Years of Internal BP Probes Warned That Neglect Could Lead to Accidents

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Pro Publica

Years of Internal BP Probes Warned That Neglect Could Lead to Accidents

by
Abrahm Lustgarten and Ryan Knutson

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

A series of internal investigations over the past decade warned senior
BP managers that the 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 unit
that undermined the company's publicly proclaimed commitment to safe
operations. They described instances in which management flouted safety
by neglecting aging equipment, pressured or harassed employees not to
report problems, and cut short or delayed inspections in order to
reduce production costs. Executives were not held accountable for the
failures, and some were promoted despite them.

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 to California and Texas.

Tony Hayward, BP's CEO, has committed himself to reform since taking
the top job in 2007. Top BP officials would not comment for this story,
but spokesman Tony Odone said that in March an independent expert
reported that BP has made "significant progress" toward meeting goals
set in 2007 in response to a deadly Texas refinery explosion. Odone
said the notion that BP has ongoing problems addressing worker concerns
is "essentially groundless."

Because of its string of accidents before the recent blowout in the Gulf, BP already faced a possible ban on its federal contracting and on new U.S. drilling leases [3] [3],
several senior former Environmental Protection Agency debarment
officials told ProPublica. That inquiry has taken on new significance
in light of the Gulf accident. 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 BP'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 BP who believes the
company has not yet done enough to eradicate its shortcomings.

A 2001 report [4] [4]
noted that BP had neglected key equipment needed for 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 intimidating workers who raised
safety or environmental concerns. It said managers were shaving
maintenance costs with the practice of "run to failure," under which
aging equipment was used as long as possible. Accidents resulted,
including the 200,000-gallon Prudhoe Bay pipeline spill in 2006, the
largest ever spill on Alaska's North Slope.

During the same period, similar problems surfaced at BP facilities in California and Texas.

In 2002, California officials discovered that BP 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 were forced to get a
warrant before BP allowed them to check the tanks. The company
eventually settled a civil lawsuit brought by the South Coast Air
Quality Management District for more than $100 million.

In 2005, an emergency warning system failed before a Texas City refinery exploded in a ball of fire. BP's investigation of that deadly accident [5] [5]
-- conducted by a committee of independent experts -- found that
"significant process safety issues exist at all five U.S. refineries,
not just Texas City." It said "instances of a lack of operating
discipline, toleration of serious deviations from safe operating
practices, and apparent complacency toward serious process safety risk
existed at each refinery." BP spokesman Odone said that after the
accident the company adopted a six-point plan to update its safety
systems worldwide. But last year the Occupational Safety and Health
Administration fined BP $87 million for failing to make safety upgrades
at that same Texas plant.

It is difficult to compare safety records among companies in industries
like oil exploration. Some companies drill in harsher environments. And
bad luck can play a role. But independent experts say the pervasiveness
of BP'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 debarment attorney who led the investigations into BP. "At
what point are we going to say we are not going to do business with you
any more, bye? None of the other supermajors have an environmental
criminal record like they do."

***

Since the late 1960s, BP has pulled oil from
underneath Alaska, usually without problems. But when the company
pleaded guilty to a felony conviction in 1999 for illegal dumping at an
offshore drilling field there it drew fresh scrutiny to its operations
and set off a cascading 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
cancellation of contracts with the federal government -- BP agreed to a
five-year probationary plan with the EPA. The company would reorganize
its environmental management, establish protections for employees who
speak out about safety issues, and reform its approach to risk and
regulatory compliance. The company pledged to improve its conduct and
reform its safety and maintenance programs.

Less than a year later, employees complained to an independent
arbitrator that BP was letting equipment and critical safety systems
languish at its Greater Prudhoe Bay drilling field. BP, in the spirit
of reform, hired a panel of independent experts to examine the
allegations.

The panel identified systemic problems in maintenance and inspection
programs -- 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, in part because senior management lacked a
structure of accountability.

"There is a disconnect between GPB (Great Prudhoe Bay) management's
stated commitment to safety and the perception of that commitment," the
experts said in their 2001 operational integrity report [4] [4].
"Correcting these underlying causes is essential ... for ensuring long
term operational efficiency and mechanical integrity. Without a
concerted effort to address these basic issues, any other action will
provide only temporary relief."

According to the report, "unacceptable" maintenance backlogs ballooned
as BP tried to sustain profits in the aging North Slope even though
production was declining. The consultants concluded that BP had
neglected to clean and check pressure valves, emergency shutoff valves,
automatic emergency shutdown mechanisms and gas and fire safety
detection devices essential to preventing a major explosion. It warned
management of the need to update those systems, which "have a potential
immediate safety impact or that pose an environmental threat."

