Crude Behavior

Big Oil to Alaska Pipeline Inspectors: Don't Squawk or Else

by Eric Nelson
The Free Press

Also See: Related Story

What safety inspector Richard Acord witnessed back in September 1991 at Milepost 113.6 would have been a comedy of errors if the consequences were not so grave. Milepost 113.6 is one of 25 animal crossings where the Trans-Alaska pipeline drops below ground to allow migrating caribou and other animals to cross the line. A crew operating a drill rig - a 60,000-pound truck with a giant drill on the chassis - planned to drive it across the pipeline but had failed to follow proper guidelines.

In due course, the rig slid off the narrow wood planks laid out for its wheels and sunk to its hubs in thick mud directly above the pipeline. A bad situation got worse when a fuel line broke and diesel spilled out onto the tundra.
Appalled at the crew's disregard for established procedures and common sense, Acord tried to issue a stop-work order to develop a plan for extracting the rig and ensuring that the 48-inch diameter mainline pipe had not been damaged. He was rebuffed by the crew's supervisor and told if he didn't cooperate, "they would find somebody who would."
When the drill rig was finally freed 36 hours later, holes were dug nearby for the installation of heat exchange pipes. These components ensure that the permafrost does not melt as 140-degree oil courses through the line on its 800-mile route from the North Slope to Valdez. But when the holes were dug, the drill brought up what appeared to be buried construction debris, chemical-soaked wood and other waste left behind from previous jobs. These were probable violations of environmental laws.
"We had oil running down the tundra, we had a rig stuck across the pipeline, indeterminate material in the ground. All of those constitute a bad scenario," Acord recalled in a recent deposition.
Bad scenarios on the Trans-Alaska Pipeline System (TAPS) are no longer isolated events. Acord has joined a growing list of quality control inspectors who have blown the whistle on environmental, health and safety violations by the pipeline operator, Alyeska Pipeline Service Co., and its contractors.
This month four whistleblowers who settled their cases against Alyeska two years ago will be back in court alleging that Alyeska, its parent oil companies and its contractors have blacklisted them from oil industry inspection work in Alaska. Later this year, Acord and others will go to trial alleging many of the same types of adverse actions that won the original whistleblowers a settlement two years ago.
Despite Congressional hearings and investigations, a series of damning audits of the pipeline's condition, and repeated promises by Alyeska to rehire and stop harassing inspectors who raise environmental and safety concerns, Alyeska and its contractors continue to play hardball with pipeline inspectors who do their jobs too well.
For its part, Alyeska - a consortium company held by majority owners British Petroleum, Atlantic Richfield (ARCO) and Exxon; as well as four minor-owner oil companies - touts its record of building and operating an engineering wonder of the world. An oft-quoted statistic is that 25 percent of the nation's domestically-produced oil flows through TAPS. With billions of barrels moved through the line, the company reports that the largest non-intentional spill is 4,000 barrels. (A 1978 act of sabotage resulted in a 16,000-barrel spill.)
However, attorneys representing the inspectors say the company is silencing concerned employees who represent the first line of defense against a major catastrophe.
"These inspectors have been prevented from expressing their concerns in an unlawful manner," said Alene Anderson, an attorney with the Seattle office of the Government Accountability Project, a national non-profit organization representing whistleblowers.
"There have been serious accidents and loss of oil on the line. Not on the scale of the Exxon Valdez, but that is a real possibility," said Anderson.
In a recent deposition, John Dayton, Alyeska's senior vice president of operations, estimated that a "total failure of the integrity of the line at the wrong spot"could spill 40,000 to 50,000 barrels of oil.
By comparison, the Exxon Valdez spill was 261,000 barrels. (A barrel is 42 gallons.)
While such a spill would be less than one-fifth the size of the Exxon Valdez, it might occur in a remote location in the dead of winter, or as the pipeline crosses 13 rivers and three major earthquake faults. The effects of a spill on the tundra, the flat desert plains of the high arctic, would be devastating to flora and fauna. For instance, an oil pipeline rupture last year in the Komi region of Russia - at a similar latitude to Alaska - has wrought massive ecological damage. There, a pipeline rupture and subsequent collapse of an oil impoundment dam spilled an estimated 100,000 barrels into three rivers leading to the Arctic Ocean.
However, rather than focusing on prevention, Alyeska has historically invested its resources in aggressively pursuing both outside critics and dissenters in its ranks. Its command and control culture is driven by liquid revenues that spring from the North Slope and flow south at the rate of 1.5 million barrels a day. So intense is the pressure to keep the oil flowing, Alyeska has built complex by-passes when forced to replace sections of the line due to corrosion. And according to legal complaints, when inspectors bring up safety and environmental violations that could cost millions of dollars to fix, they get muscled off the job or reassigned.
"You can't help but think about (your physical safety) when you are costing somebody $500 million," said one whistleblower.
"The theory is that they will use the equipment until (the line) is destroyed. When you step back and look at the big picture, God it stinks."
Part of that big picture is simple oil economics. According to oil industry reports, Prudhoe Bay oil flowing through the line peaked in 1988 at 2 billion barrels a day and has begun its projected decline. But the current flow of 1.5 million barrels a day is still significant and profitable. Independent economist Richard Fineberg estimates the oil companies derive $3 billion in annual profits from the Prudhoe Bay field. In fact, Alaskan oil watchers report intense squabbling between the "owner"oil companies over the future of North Slope production and TAPS. Nonetheless, all of the companies have publicly and repeatedly stated the need to cut costs on the North Slope, including those associated with maintaining the 18-year old pipeline.

