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*Reports at BP over years find history of problems*

By Abrahm Lustgarten and Ryan Knutson
Tuesday, June 8, 2010; A01

*ProPublica*

A series of internal investigations over the past decade warned senior BP
managers that the oil company repeatedly disregarded safety and
environmental rules and risked a serious accident if it did not change its
ways.

The confidential inquiries, which have not previously been made public,
focused on a rash of problems at BP's Alaska oil-drilling operations. They
described instances in which management flouted safety by neglecting aging
equipment, pressured employees not to report problems and cut short or
delayed inspections to reduce production costs.

Similar themes about BP operations elsewhere were sounded in interviews with
former employees, in lawsuits and little-noticed state inquiries, and in
e-mails obtained by ProPublica. Taken together, these documents portray a
company that systemically ignored its own safety policies across its North
American operations -- from Alaska to the Gulf of
Mexico<http://www.washingtonpost.com/wp-srv/world/countries/mexico.html?nav=el>to
California and Texas. Executives were not held accountable for the failures,
and some were promoted despite them.

Tony Hayward has committed himself to reform since becoming BP's chief
executive in 2007. Under him, the company has worked to implement an
operating safety system to create "responsible operations at every BP
operation," said Toby Odone, a company spokesman. BP has used the system at
80 percent of its operations and expects to bring it to the rest by the end
of the year, he said.

Odone said the notion that BP has ongoing problems addressing worker
concerns is "essentially groundless."

Because of its string of accidents before the April 20 blowout in the Gulf
of Mexico, BP faced a possible ban on its federal contracting and on new
U.S. drilling leases, several senior former Environmental Protection Agency
department officials told ProPublica. That inquiry has taken on new
significance in light of the oil spill in the gulf. One key question the EPA
will consider is whether the company's leadership can be trusted and whether
BP's culture can change.

The reports detailing the firm's Alaska investigations -- conducted by
outside lawyers and an internal BP committee in 2001, 2004 and 2007 -- were
provided to ProPublica by a person close to the company who thinks it has
not done enough to fix its shortcomings.

A 2001 report noted that BP had neglected key equipment needed for an
emergency shutdown, including safety shutoff valves and gas and fire
detectors similar to those that could have helped prevent the fire and
explosion on the Deepwater Horizon rig in the gulf.

A 2004 inquiry found a pattern of the company intimidating workers who
raised safety or environmental concerns. It said managers shaved maintenance
costs by using aging equipment for as long as possible. Accidents resulted,
including the 200,000-gallon Prudhoe Bay pipeline spill in 2006 -- the
largest spill on Alaska's North Slope -- which was blamed on a corroded
pipeline.

Similar problems surfaced at BP facilities in California and Texas.

California officials alleged in 2002 that the company had falsified
inspections of fuel tanks at a Los Angeles area refinery and that more than
80 percent of the facilities didn't meet requirements to maintain storage
tanks without leaks or damage. Inspectors had to get a warrant before BP
allowed them to check the tanks. The company eventually settled a lawsuit
brought by the South Coast Air Quality Management District for more than
$100 million.

Three years later, a Texas City refinery exploded, killing 15 people. An
investigation found that a warning system failed, and independent experts
found that "significant process safety issues exist at all five U.S.
refineries, not just Texas City."

BP spokesman Odone said that after the accident, the company adopted a plan
to update its safety systems worldwide. But last year, the Occupational
Safety and Health Administration fined the firm $87 million for not
improving safety at that same Texas plant.
*'Environmental criminal'*

BP has had more high-profile accidents than any other company in recent
years. And now, with the disaster in the gulf, independent experts say the
pervasiveness of the company's problems, in multiple locales and different
types of facilities, is striking.

"They are a recurring environmental criminal and they do not follow U.S.
health safety and environmental policy," said Jeanne Pascal, a former EPA
lawyer who led its BP investigations. Since the late 1960s, the company has
pulled oil from under Alaska, usually without problems. But when it pleaded
guilty in 1999 to illegal dumping at an offshore drilling field there, it
drew fresh scrutiny and set off a cycle of attempted -- and seemingly failed
-- reforms that continued over the next decade.

