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BP's Shutdown May Have Been Preventable

In an election year filled with debates over rising energy prices and the potential drilling of the Arctic National Wildlife Refuge, the media has been steadfast in its coverage of BP�s recent decision to shut down its oil field in Prudhoe Bay, Alaska, following the discovery of �unexpectedly severe corrosion� in the company�s pipeline.  Yet the problems with the pipeline were hardly unexpected, and may have even been preventable.  Just ask POGO board member Chuck Hamel, who has been exposing misconduct in the oil industry for over two decades.

As an independent tanker and oil broker on the North Slope of Alaska in the 1980s, Hamel discovered that Alyeska�a consortium formed by Exxon, Arco and BP to operate the state�s pipeline�was violating numerous environmental, health and safety regulations.  He and the whistleblowers he works with began reporting these violations to Congress, regulatory agencies and the press, much to the chagrin of oil company executives.  In response, Alyeska hired the security firm Wackenhut to investigate Hamel and expose the identities of the whistleblowers.  As Hamel later told 60 Minutes, the investigative team went to extraordinary lengths to spy on him.  At one point, a �pretty, blonde, tanned� Wackenhut agent�posing as a representative of a fake environmental organization called Eco-Lit�even attempted to seduce him (she was among the agents who eventually turned against Wackenhut and submitted evidence of the operation at a Congressional hearing). 

Throughout the years�and in spite of the Wackenhut investigation, which Federal Judge Stanley Sporkin described as �horrendous��Hamel has served as a trustworthy conduit for whistleblowers exposing malfeasance in the Alaskan oil companies.  And he has repeatedly issued warnings about the very type of pipeline corrosion that forced that shutdown of Prudhoe Bay.  As early as 2004, Hamel warned Bob Malone�BP�s new head of U.S. operations�that the company�s faulty inspection procedures had resulted in a �clear and present danger to the workers, the facilities, and the environment.�  In fact, says POGO Senior Investigator Peter Stockton, former Chief Investigator for Chairman John Dingell of the House Energy and Commerce Committee, Hamel and others have testified since the early 1990s about corrosion in the oil pipelines and in the smaller feeder lines.  Incidentally, the early 1990s was also the last time that BP used a device called a �smart pig� to measure pipe wall thickness (after another major spill along the pipeline earlier this year�the biggest ever on the North Slope�the Department of Transportation finally ordered BP to resume its smart pig measurements).

Much of the media coverage has focused on the higher oil prices that are likely to result from the shutdown, an important concern given the supply shortages in the wake of Hurricane Katrina.  It should be noted, however, that BP could have prevented the shutdown in the first place if it had listened to Hamel and its own employees about the serious shortcomings in pipeline maintenance.

MORE 8/14: You can read more about Chuck Hamel�s story in a Wall Street Journal article published this weekend (paid subscription required).  The article mentions, among other things, that Hamel has had to overcome serious financial burdens in order to continue in his fight against oil industry corruption:

Mr. Hamel has spent so much money on phone bills, travel and other expenses related to the work that he has exhausted much of his savings, says Stan Stephens, a tour-boat captain in Valdez, Alaska, and close friend of Mr. Hamel�s.  �He told me once he didn�t have enough money to go out to dinner...At least now he�s finally getting the credit he deserves.�

...Mr. Hamel says he doesn�t consult for energy companies and lives mostly on bank loans and Social Security income.  He was one a millionaire, he says, but filed for bankruptcy after he lost his tanker business and the Prudhoe Bay lease.  But �when these [oil workers] come to you, how can you say no?� he says.  �You can�t.�

By: Michael Smallberg
Investigator, POGO

Michael Smallberg, Investigator Michael Smallberg is an investigator for the Project On Government Oversight. Michael's investigations center on oversight of the financial sector.

Authors: Michael Smallberg

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