Stemming Leaks
It was against this backdrop of imminent production declines and cost cutting in the late 1980s that TAPS workers began feeding information to Congress through Charles Hamel, a former oil broker concerned about TAPS environmental problems. According to published reports, the documentation supplied by Hamel later forced Alyeska to spend millions of dollars on corrosion repairs.

In 1990, Alyeska hired the security company Wackenhut Corp. to investigate Hamel and identify his sources. Wackenhut sifted through his trash and credit reports, set up a phony environmental group in an attempt to gain his confidence, and even hired a woman posing as a reporter to try to seduce Hamel in a hotel bar. According to Congressional testimony, Rep. George Miller (D-CA), then chairman of the House Natural Resources Committee, was also a target of spying.
Hamel soon brought suit against Alyeska and Wackenhut for invasion of privacy. In turn, Alyeska and its high-priced Washington, D.C. law firm, Steptoe & Johnson, did their utmost to regain control of documents in Hamel's possession and stem any internal leaks. According to a report in The American Lawyer, Alyeska's security department went so far as to instigate a sting within the company's own legal department to find the source of leaks. Hamel settled the suit for an estimated $5 million and became an established conduit for information about Alyeska.
Alyeska had plenty to be defensive about. Not only did it botch its response to the Exxon Valdez disaster in 1989, audits of TAPS soon found thousands of code violations.
In 1993, the Bureau of Land Management (BLM) hired the Quality Technology Company (QTC) to perform an audit of the pipeline's condition. The QTC report confirmed that the pipeline's condition was "indeterminate" and that harassment and intimidation was a problem. (Ironically, even the QTC audit became the source of a scandal; Alyeska employees were caught "stuffing"the files of quality records to make them appear more substantial to the auditors. According to a two-volume BLM report on the incident, Alyeska technician Michael Kelley was threatened by the quality assurance manager when he refused to participate in the "file stuffing.")
An audit by the Arthur D. Little Co. found numerous deficiencies which required repair, modification, and redesign. And a third study, begun by the Stone and Webster Company in early 1994, reviewed TAPS schematics and design drawings and concluded that Alyeska lacked proper control of pipeline configuration data. In other words, none of the drawings reviewed by the auditors accurately reflected the pipeline as it was built and modified. For example, one set of drawings incorrectly placed the pipeline a mile off of its actual location.
The audits were prompted by a series of disclosures and damaging Congressional hearings. Glen Plumlee, an inspector with 18 years experience in refineries and chemical plants, filed an affidavit in 1992 describing practices that did not conform to the quality assurance policy manual. Further, the system did not allow inspectors to report violations to managers who were free from the pressures of time and budget constraints. This prevented inspectors from issuing stop-work orders and perpetuated out-dated weld-inspection procedures, Plumlee charged.
In Congressional hearings held in July 1993, Plumlee was joined by four others who had been terminated: engineer Richard Green, electrical inspectors Ken Hayson and Joe Tracanna, and inspector James Schooley. They testified about blacklists, pressure not to file discrepancy reports, and physical threats from Alyeska and contractor managers.
Rep. George Miller got straight to the point:
"The central question to be answered at today's hearing is, do they get it? Will Alyeska and its ownership stop trying to shoot the messengers - whether they be environmentalists, employees, or Members of Congress - and get down to the business of fixing the problems and meeting their obligations?"
However, a key legal issue facing the whistleblowers is whether Alyeska's obligations extend to its contractors and whether Alyeska controls its contractors' actions. Remarkably, few except Green, Plumlee and Schooley had ever worked directly for Alyeska. Rather, they were contract employees on the payroll of "bodyshops."
Alyeska stands at the center of a complex web of contractors who provide construction, engineering and inspection services. Several contractors are subsidiaries of the politically-powerful Arctic Slope Regional Corp. (ASRC), the Inupiat Eskimo native corporation based in Barrow, which itself owns vast mineral and oil resources on the North Slope and has emerged as the largest Alaska-based corporation, with $450 million in revenues.
In the last two years, most of the inspectors bringing claims, including Acord, Glen Plumlee and Jim Schooley, have worked at ASRC subsidiary Arctic Slope Inspection Services. This shop goes by the ironic acronym ASIS, pronounced "as-is.''
Despite the fact that they are contract employees, the inspectors worked in Alyeska facilities, took orders from Alyeska managers and used Alyeska trucks and equipment. And, according to their attorneys, they were fired at the behest of Alyeska.
"Alyeska has created and fostered a system of retaliation by proxy," said attorney Tom Carpenter, the director of the Seattle office of the Government Accountability Project.
"They have their contractors commit reprisals against whistleblowers, and then punish the contractor for doing so when an outraged Congressman calls them on it."
Carpenter noted that this strategy has yet to fool the U.S. Department of Labor, which has repeatedly held Alyeska chiefly responsible for acts of illegal discrimination against quality inspectors.
The evidence of Alyeska's involvement was apparently conclusive enough that it settled most of the inspectors' claims just prior to the July 1993 hearings. As part of the settlement agreement, CEO David Pritchard stated that they were eligible for rehire and advised his managers and contractors of the inspector's eligibility for work.
The phone never rang.
For example, Glen Plumlee had a job lined up with Exxon to begin just following the hearings. But when he appeared for work, he was told the job was no longer available. The only work he could find was in Saudi Arabia.