To avoid having its Alaska division debarred -- the official term for a
contract cancellation with the federal government -- the firm agreed to a
five-year probationary plan with the EPA. BP would reorganize its
environmental management, establish protections for employees who speak out
about safety issues, and change its approach to risk and regulatory
compliance.

Less than a year later, employees complained to an independent arbitrator
that the company was letting equipment and critical safety systems languish
at its Greater Prudhoe Bay drilling field. BP hired independent experts to
investigate.

The panel identified systemic problems in maintenance and inspections -- the
operations that keep the drilling in Prudhoe Bay running safely -- and
warned BP that it faced a "fundamental culture of mistrust" by its workers.

"There is a disconnect between GPB management's stated commitment to safety
and the perception of that commitment," the experts said in their 2001
report.

The report said that "unacceptable" maintenance backlogs ballooned as BP
tried to sustain North Slope profits despite declining production. The
consultants concluded that the company had neglected to clean and check
valves, shutdown mechanisms and detection devices essential to preventing
explosions.

In May 2002 -- less than seven months later -- Alaska state regulators
warned BP that it had failed to maintain its pipelines. Alaska struggled for
two years to make the firm comply with state laws and clear the pipeline of
sedimentation that could interfere with leak detection.

Soon after, BP hired another team of outside investigators to look into
worker complaints on the North Slope. The resulting 2004 study by the law
firm Vinson & Elkins warned that pipeline corrosion endangered operations.

It also offered a harsh assessment of BP's management of employee concerns.
According to the report, workers accused the company of allowing "pencil
whipping," or falsifying inspection data. The report quoted an employee who
said employees felt forced to skip key diagnostics, including pressure
testing, pipeline cleaning and corrosion checks.

The report said that Richard Woollam, the manager in charge of corrosion
safety in Alaska at the time, had "an aggressive management style" and
subverted inspectors' tendency to report problems. "Pressure on contractor
management to hit performance metrics (e.g. fewer OSHA recordables) creates
an environment where fear of retaliation and intimidation did occur," it
said. Woollam was soon transferred.
*More accidents*

Two years later, in March 2006, disaster struck. More than 200,000 gallons
of oil spilled from a corroded hole in the Prudhoe Bay pipeline. Inspectors
found that several miles of the steel pipe had corroded to dangerously thin
levels.

When Congress held hearings later that year, Woollam pleaded the Fifth
Amendment. He now works in BP's Houston headquarters. Reached at his Texas
home last week, he referred questions to the BP media office, which declined
to comment.

In August 2006, just five months after the Prudhoe Bay spill, a pipeline
safety technician for a BP contractor in Alaska discovered a two-inch
snaggletoothed crack in the steel skin of an oil transit line. Nearby,
contractors ground down metal welds, sending sparks across the work site.
Technician Stuart Sneed feared that the sparks could ignite stray gases, or
that the work could worsen the crack, so he ordered the contractors to stop
working.

"Any inspector knows a crack in a service pipe is to be considered dangerous
and treated with serious attention," he told ProPublica.

Sneed said he thought the Prudhoe Bay disaster had made BP management more
amenable to listening to worker concerns about safety. The company had
replaced its chief executive for North America with Robert Malone, who
focused on reforming BP's culture in Alaska.

But instead of receiving compliments for his prudence, Sneed -- who had also
complained that week that pipeline inspectors were faking their reports --
was scolded by his supervisor, who hadn't inspected the crack but believed
it was superficial, according to a report from BP's internal employer
arbitrators.

The next day, the report said, that supervisor criticized Sneed at a staff
briefing, then solicited complaints from colleagues that could be used to
justify Sneed's firing. Two weeks later, Sneed was gone.

During the investigation, BP inspectors substantiated Sneed's concerns about
the cracked pipe. The arbiter also confirmed his account of what happened
when he reported the problem. His dispute with the company is unresolved.