It also warned that emergency shutdown systems would need to be
operated manually, that there may not be enough staff to do so, and
said that even if closed, the isolation valves were known to leak.

"Workers believe internal leak-through of isolation valves is a
significant problem and under certain circumstances may pose a
potential hazard to workers and equipment," the report stated.

In May 2002 -- less than seven months later -- Alaska state regulators
underscored the panel's critical findings in a tersely worded order
warning BP that it had failed to maintain its pipelines. Alaska
struggled for two years to make BP comply with state laws and clear the
pipeline of sedimentation that could interfere with leak detection
systems.

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

"Due to corrosive conditions present at the Greater Prudhoe Bay
oilfield and the age of the field, corrosion control is and has been a
major issue for BPXA," the study said.

It also offered a harsh assessment of BP's management of health,
safety and environment concerns raised by employees. According to the
report, workers accused BP of allowing "pencil whipping," or falsifying
inspection data. The report quoted an employee who said BP workers felt
pressure to skip key diagnostics, including pressure testing, cleaning
of pipelines and checking for corrosion, in order to cut costs.

"To reduce staff workload it was suggested by BPXA management not to
rebuild the pulling equipment as often ... and possibly not pressure
test the equipment," BP employee Marc Kovac wrote in a safety complaint
filed with the company. "This obviously would increase the potential
for equipment failure resulting in equipment damage, environmental
spills and injury to workers."

The report said that the manager in charge of corrosion safety in
Alaska at the time, Richard Woollam, had "an aggressive management
style" and subverted inspectors' tendency to report problems on the
pipeline.

"Pressure on contractor management to hit performance metrics (e.g.
fewer OSHA recordables) creates an environment where fear of
retaliation and intimidation did occur."

Woollam was soon transferred, but the damage was done.

Two years later, in March 2006, disaster struck. More than 200,000
gallons of oil spilled out of a corroded hole in the Prudhoe Bay
pipeline into the snow, the largest spill ever on the North Slope.
Inspectors found that the steel pipe -- the inside of which hadn't been
inspected in years -- had been corroded to dangerously thin levels
along nearly 12 miles of pipeline. It was exactly the kind of situation
BP's auditors and Alaska officials had feared.

When Congress held hearings into the cause of the spill later that
year, Woollam pleaded the Fifth Amendment. He now works in BP's Houston
headquarters. Reached at his home in Texas this week, Woollam referred
questions to the BP press office, which declined to comment on the
matter.

***

In
August 2006, just five months after the spill at Prudhoe Bay, a
pipeline safety technician for a BP contractor in Alaska discovered a
two-inch snaggle-toothed crack in the steel skin of an oil transit
line. Nearby, contractors were grinding down metal welds, sending a fan
of sparks shooting across the work site. The technician, Stuart Sneed,
feared the sparks could ignite stray gases, or the work could make the
crack worse, 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," Sneed told ProPublica.
"The crack could have created a hellacious leaker with people grinding
on it."

Sneed believed that the Prudhoe Bay disaster had made BP management
more amenable to listening to workers concerns about potential safety
problems. The company had replaced its chief executive for North
America with Robert Malone and had ordered him to make fundamental
changes. Malone quickly focused on reforming the company'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 for stopping the work.
According to a report from BP's internal employer arbitrators, Sneed's
supervisor, who hadn't inspected the crack himself, said he believed it
was superficial.

The next day, according to multiple witness accounts and the report,
that supervisor singled out Sneed and harassed him at a morning staff
briefing. Within a couple of hours, the supervisor sent emails to
colleagues soliciting complaints or safety concerns that would justify
Sneed's firing. Two weeks later, after a trumped up safety infraction,
he was gone.

During the investigation BP inspectors substantiated Sneed's concerns
about the cracked pipe. The arbiter also investigated Sneed's account
of what happened when he reported the problem. Not only did the report
confirm his account, but it determined that he was among the best at
his job.

The investigators interviewed dozens of workers and according to most
of them Sneed "was likely to be the most careful technician on the
Slope with respect to safety and quality of his inspections. If there
was corrosion in existence... he would find it," said the report, which
was authored by Washington, D.C., attorney Billie Garde and
environmental investigator Paul Flaherty and delivered to BP executives
in late 2006.

So why would BP want to get rid of one of its most effective
inspectors? The report echoed BP's internal investigations from 2001
and 2004, finding, once again, that BP pressured its contractors and
employees in order to save money.

