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June 2005

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Opening the Arctic to Development

By Jason Leopold
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June 2005
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I t’s true that thousands of caribou and other wildlife will be displaced if Washington, DC lawmakers pass a measure to allow drilling in the Arctic National Wildlife Refuge (ANWR). 

But there’s an even bigger issue floating under the radar: the very real possibility of an environmental tragedy that could be as catastrophic as the 1989 oil spill caused by the Exxon Valdez oil tanker if swift measures aren’t taken to address severe safety and maintenance issues plaguing drilling operations in Prudhoe Bay—North America’s biggest oil field, 60 miles west of ANWR—and other areas on Alaska’s North Slope. 

That’s just one of many alarming claims that employees working for BP have made over the years to draw attention to the dozens of oil spills—three of which occurred between March and April—that could boil over at ANWR if BP continues to neglect safety issues and the area has opened up to further oil and gas exploration. 

As President Bush renews his calls for development, some of those same BP employees are blowing the whistle on their company again and are turning to the one person who helped them expose oil companies’ cover-ups on Alaska’s North Slope. Chuck Hamel, an Alexandria, Virginia oil industry watchdog, was the first person to expose weak pollution laws at the Valdez tanker port and electrical and maintenance problems with the trans-Alaska oil pipeline. 

Hamel, who is protecting the identities of the current whistleblowers, says not only do oil spills continue on the North Slope because BP neglects to address maintenance issues, but also the oil executives routinely lie to Alaskan state representatives and members of the United States Senate and Congress about the steps they’re taking to correct the problems. The company also denies its employees claims of safety issues at its crude oil production facilities on the North Slope. 

Hamel, however, has some damning evidence on BP: photographs showing oil wells spewing a brown substance known as drilling muds (that contain traces of crude oil) on two separate occasions. Hamel says he’s determined to expose BP’s shoddy operations and throw a wrench in President Bush’s plans to open up ANWR to drilling. “I am going to throw a hiccup into the ANWR legislation,” Hamel said in an interview. “Until these oil companies clean up their act they can’t drill in ANWR because they are spilling oil in the North Slope.” 

On April 15 Hamel sent a letter to Senator Pete Domenici, chair of the Senate energy and natural resources committee, saying there have been three spills between late March and early April, at a time when BP and two of its drilling contractors are under investigation for charges of failing to report other oil spills in late 2004 and in early 2005. 

“You obviously are unaware of the cheating by some producers and drilling companies,” Hamel said in his letter to Domenici. “Your official Senate tour” of Alaska “was masked by the orchestrated ‘dog and pony show’ provided you at the new Alpine Field, away from the real world of the Slope’s dangerously unregulated operations.” Domenici’s office said the senator is reviewing Hamel’s letter. 

Hamel also claimed that whistleblowers had told of another cover- up dating back to 2003 in which Pioneer Natural Resources and its drilling contractor, Nabors Alaska Drilling, allegedly disposed of more than 2,000 gallons of toxic drilling mud and fluids through the ice “to save the cost of proper disposal on shore.” 

Hamel has had his share of detractors, notably BP and several Alaskan state officials (who said he’s a conspiracy theorist) and the federal Environmental Protection Agency. But Hamel was vindicated in March when Alaska’s Department of Environmental Conservation confirmed Hamel’s claims of major spills in December 2004 and July 2003 at the oil well owned by BP and operated by its drilling contractor, Nabors, on the North Slope, which the company never reported, as required by state law. 

Hamel filed a formal complaint in January with the EPA, claiming he had pictures showing a gusher spewing a brown substance. An investigation by Alaska’s Department of Environmental Conservation determined that as much as 294 gallons of drilling mud was spilled when gas was sucked into wells, causing sprays of drilling muds and oil that shot up as high as 85 feet into the air. 

Because both spills exceeded 55 gallons, BP and Nabors were obligated, under a 2003 compliance agreement that BP signed with Alaska, to report the spills. That didn’t occur, said Leslie Pearson, the agency’s spill prevention and emergency response manager. 

BP spokesperson Daren Beaudo said the company did report the spills after learning about them and said it wasn’t that big of a deal. “In this case, the drilling rig operators did not feel this type of event qualified for reporting,” Beaudo told the Anchorage Daily News in March. “Obviously the Alaska Department of Environmental Conservation felt otherwise and that’s what they’re saying as a result of their investigation. It’s a matter of interpretation.” Beaudo said the agency’s findings are in line with BP’s investigation that the spills did not cause any harm to the environment, aside from some “speckles” on the snow. 

But what’s troubling to Hamel is that Alaska’s Department of Environmental Conservation has let BP off with a slap on the wrist. The agency is not penalizing BP; rather it said that it will ensure that the company reports other spills in a timely manner. That plays into Hamel’s other theory: that the state of Alaska is in cahoots with the oil industry and routinely fails to enforce laws that would hold those companies liable for violating environmental regulations. 

In April 2001 whistleblowers informed Hamel and Interior Secretary Gale Norton, who at the time was touring the Prudhoe Bay oil fields, that the safety valves at Prudhoe Bay, which kick on in the event of a pipeline rupture, failed to close. Secondary valves that connect the oil platforms with processing plants also failed to close. Because the technology at Prudhoe Bay would be duplicated at ANWR that means that the potential for a massive explosion and huge spills is very real. “A major spill or fire at one of our [processing centers] will exit the piping at high pressure, and leave a half-mile-wide oil slick on the white snow all the way,” Hamel said in an interview with the Wall Street Journal . 

In March 2002 a BP whistleblower brought up the same issues and went public with his claims of maintenance backlogs and employee shortages at Prudhoe Bay that he said could worsen spills on the North Slope. 

Robert Brian, the whistleblower who had worked as an instrument technician at Prudhoe Bay for 22 years, had a lengthy meeting with aides to Senators Jospeh Lieberman and Bob Graham, both Democrats, to discuss his claims. At the time, Brian said he supported opening up ANWR to oil exploration, but said BP has imperiled that goal because it is “putting Prudhoe workers and the environ- ment at risk.” 

In 2001, the Alaska Oil and Gas Conservation Commission found high failure rates on some Prudhoe wellhead safety valves. In the 1990s the company was put on federal criminal probation after one of its contractors dumped thousands of gallons of toxic material underground at BP’s Endicott oil field in the 1990s. BP pleaded guilty to the charges in 2000, paid a $6.5 million fine, and agreed to set up a nationwide environmental management program that has cost more than $20 million. 

But Hamel and the whistleblowers said BP continued to violate environmental rules and then attempted to cover it up. A BP spokesperson said those claims “are an outright lie.” 

Still, despite the charges leveled against BP, which were aired as early as April 2001, the Senate never held hearings on the safety issues that over the years have caused dozens of oil spills at oil production facilities on the North Slope. Now, with gasoline prices soaring and Bush’s claims that drilling in ANWR would reduce this country’s dependence on foreign oil, lawmakers are being urged to once again investigate the issue.

Jason Leopold’s investigative pieces have been published in the Nation , the Financial Times, Utne Reader, and numerous other national and international publications. 
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