Seattle firm's reports on BP subpoenaed in Alaska case

The reports of a Seattle-based engineering firm have been subpoenaed as part of a federal grand-jury investigation of BP's maintenance practices in Alaska's troubled Prudhoe Bay oil field.

Federal criminal investigators are trying to determine whether BP may have had any advance warning of corrosion problems in some North Slope pipes known as transit lines. In March, more than 200,000 gallons of oil spilled from one pipe. Earlier this month, worn-out pipes triggered additional spills and a partial shutdown of the oil fields.

The grand jury has received both draft and final reports that Coffman Engineers produced under a contract with the state of Alaska.

The final annual reports, covering the years 2000-04, appeared to provide little warning of this year's problems.

They generally offer a favorable view of BP's efforts to fight corrosion as meeting — or exceeding — industry standards. They are in sharp contrast with the testimony from some employee whistle-blowers who claim that BP — bent on cost-cutting — balked at conducting an all-out attack on corrosion.

All the reports were prepared in consultation with the state of Alaska and BP.

Investigators are trying to find out whether some critical findings in the draft reports might have been dropped from any of the final reports, according to a federal official familiar with the investigation. That official spoke on condition of anonymity because the case is under investigation.

Coffman officials say they have never allowed BP or Alaska officials to censor their reports, and they have provided final and early drafts to the federal grand jury in Anchorage.

Under the federal Clean Water Act, BP and some of its employees could face criminal prosecution if it is found that a failure to adequately maintain the pipeline caused a spill.

Another black eye

The investigation involves the Environmental Protection Agency, the FBI and the U.S. Attorney's Office in Anchorage. It comes at a sensitive time for BP, as the company seeks to convince U.S. politicians and consumers that record profits are not coming at the expense of safety and maintenance investments in the aging Prudhoe Bay field, trans-Alaska pipeline and other major U.S. assets that include a refinery at Cherry Point in Whatcom County.

BP already has one legal black eye in Alaska, pleading guilty in 1999 to a felony count of failure to report illegal hazardous-waste dumping in the North Slope. And in Texas, BP is now the subject of a separate federal criminal investigation into a 2005 refinery explosion in Texas that killed 15 workers and injured more than 100.

BP officials acknowledge that the Prudhoe anti-corrosion program was inadequate. But they say they always have tried to deal with corrosion problems and have been surprised by the leaks and severe wear discovered this year in pipes believed to be at low risk of failure. During the last six years they say they had made major increases in anti-corrosion spending.

"We can't eliminate the risk of corrosion but we do manage it in a most professional manner," said Steve Marshall, president of BP Exploration (Alaska), in testimony last week to an Alaska legislative committee.

A Coffman report released last September did offer a few hints of possible trouble, noting that "isolated locations of accelerated corrosion exist" that could seriously damage pipe. Overall, the report praised BP for an "aggressive" program that reduced corrosion "in the majority of the pipeline system to a negligible level," according to a copy of the final report obtained by The Seattle Times under a public-records request.

Dan Stears, an Anchorage-based Coffman engineer who heads the company's BP oversight, confirmed that the reports have been subpoenaed by an Anchorage-based federal grand jury.

Investigators have singled out a report covering the year 2000 for special scrutiny after being told it was significantly changed to make it less critical, the federal official said.

The changes were "more than tweaking," the official said.

Stears said he "never felt pressure to change a report."

Instead, Stears describes an early dialogue with BP officials over what data should be included in the monitoring program to gain an accurate overview of the situation.

BP, the state and Coffman finally settled on eight areas, including using metal "coupons" stuck into the pipe to measure wear from oil or other substances. Coffman officials cautioned that the coupons might not accurately reflect wear on the outer edges, Stears said. That prompted BP to increase external inspections of the pipes, he said.

In all of the Coffman reports, the focus was on high-risk pipes.

Without treatment, some of these pipes might fail within a few years' time, according to Stears. Yet by 2005, the corrosion in these pipes appeared "to be as low as practically could be achieved," Coffman concluded.

But a different set of pipes was involved in the March spill and in the corrosion discovered in August that triggered the partial shutdown. These pipes carry oil — and sometimes small amounts of water — from the gathering centers to a pump station to begin the journey south along the trans-Alaska pipeline.

Since these pipelines carried a less corrosive mix, they were deemed to be at less risk, according to BP officials.

Watchdogs critical

Over the years, employee whistle-blowers have offered harsh assessments of BP North Slope maintenance.

"Our emergency-response team has been gutted by BP and is severely understaffed," said Robert Brian, in a 2002 statement submitted to two U.S. senators. "The facilities are in disrepair at Prudhoe Bay."

Many whistle-blowers have turned to Charles Hamel, a former oil broker who now watchdogs Alaska's oil industry. Hamel forwarded many of their concerns to BP management and also helped launch a Web site, anwrnews.com, to air their concerns.

Hamel, of Alexandria, Va., said the whistle-blowers included about a dozen corrosion specialists whose overall concerns were relayed to BP. Two years ago, a BP whistle-blower expressed concerns about build-ups of peanut-brittlelike sludge and poor conditions in the underground-pipe segment that spilled more than 200,000 gallons of oil in March.

Hamel said he did not relay those specific concerns to BP for fear that it would jeopardize his source.

BP employees also have provided critical accounts of the company's practices to investigators, said the federal official familiar with the investigation.

Employees have told investigators that BP's maintenance program was undermanned and underfunded, the official said.

BP's Marshall, at the Friday hearing in Alaska, said that the company has responded to employee concerns and made a concerted effort to improve safety and maintenance.

Hal Bernton: 206-464-2581 or hbernton@seattletimes.com

Steve Miletich: 206-464-3302 or smiletich@seattletimes.com

Times staff researcher David Turim contributed to this report.