in place, fully operational and consistently followed" by March 31, 1996. On February 13, 1996, JPO issued one more in a series of stern warnings that Alyeska appeared to be unable to meet that requirement. Five weeks later, despite Alyeska's failure to resolve many of the issues discussed in that memorandum, JPO removed the "conditional" sanction and gave the new quality program its unqualified endorsement. In granting its approval for the new quality program, JPO expressed confidence that Alyeska would add a new layer of monitoring controls to identify and rectify the many holes still existing in the new program. The need for these requirements demonstrates that Alyeska's new quality program was neither "fully operational" nor "consistently followed" on March 31, 1996. Nevertheless, the monitors quietly withdrew the immediate threat of their strongest hammer — the warning that failure to meet specific requirements by a specific date might result in shut down of pipeline for breach of contract. Lesser sanctions were possible; none were applied.

After the near-disastrous re-start on May 7, 1996, JPO praised the "high degree of professionalism" Alyeska showed during the exercise. In doing so, the monitors ignored the lack of preparation for the exercise and the problems at Pump Station #8.

It is easy to understand why the bark of Alyeska's government watchdog may be worse than its bite. TAPS delivers nearly one-tenth of the oil this nation consumes daily; revenue from that oil pays for more than two-thirds of the total budget of the State of Alaska. Under these circumstances, government monitors are understandably reluctant to shut down the oil line. It is precisely for those reasons — in addition to environmental concerns — that stronger oversight of TAPS is recommended.

Chapter 14. Recommendations

This chapter presents recommendations designed to ensure safe and environmentally sound operations of the aging Trans-Alaska Pipeline System. The recommendations follow from the findings presented in this report.

Despite positive reports from the General Accounting Office, the Department of Transportation's Inspector General and the Joint Pipeline Office on Alyeska's increased efforts in recent years to deal with the problems of maintaining an aging pipeline, this report has documented a pattern of instances in which resolution of TAPS operating problems has been characterized by serious shortcomings and/or chronic delays in abatement plans. The following recommendations are based on analysis of some of those problems and responses. They are designed to accomplish the following ends:

The importance of implementing these recommendations is underscored by the oil industry's recent confirmation that North Slope production will probably continue for at least another 30 years, combined with Alyeska's clear predilection for cost-cutting. Both of these facts increase the threats to the environment and worker safety posed by the aging pipeline system.

Recommendation #1. Immediately Implement a Presidential Task Force on TAPS

Recommendation #2. Strengthen State of Alaska Oversight

Recommendation #3. Assure Adequate State Funding for JPO

Recommendation #4. Strengthen the JPO Executive Council

Recommendation #5. Strengthen JPO Mandate to Improve Oversight

Recommendation #6. Amend State of Alaska Whistleblower Laws To Provide Protection for Private Sector Employees

Recommendation #7. Create a Credible JPO Employee Concerns Program and Convene a Whistleblowers Conference

Recommendation #8 Develop a System to Track and Trend Data on TAPS Shutdowns and Potentially Serious Incidents

Recommendation #9 Improve Tracking of Key TAPS Issues

Recommendation #10 Devote a Portion of Already Collected DR&R Funds to Ensuring Safe Operation of TAPS








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