Do Not Touch!
In November 1993 key evidence surfaced that would convince Congress and the inspectors' lawyers that a systematic blacklist was in effect. A Congressional investigator found a note in a ARCO contractor's files at a remote worksite. Known as the "Udelhoven blacklist"(after Udelhoven Oil System Services), the list contained the names of Glen Plumlee, his father Robert Plumlee, Schooley, Green, Tracanna, Hayson and Charles Biddy. In the margin, a notation read, "Former Alyeska Inspectors, Do Not Touch!"

Since 1993, Green, a highly respected engineer with 30 years experience in quality assurance, and Robert Plumlee have yet to find work despite numerous applications. Glen Plumlee and Schooley were eventually hired by ASIS, although Schooley has since been laid off this year.
The most vocal of the whistleblowers, Glen Plumlee summed up his frustration in a March, 1995 e-mail message following word of a layoff which was later rescinded: "None of us had these problems before we blew the whistle. I have no illusions about fair play concerning Alyeska. Their history is awful and apparently their methods have not changed significantly.''
Of the inspectors who testified in July 1993, Charles "Chuck" Biddy was the only one still working in the Alyeska quality department. Biddy had flown out to Washington with Alyeska executives. Testifying with him was CEO David Pritchard, a British Petroleum executive installed by the owners in 1993 to smooth over Alyeska's jagged management edges and inept Congressional relations. Also testifying was Vice President Willliam Howitt, the company's former operations chief by then shunted over to vice president of human resources, and a notorious hardliner on whistleblowers.
Sitting alongside Pritchard and Howitt, Biddy courageously confirmed the testimony of the other whistleblowers. Pritchard and Howitt could do little but make lame excuses for the abusive actions of their underlings. Rep. Miller savaged Pritchard for not firing a manager who had threatened to break Biddy's "fucking arm" if he wrote another discrepancy report. Biddy also told how in 1991 he was reassigned to a job paying half as much as the one he had held. Needless to say, Biddy was not given a ride home in the company jet.
Biddy's reputation as a whistleblower has dogged him ever since. His name was on the Udelhoven blacklist, and he was recently turned down for a "quality generalist" position within the Alyeska quality department. According to his attorney, this "non-selection" effectively terminates Biddy's employment with Alyeska in the near future.
Reflecting on his prospects, Biddy believes he may never work again in quality control because of pervasive blacklisting in the oil and nuclear industries.
Nonetheless, Biddy believes his actions have made him a better person.
"I'm from the South, and I saw a lot of racism. Of course, minorities were always kept out of oil and gas. But now for the first time, I understand what it means to be discriminated against. You walk into a room and people stop talking. They move to the other side of the table. I have a new found respect for other people (who have experienced discrimination.)"
But taking a public stand also carries a heavy emotional price tag.
"This is the worst thing that has ever happened to me. You can't sleep at night because (lack of inspection) could get somebody killed," said Biddy.
Richard Acord also knows those consequences well.
Acord was terminated in late 1993 from Alyeska contractor ASIS for what he and his attorneys allege were trumped up charges of inadequate performance in retaliation for raising serious deficiencies in Alyeska's tanker truck inspection program. Alyeska's fleet of mobile cargo tankers carry a plethora of hazardous materials across Alaska's roads and must be regularly inspected according to Department of Transportation guidelines.
Many of the tankers carry Drag Reducing Agent (DRA), a kerosene-like substance with a slippery polymer specially designed to prevent oil from sticking to the inside of the pipeline. One former Alyeska quality department employee likened DRA to snot.
DRA boosts the "throughput" of oil and saves millions of dollars. Without DRA, Alyeska figures that it could not pump more than 1.45 million barrels a day.
Thus, removing DRA tankers from operation because of safety concerns or inadequate inspections directly impacts the operation of the line and costs money.
"We were taking equipment out of service and affecting production," said one former employee who worked with Acord.
According to information gained from depositions and internal Alyeska documents, Acord was publicly named as a whistleblower and accused of drug use and sexual harassment. In one instance, Dan McGrew, a consultant reporting to the Alyeska president and his "leadership team," became enraged under the apparent belief that Acord had misquoted him about an imminent "purge" in the quality department. He told Acord that he "was barely restraining himself" from "tearing out your hair" and "ripping off your testicles." Acord's Alyeska supervisor and ASIS general manager, who were both present during the confrontation, refused to intervene. Although he later apologized to Acord, McGrew - who is described as an industrial psychologist - is still advising Alyeska executives on personnel issues.
Acord was terminated by ASIS at the end of 1993, ostensibly for failing to return cheap equipment issued for that season's work and for not completing inspection reports. A Department of Labor investigator found that "Alyeska had little interest in providing direction to Mr. Acord, instead, it chose to ignore him as the bearer of bad news." Alyeska has appealed the finding.
Acord next went to work for Houston Contracting, another subsidiary of Arctic Slope Regional Corp. There, he expressed concerns that Houston was not following proper procedures for confined space inspections on sections of pipe. When he refused to participate in one such inspection, Acord was reassigned.
Several weeks later, a 22-year old welder died of argon gas poisoning inside a section of 30-inch pipe near the Kuparuk River. Acord's work at Houston ended soon thereafter.
Last month, a Barrow grand jury indicted Houston and the project manager for manslaughter. Amazingly, the indictment is the first time ever that an Alaska company has been indicted in a death. Houston also faces fines based on willful violations of safety standards.