"Many of the people interviewed indicate that they felt pressured for
production ahead of safety and quality," the report stated.

Contractors received incentives to list large numbers of completed
inspections, the report found, something Sneed said routinely led
workers to falsify their reports. Contractors also received a 25
percent bonus tied to BP's production numbers. With fewer delays, more
oil would be pumped, and more cash would flow to companies executing
the work under BP supervision.

The message to workers was clear.

"They say it's your duty to come forward," said Sneed of BP's corporate
policies and public statements, "but then when you do come forward,
they screw you. They'll destroy your life."

"No one up there is ever going to say anything if there is something
they see is unsafe," he added. "They are not going to say a word."

The following year saw another shakeup at BP. The company had
already replaced its chief executive of Alaskan operations with Doug
Suttles -- the man now in charge of offshore operations and cleanup of
the disaster in the Gulf. In May 2007 it also named a new global CEO,
Tony Hayward, a 25-year BP veteran.

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

In September 2008, a section of a high pressure 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 high-pressure gas line system before he left the
company. If the release had caught a spark the explosion could have
been catastrophic, said Robert Bea, a University of California Berkeley
engineering professor who has worked for BP on the North Slope.

Three more accidents rocked the same system of pipelines and gas
compressor stations in 2009, including a near explosion that could have
destroyed the entire facility. According to a letter that members of Congress sent to BP executives [6] [6], obtained by ProPublica, the near miss was the result [7] [7] of malfunctioning safety and backup equipment.

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

***

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

For years the BP 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. The thinking was that companies
had the technical knowledge and that self-inspection was cheaper and
more efficient.

But in 2002, eight years after the program began, 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 began to suspect that BP was falsifying its
inspection reports and fabricating its compliance with the law.

The management district sent its own inspectors to investigate, but
when they tried to enter BP's plant, the company turned them away.
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 did finally get in, they found equipment in a
disturbing state of disrepair. According to a lawsuit the management
district later filed against the company, inspectors discovered that
some tanker seals had tears that were nearly two feet long. Tank roofs
had gaps and 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 told ProPublica.
"It was clear that no matter what was said, production was put ahead of
any kind of environmental compliance."

Panasiti sued BP for $319 million, alleging, among other things,
that emissions from the refinery forced nearby schools to be evacuated
on two separate occasions. After 24 months of litigation, BP settled
out of court, agreeing to pay more than $100 million without admitting
guilt. Colin Reid, the plant's operations manager during the
prosecution, was later promoted to a vice president position at a BP
office in the United Kingdom. Reid recently left BP; he 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 BP's 2001 and 2004 internal reports on Alaska,
but the internal auditors stopped short of confirming that fraud had
occurred. The 2004 Vinson & Elkins report, titled "Report for BPXA
Concerning Allegations of Workplace Harassment From Raising HSE Issues
and Corrosion Data Falsification," says investigators did not
thoroughly examine those allegations and couldn't conclude whether
fraud had occurred. But the report extensively quoted workers who
described how it was done.

As recently as 2006 a North Slope worker told a BP investigator that
he suspected tests had been faked after an inspection team produced
2,500 completed reports from a weekend's work in remote territory. In
2007 another North Slope safety engineer brought in to examine a
pipeline system quickly identified a pattern of problems in an area
that had received clear inspection reports for the previous five years.

***

In
August 2008, Kenneth Abbott accepted a job with a BP contractor as a
project control leader on the Atlantis, a monstrous deepwater drilling
rig in the Gulf of Mexico that is significantly larger than the
Deepwater Horizon rig that sank in April. The Atlantis is capable of
producing more than eight million gallons of oil a day from the ocean
floor.

Abbott supervised a staff of six charged with doing internal audits and
making sure the rig machinery was built to specifications and had the
documents and instructions necessary to operate safely. It was an
important job on one of the world's most advanced drilling platforms.

Yet it quickly turned sour. In a debriefing with the person who last
held the post, Abbott was told that BP did not have final design
drawings ready to deliver to the crews that would operate the Atlantis
in the Gulf, Abbott said in an interview with ProPublica [8] [8].

Final design drawings, called "as-built" drawings, are considered an
essential safety component. They prove that a piece of equipment -- say
a shutoff valve or an engine winch -- was built the way it was supposed
to be. Those drawings are thus the final checks to make sure the
equipment operates properly. They also serve as instruction manuals for
emergencies. If there is a fire on deck or a blowout, for example,
operators under extreme stress and danger can use the design drawings
to find the hidden kill lever that can shut an engine down before it
explodes.

