BP was warned of intimidation

By RICHARD MAUER
Anchorage Daily News

(Published: September 10, 2006)

WASHINGTON -- Three times between early 2003 and late 2004, BP officials were warned that a "chilling atmosphere" made workers engaged in critical pipeline-corrosion work in the North Slope oil fields afraid to report environmental and safety concerns.

One of those reports said the fear was justified: At least one worker was summoned for firing because his bosses thought he was responsible for a formal complaint that his inspection crew had been cut by 25 percent with no matching reduction in workload. The man denied any role in the complaint and kept his job, the report said.

The harassment of corrosion workers, reported in testimony before Congress on Thursday and in confidential BP documents subsequently released by the House Energy & Commerce Committee, occurred while BP was on felony probation from a federal court in Alaska and under strict rules to prevent reprisals against workers with environmental concerns.

The company finally removed its corrosion manager, Richard Woollam, in January 2005 and shipped him to Houston, where he no longer supervised anyone. A BP spokesman said the company put him on paid leave last week, just as he was preparing to plead the Fifth and refuse to testify before Congress.

BP's failed management of its corrosion program led to two oil spills from low-pressure transit lines on the North Slope this year. The spills, and a related partial shutdown of the giant Prudhoe oil field, have brought BP under a new federal criminal probe and investigations by Congress and state and federal regulators.

Why corrosion inspectors and the workers who brewed and applied anti-corrosion compounds felt afraid to report their concerns about critical safety programs is one aspect of the ongoing investigations.

FELON ON PROBATION

The earlier criminal case arose from BP's failure in the mid-'90s to report immediately that its drilling contractor had repeatedly dumped waste oil, paint, solvents and other hazardous materials down a well in the Endicott field, east of Prudhoe Bay. The company saved money by pumping the material down the well hole and not shipping it to a hazardous-waste disposal site.

BP pleaded guilty to a single felony count and paid a $500,000 fine and a $6.5 million civil penalty. It was required to adopt a nationwide environmental management program that eventually cost it at least $40 million.

In January 2000, the company began serving five years' probation. Like any other felon, it had a probation officer from the U.S. District Court's Office of Probation and Pretrial Services in Anchorage, Mary Frances Barnes.

And to avoid action that could strip it of its right to bid on U.S. contracts and leases, BP Exploration Alaska entered into a 27-page compliance agreement with the EPA's debarment counsel in Seattle, Jeanne Pascal.

Debarment is the process under which lawbreaking contractors are forbidden from doing business with the government for a period of time. In the case of BP, debarment would have meant no new drilling leases on federal land and no contracts to supply petroleum products to the government.

While much of the EPA agreement focused on proper disposal of hazardous material, it also demanded that BP use best environmental practices throughout its operations. An entire section required BP to ensure that no employee of BP or any of its contractors would suffer reprisal or retaliation for reporting "any actual or potential environmental violation." BP assured the EPA it would take disciplinary action against any manager who violated those terms. The EPA warned that retaliation against a BP or contract employee would constitute a "material breach" of the agreement and reopen the question of debarment.

"During the probationary period, (BP Alaska) arguably was subject to closer environmental scrutiny than any company in America," BP spokesman Daren Beaudo said in an e-mail interview.

Though Pascal and Barnes had different authority, they stayed in touch. Retired Alexandria, Va., oil broker Charles Hamel, a frequent critic of the Alaska oil producers and an advocate for their workers, said he was in contact with both women and brought them information from whistle-blowers.

Both Woollam and BP Exploration Alaska president Steve Marshall were in their Alaska positions during the time the company was required to report to Barnes and Pascal.

On Thursday, two Democrats on the House committee grilled Marshall, the top- ranking BP official in Alaska, about the worker fears. The matter arose because of a formal complaint, known as HSE-1838, filed by a field mechanic with ties to the oil worker union on behalf of several anonymous contract corrosion workers.

Marshall told the committee he had learned of the issue in early 2003. The matter went to an employee-run safety committee and an outside "channel" with a toll-free number. Marshall said the complaint was investigated by Washington attorney Billie Garde, who once represented Hamel against the industry, and Paul Flaherty of Boston. Garde and Hamel say they've had a falling out.

Garde and Flaherty traveled to Alaska and interviewed members of the corrosion team, Marshall said.

"They confirmed and established there was an atmosphere of intimidation that was potentially suppressing safety concerns," Marshall said.

Woollam, the corrosion manager, was directed to undergo training, Marshall said.

CONTINUING WORRY

In 2004, Garde and Flaherty returned to the Slope on another matter, Marshall said. "They did some checking and were still concerned there was a chilled atmosphere in the CIC (Corrosion, Inspection and Chemicals department)," he said.

By this time, Pascal and Barnes were also growing concerned. In an interview, Pascal said she was hearing complaints that BP had been falsifying corrosion data. She would not identify her sources, saying only that the issues came from "multiple channels."

In May 2004, she and Barnes directed BP to act. "I asked them to do an internal investigation on corrosion and I also advised them that workers were fearful of retaliation," Pascal said.

BP assigned the job to the Houston law firm Vinson & Elkins, which sent two of its Washington lawyers and a lawyer from another firm to Alaska. After reviewing documents and conducting about 45 interviews, they concluded that some of the allegations were true, though they found no evidence of corrosion-data falsification.

"Nothing we learned in our investigation suggests that the field is, as a general matter, unsafe or prone to catastrophic failure," it said.

The lawyers reached a different conclusion about Woollam, generally supporting the complaints. It blamed Woollam and his "dictatorial" style, which led workers to call his department his "kingdom" and Woollam himself "King Richard."

Contractors also feared they would lose their contracts if their workers complained, the report said.

When a manager for one of the contractors told Woollam that his men were upset about a reduction in staff, Woollam's response, which quickly became legendary among workers, was, "Fire the whole bunch," the report said.

The Vinson & Elkins report, issued Oct. 20, 2004, recommended that Woollam be stripped of supervisory duties.

Pascal said the company provided her and her investigator with copies of the report but told her not to make copies and collected them after a week. She said the matter arrived too near the end of BP's probationary period -- Jan. 31, 2005 -- for there to be time to begin further legal action.

Over the past month, BP declined several requests to provide a copy of the V&E report to the Daily News. Spokesman Beaudo said it was "proprietary."

But House investigators demanded the document. After Thursday's hearing, BP provided them with copies, which they made available to the media, though with names blanked out. The report was still stamped "Privileged and Confidential, Attorney Client Communication, Attorney Work Product."

The V&E conclusions were fodder for Rep. Ed Markey, D-Mass., who asked Marshall, "Do you believe that this chilling atmosphere has any impact on the quality of this (corrosion) program?"

"I can't definitively say that it did," Marshall replied, "but I would say this: We don't tolerate, and I don't tolerate, chilled atmospheres, harassment."

"Did this chilling effect have any impact on the safety or quality of the program at that time?" Markey pressed.

"I have no information to know there was a direct correlation," Marshall said. "Clearly, the potential exists."

"When whistle-blowers don't come forward because they're frightened, there can be," said Markey, reaching a conclusion. "And in this instance, I think there probably was serious safety issues that were compromised."

Daily News reporter Richard Mauer can be reached at rmauer@adn.com or in the Washington bureau at 1-202-383-0007.