A Coordinated Plan
Recent reports from Alaska show little improvement in the condition of TAPS or the culture of its operators. In June, an ASIS electrical inspector at the Valdez Terminal was subjected to verbal and physical harassment. Also in June, a short in some insulation tape on equipment at the terminal caused a fire that was later contained. These are just a few of the incidents detailed by Billie Garde, a Houston attorney representing many of the inspectors, in a 28-page letter to Congress in June.

According to Garde, Alyeska is dismantling the last effective remnants of its inspection program. Alyeska is seeking to cut costs through new "quality generalist"positions that will give inspectors responsibility for a wider range of equipment, much of it potentially beyond their expertise. In addition, according to the testimony of an ASIS manager, ASIS has been removed from an Alyeska list of preferred "alliance"contractors because of its "personnel problems,"i.e. too many whistleblowers.
A few Alyeska executives grasp the enormity of the company's problems, but still focus on "managing" the issues in Congress and the media. In an insightful 1994 memo obtained through discovery, Roger Staiger, Alyeska's Washington, D.C. lobbyist, summed up his impression of Alyeska's problems on Capitol Hill.
Staiger wrote, "...necessary enthusiasm and conviction (among senior management) is simply not there. It is also my opinion that too many Alyeska managers and Owners Committee representatives do not yet appreciate the magnitude and significance of the whistleblower issues in Washington. More disconcerting is that these individuals do not recognize that their lack of recognition and conviction is part of the problem."
Staiger proposed a "coordinated" plan that included, "consider getting more aggressive with the [Department of Labor] investigator in our cases,"and hiring a media strategist to gain more favorable newspaper coverage.
Such recommendations still reflect a "kill the messenger" mentality, said attorney Tom Carpenter.
"The quality inspectors are our only early warning system," said Carpenter.
"Congress and the public should pay attention, even if the oil companies refuse to pay attention. It was the 'hear no evil, see no evil' attitude that brought us Exxon Valdez."

To e-mail Eric Nelson:
WAfreepress@gmail.com

Related Story:
Despite a Serious Quality Control Crisis, Big Oil Seeks to expand Drilling




[Home] [This Issue's Directory] [WFP Index] [WFP Back Issues] [E-Mail WFP]

Contents on this page were published in the August/September, 1995 edition of the Washington Free Press.
WFP, 1463 E. Republican #178, Seattle, WA -USA, 98112. -- WAfreepress@gmail.com
Copyright © 1995 WFP Collective, Inc.