Abbott told ProPublica that as-built documents had been issued for only
274 of more than 7,100 pieces of equipment, the equivalent of
constructing a house without having an architect or engineer sign off
on the blueprint.

In May, Abbott filed a lawsuit against the Minerals and Management
Service in federal court in Texas aiming to force the regulatory agency
to stop Atlantis operations until BP could prove the documents are in
place. He is not seeking monetary damages or compensation.

In the court filings, he said that some of the most critical
spill-protection infrastructure, including the wellhead documents,
hadn't been approved. None of the sub-sea risers -- the pipelines and
hoses that serve as a conduit for moving materials from the bottom of
the ocean to the facility -- had been "issued for design." And the
manifolds that combine multiple pipeline flows into a single line at
the sea floor hadn't been reviewed for final use.

Abbott -- an engineer with 30 years of experience completing design
documents for companies like Shell and General Electric -- said the
completion of "as-built" documents is standard for the industry.
Machinery is designed, approved for manufacturing, checked to make sure
it was built properly, and then approved for final use. If BP didn't
provide the documentation to its workers in the field, it would be a
stark exception.

Yet to Abbott's surprise BP's engineers resisted completing the process.

"I just hit a lot of resistance form the lead engineers," Abbott told
ProPublica. "They got really angry with me. They wanted to shortcut the
system and not do the reviews, because they cut short the man hours."

Abbott estimates BP saved $2 million to $3 million by streamlining the process.

"There seemed to be a big emphasis to push the contractors to get
things done and that was always at the forefront of the operation,"
Abbott said. "I felt there had to be balance. You had to have safety
because peoples' life depended on it. My management didn't see it that
way."

Abbot's complaint wasn't the first time the company had been warned
about not maintaining as-built drawings. According to BP's internal
2001 operational integrity report conducted in Alaska, as-built
documentation wasn't being maintained at the company's Prudhoe Bay
operations either.

It was among the issues BP executives were encouraged to fix after the audit of their operations there nearly a decade ago.

BP declined to discuss Abbott's allegations, telling ProPublica it does
not comment on pending legal matters. In a previous statement made to
federal investigators, BP said the drawings were updated and in place
before the Atlantis began operating. The Minerals and Management
Service is reportedly investigating Abbott's claims and Congress has
also launched an inquiry that is still in progress.

A BP ombudsman letter written by Billie Garde and obtained by
ProPublica confirmed Abbott's allegation that the company had violated
its own safety and management protocol by not completing as-built
documentation. The ombudsman's office has not yet investigated Abbott's
claims about the specific pieces of equipment that lacked documentation
because Abbott didn't make that information available until he filed
the lawsuit last month.

Shortly after he raised his complaints to BP management, Abbott lost his contract to work with BP.

***

Among
the most important pieces of safety equipment that BP was criticized
for not having in place in Alaska, according to its own 2001
operational integrity report, were gas and fire detection sensors and
the emergency shutoff valves that they are supposed to trigger.

When gas leaks from a pipeline break or a blowout near a running
engine, it's a lot like stomping on the accelerator of a car: The
engine will suck up the fuel vapors and scream out of control. Gas
sensors are critical to preventing an explosion, because they can shut
down a rig engine before that happens.

Now investigators are learning that similar sensors -- and the
shutoff systems that would have been connected to them -- were not
operating in the engine room of the Deepwater Horizon rig that exploded
in the Gulf of Mexico.

In sworn 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 enters the engine room. The influx of gas
from the well gave the engines "a more volatile form of burning
mixture," he said, and caused them to rev out of control. Another
system was supposed to kick in and shut the engines down, but that
system also failed. He said the engine room wasn't equipped with a gas
alarm system that could have shut off the power.

Minutes later, the Deepwater Horizon 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 into the Gulf.

The investigation into that massive spill is still under way, but
these revelations -- plus evidence that BP skipped key parts of the
drilling process intended to prevent a blowout to save roughly $5
million -- echo the problems that BP's auditors, attorneys and
investigators have identified in the past 11 years.

Over the next few months, the Department of Justice will decide whether
what happened in the Gulf violates criminal or civil laws intended to
protect the environment. Separately, EPA investigators are considering
whether to end BP's ability to do business with the federal government,
a sanction that could cost it billions in revenue. The investigators
say a pivotal question in that investigation will be whether BP's
record over the past decade amounts to a corporate culture of
"non-compliance."


ProPublica Director of Research Lisa Schwartz and researcher Sheelagh McNeill contributed to this report.

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