WASHINGTON – Congressman Bart Stupak (D-MI) delivered the following statement at today’s Energy and Commerce Committee Subcommittee on Oversight and Investigations hearing on “BP’s Pipeline Spills at Prudhoe Bay: What Went Wrong?”  Stupak is the Ranking Democrat on the Oversight and Investigations Subcommittee.    

“Thank you Mr.  Chairman, and thank you for having this hearing. 

“On March 2nd of this year, BP discovered that oil was leaking from a major transmission line largely responsible for connecting its west oilfield (WOA) with the Trans-Alaskan Pipeline (TAPS).  That spill, included almost 270,000 gallons of crude and became the largest spill in North Slope history.  Shortly thereafter, a letter was sent by ranking Member Dingell seeking answers to the causes of the WOA line’s failure and BP’s efforts to deal with corrosion.  Over the next several months, what started as a single spill ended in the shutdown of the entire Prudhoe Bay field, and for a time, the reduction of 8% of the U.S. domestically-produced oil supply.

“Mr.  Chairman, this hearing is about far more than oil spills or pipeline corrosion.  It is, about trying to understand how a company with the global standing of BP allowed its north slope operations to deteriorate to where the company professes little understanding of the true condition of major operational assets.  It is also about why, when the nation is facing threats to its fuel supply abroad, we don’t have better redundancy in a field as strategic as Prudhoe Bay.  Given the record profits of this industry, this aspect of BP’s recent north-slope failures is particularly egregious.

“Mr.  Chairman, this Committee’s investigation into the failures of BP’s Alaska operations began shortly after the Department of Transportation’s (DOT) issuance of their March 15th Corrective Action Order.  Among many requirements, that order mandated that BP “smart pig” a number of key lines, including both the Western Operating Area (WOA) line and the Eastern Operating Area (EOA) line.

“In April of this year, Committee staff traveled to Alaska to seek answers to the causes of the WOA line’s failure and determine the implications of the DOT order.  In that process, it was learned that huge amounts of solids were believed to exist in key lines that BP was now ordered to pig.  These solids -- it was believed -- could create a number of potential operational challenges.  In particular, BP might not be able to run smart pigs through these lines because the solids were potentially so excessive, the cleaning pigs risked becoming stuck in the lines.  If that occurred, this would essentially block the transit line’s ability to deliver oil to the Trans Alaskan Pipeline and perhaps shut down large parts of the oilfield.  It was also learned that the dislodging of such solids could later have profound consequences on TAPS itself, including the introduction of corrosion-causing materials into that system and the potential for clogging Pump-Station One’s entry strainers.

“These new issues prompted ranking Member Dingell to send an April 25th letter to the Department of Transportation’s Secretary, which posed a number of key questions about not only the ability of BP to meet DOT’s March 15th order, but also about the overall condition of BP’s major transit lines.  

“The DOT’s response to that letter raised several troubling issues.   Most notably, that BP appeared to lack a fundamental understanding of the condition of both its WOA or EOA lines.  Moreover, it became clear that despite what appeared to be knowledgeable buildup of scale and solids over the years, the company inexplicably failed to pig these lines frequently (if at all).  In its response, DOT also noted that based on current management information, that the infrequency by BP to pig these lines “[did] not represent sound management practices for internal corrosion control.”  [I would ask that this and all of Mr.  Dingell’s letters on this subject be placed into the record.]

“Mr.  Chairman, I have a number of key questions for BP that I hope we will find answers to at this hearing and I will raise several of them here:

“First, why is it that BP relied so heavily on ultrasonic thickness (UT) testing and the use of corrosion coupons when BP knew such techniques could not deliver data on the under ground portions of the WOA line (such as the caribou crossings)?  The most recent run on the WOA line was last done in 1998 and found that corrosion had increased, particularly in low-lying areas similar to the area where the March 2nd spill occurred.  Moreover, why did BP not install a more aggressive plan to seek data on these sections given that the WOA line had a low-flow rate and was thus subject to water and solids separation?  It is not Monday-morning quarter backing to suggest that BP should have known it needed a plan to physically collect detailed data on these locations, even if it included removing soil to access the pipe or more aggressive pigging.

“Second, why was the EAO line --  the line that failed in August and prompted the entire field’s shutdown --  not smart-pigged at all by BP until DOT ordered it to do so?  The EOA line is a  primary transmission line.  It is a key asset in BP’s field.  Yet this line was left for almost fifteen years with not so much as a maintenance pig being run through its length.  Indeed, the EOA line has both a pig launcher and a pig receiver, and so was clearly designed for pigging.  What explains this failure?  So far we do not have a satisfactory explanation from BP.

“Third, why is it that there were virtually no redundancies in either the eastern field or the western field which would have allowed BP to continue operating after the most recent corrosion problems were discovered?  As we know today, BP is now seeking to construct a number of bypass solutions to re-route oil around the failed EOA line. 