The following year saw another BP shakeup. The company had replaced its
chief executive of Alaskan operations with Doug Suttles -- who is now in
charge of offshore operations and cleanup of the gulf disaster. In May 2007,
it also named Hayward its new global chief executive.

But worker harassment claims continued in Alaska and elsewhere, and more
problems with the Alaska pipeline systems emerged.

In September 2008, a section of a gas line on the slope blew apart. A
28-foot-long section of steel -- the length of three pickup trucks -- flew
nearly 1,000 feet through the air before landing on the Alaskan tundra.
Sneed had raised concerns about the integrity of segments of the gas line
system.

Three more accidents rocked the same system of pipelines and gas compressor
stations in 2009, including a near-catastrophic explosion. According to a
letter that members of Congress sent to BP executives, obtained by
ProPublica, the near-miss resulted from malfunctioning safety and backup
equipment.

Odone said that BP is continuing to roll out a company-wide operating
management system to help track and implement maintenance. He said the
company reduced corrosion and erosion-related leaks in Alaska by 42 percent
between 2006 and 2009.
*Noncompliance*

As BP battled through the decade to avoid accidents in Alaska, another
facility operating under a different business unit, BP West Coast Products,
had similar problems.

For years, the subsidiary that refined and stored crude oil was allowed to
inspect its own facilities for compliance with emission laws under the South
Coast Air Quality Management District, the agency that regulates air quality
in Los Angeles.

In 2002, inspectors with the management district thought BP's inspection
results looked too good to be true. Between 1999 and 2002, BP's Carson
Refinery had nearly perfect compliance, reporting no tank problems and
making virtually no repairs. The district suspected that BP was falsifying
its inspection reports and fabricating its compliance.

According to Joseph Panasiti, a lawyer for the management district, the
agency had to get a search warrant to conduct inspections required by state
law. When the regulators finally got in, they found equipment in a
disturbing state of disrepair. According to a lawsuit the management
district later filed against BP, inspectors discovered that some tanker
seals had extensive tears, tank roofs had pervasive leaks and there were
enough major defects to lead to thousands of violations.

"They had been sending us reports that showed 99 percent compliance, and we
found about 80 percent noncompliance," Panasiti said.

The district sued BP for $319 million. After lengthy litigation, the firm
agreed to pay more than $100 million without admitting guilt. Colin Reid,
the plant's operations manager, was later promoted to a vice president
position in the United
Kingdom<http://www.washingtonpost.com/wp-srv/world/countries/greatbritain.html?nav=el>.
He recently left BP and did not respond to requests for comment.

Allegations that BP or its contractors falsified safety and inspection
reports are a recurring theme. Similar allegations were attributed to
workers in 2001 and 2004 internal reports on Alaska, but the internal
auditors did not confirm that fraud had occurred.

Among the safety equipment that BP was criticized for not having in place in
its Alaska facilities, according to its own 2001 operational integrity
report, were gas and fire detection sensors and emergency shutoff valves.

Now investigators are learning that similar sensors and their shutoff
systems were not operating in the engine room of the Deepwater Horizon rig
that exploded in the gulf.

In testimony before a Deepwater Horizon joint investigation panel in New
Orleans last month, Deepwater mechanic Douglas Brown said that the backstop
mechanism that should have prevented the engines from running wild
apparently failed -- and so did the air-intake valves that were supposed to
close if gas entered the engine room.

He said the engine room wasn't equipped with a gas alarm system that could
have shut off the power.

Minutes later, the rig exploded in a ball of fire, killing 11 workers before
sinking to the seafloor, where it left a gaping well pipe that continues to
gush oil and gas.

*ProPublica director of research Lisa Schwartz and researcher Sheelagh
McNeill contributed to this report. For additional information and
documents, see www.propublica.org/bpdocs<http://www.propublica.org/feature/years-of-internal-bp-probes-warned-that-neglect-could-lead-to-accidents>
.*

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-- 
******************************************
Michael Balter
Contributing Correspondent, Science
Adjunct Professor of Journalism,
New York University

Email:  [log in to unmask]
Web:    michaelbalter.com
NYU:    journalism.nyu.edu/faculty/balter.html
******************************************

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