“Fourth, why are we suddenly now deciding to replace these lines with new pipe knowing that for years such pipes were aging and that their original diameter was not designed for the low flow rates both were experiencing before they were removed from service?  These pipes were designed for 800 psi flow rate.  Today they are at only 80 psi flow rate.   Indeed, some have accused BP of ‘running these lines to failure,’ or  ‘riding the throughput curve.’  Nonetheless, at a time of record profits, I find it remarkable that the fist major plans to replace a mere 20 miles of  pipe of such strategic importance as these two lines, comes post failure. 

“Fifth, when did BP first learn that the solids in these pipes would make immediate pigging extremely difficult?  In short, why did it become such an engineering ordeal to merely determine  if pigs could be run?   If BP knew its lines were increasingly collecting scale, sludge, or solids -- all of which are known to contribute to corrosion -- why wouldn’t it aggressively attempt to remove such material regularly?  Alyeska -- the operator of the trans-Alaskan pipeline sends a scraper pig down its entire 800-mile length every 14 days.  Yet, the EAO line was not pigged a single time in 14 years.  Why?

“Sixth, more troubling, BP apparently claims it did not know how bad its lines were?  If BP only became aware of the scale and sediment after the DOT order, then why did it know so little, so late?  Shouldn’t it have known about the sediment build-up in the WOA line given the kinds of crude they were pulling from the field?  If BP truly had a world-class pipeline integrity system, shouldn’t it have known about the scale build up in the EOA line given its earlier history of huge cleaning problems when it was last pigged in 1992? 

“Seventh, we are now learning that there were a number of troubling personnel problems in BP’s corrosion management program on the north slope over the past several years.  Though not fully understood, these problems apparently created a “chilling” atmosphere in workers’ ability to report health and safety issues, and perhaps had at least some impact on the effectiveness of BP’s corrosion-control efforts.  For example, the Committee is in receipt of an October 20, 2004 report by the Vincent and Elkins law firm that found that the very program that BP relied upon to detect corrosion in both the WOA and EOA lines -- the Corrosion Inspection and Chemicals Group (CIC) -- was fraught with workplace intimidation and harassment from senior management.

“Eighth, rather than rely on smart pigs to find corrosion in its lines, BP relied upon what are called corrosion coupons.  Coupons are pieces of metal that are inserted into the pipe at various locations and are later removed and analyzed  to determine how much corrosion is taking place inside the pipe.  Unlike smart pigging which gives you a view of the entire line, coupons only tell you how corrosion is affecting the general area where the coupon is located.  Nonetheless, according to the report on worker intimidation and harassment I just mentioned, the number of coupons used in BP’s operations was reduced by 25% for reasons that remain unclear.  At a time when BP’s pipes were aging and it was already relying on a limited program to detect corrosion, why would the company allow for such a significant reduction?

“Finally, what budget pressures were placed on the corrosion monitoring group at BP and did such pressures ultimately lead to serious deficiencies in BP’s ability to truly assess corrosion risks?  For example, an April 2005 internal audit of BP’s corrosion management system found the following:  ‘Currently [the program’s] budget is set up-front in line with flat lifting cost strategy, with corrosion management activities then developed around this budget allocation.  This strategy to maintain flat lifting costs is driving behaviours counterproductive to ensuring integrity and the delivery of an effective management system.  A more effective and efficient process would be to derive the set of activities required to deliver a robust corrosion management system over the longer term, and thereafter set the budget based on these activities.’

“Mr. Chairman, this audit suggests to me, that some in BP had grown concerned that cost cutting was having a troubling affect on the company’s ability to design and maintain a sound corrosion control program.

“Mr.  Chairman, I could continue on here, but I will save other key findings for the question period.  Nonetheless, I would like to wind down my statement by welcoming our witnesses.  

“In particular, I would like to welcome Mr.  Bob Malone, who is now the newly-appointed President of BP America.   I would like to point out -- Mr.  Malone -- that you have an excellent reputation with this Committee.  During the early 1990s when it was Alyeska --  the operator of the Trans-Alaskan Pipeline -- that was in so much trouble, it was in part your leadership as president that helped turn the company around.  Over the years you have voluntarily worked closely with this Committee to keep us apprised of developments both while at Alyeska and later, while at BP.  I thank you for your assistance in that regard and your interaction with this Committee was helpful and appreciated. 

“Nonetheless, in your current position, I truly believe that the situation on the North Slope demands your full attention, as it is frankly an embarrassment to your company.  Like with the mess you found at Alyeska, this Committee is expecting that you will fully investigate and evaluate what broke down on the north slope and then pursue major fixes, whether financial or personnel.  This nation cannot allow the kinds of fiascos we have witnessed over the past several months to continue with the nation’s energy supply.  This Committee is expecting answers and results and ultimately getting this field back up running in a professional and reliable manner.  The public will expect nothing less, and neither should this Committee. 

“Mr.  Chairman, thank you again for holding this hearing, and with that, I yield back.

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