Categorical Aperitif

I thought I did when news came out of the British Petroleum Alaska Pipeline shutdown that's already sent gas prices here over $3.00 per gallon. Sure enough, Greg Palast is on the case:

Years ago, I had the unhappy job of leading an investigation of British Petroleum’s management of the Alaska pipeline system. I was working for the Chugach villages, the Alaskan Natives who own the shoreline slimed by the 1989 Exxon Valdez tanker grounding.

Even then, courageous government inspectors and pipeline workers were screaming about corrosion all through the pipeline. I say "courageous" because BP, which owns 46% of the pipe and is supposed to manage the system, had a habit of hunting down and destroying the careers of those who warn of pipeline problems.

In one case, BP’s CEO of Alaskan operations hired a former CIA expert to break into the home of a whistleblower, Chuck Hamel, who had complained of conditions at the pipe’s tanker facility. BP tapped his phone calls with a US congressman and ran a surveillance and smear campaign against him. When caught, a US federal judge said BP’s acts were "reminiscent of Nazi Germany."

This was not an isolated case. Captain James Woodle, once in charge of the pipe’s Valdez terminus, was blackmailed into resigning the post when he complained of disastrous conditions there. The weapon used on Woodle was a file of faked evidence of marital infidelity. Nice guys, eh?

Now let’s talk timing. BP’s suddenly discovered corrosion necessitating an emergency shut-down of the line is the same corrosion Dan Lawn has been screaming about for 15 years. Lawn is a steel-eyed government inspector who has kept his job only because his union’s lawyers have kept BP from having his head.

Indeed, it’s pretty darn hard for BP to claim it is surprised to find corrosion this week when Lawn issued a damning report on corrosion right after a leak and spill were discovered on March 2 of this year.

Why shut the pipe now? The timing of a sudden inspection and fix of a decade-long problem has a suspicious smell. A precipitous shutdown in mid-summer, in the middle of Middle East war(s), is guaranteed to raise prices and reap monster profits for BP. The price of crude jumped $2.22 a barrel on the shutdown news to over $76. How lucky for BP which sells four million barrels of oil a day. Had BP completed its inspection and repairs a couple years back — say, after Dan Lawn’s tenth warning — the oil market would have hardly noticed.

Palast says that the Alaskan pipeline shutdown will exacerbate the supply crisis in California, where the largest retailer is ARCO—"a 100%-owned subsidiary of British Petroleum." How convenient.

Palast also mentions a nifty-sounding device called a "smart pig" used in pipeline inspection—and wonders why BP didn't use them more frequently. Indeed. Check out this report (PDF) about the spill discovered on March 2 of this year, where you'll find this choice nugget (emphasis mine):

Although BP told reporters that corrosion problems had caused BP to operate the line between the gathering centers at reduced pressure, BP hadn’t sent a corrosion "pig – a device that travels through the pipeline to inspect its condition – through that line since 1998." [Remember, this report is from March, 2006.]

[...]

The ongoing war with corrosion on the North Slope increases the importance of ensuring that the leak detection system is effective. But over the last decade BP has consistently argued for less stringent leak detection requirements on the North Slope, while delaying installation of a state-of-the-art system that might have alerted field operators to the problem before the spill turned into the largest in North Slope history.

Well, they're certainly worried about corrosion NOW. From the BP news conference transcript (PDF):

Bob Malone [Chairman and President, BP America] I would add a comment. Again, we based our corrosion program in cooperation with agencies what we thought was an adequate program. Clearly it is not. In replacing the lines, what we hope to do is enhance that program so that they can have cleaning pigs go through and then ultrasonic pigs go through – smart pigs, so that we can further enhance the program we have been using. That is one of the main reasons for replacing the lines.

Steve Marshall [President, BP Exploration Alaska] If I could add just one more comment. I don’t want to leave the impression that we have had no monitoring of those lines. In the early 90s as bill described it, pigging was found to be difficult because of the amount of scale and solids. So, we did not have, looking back, a regular pigging program. What we did have was a regular program of ultra sonic surveys to determine the condition of the lines. We believe that would have been an acceptable and adequate replacement. Particularly given that most of these lines are above ground. That technique is available to us, where it is not available to many locations where there are buried lines. Clearly, in hindsight, our program was insufficient and will be rectified going forward.

"Rectified going forward." Sounds like a euphemism for a certain act known to happen in prisons‐only in this case, it's consumers getting reamed. As Nils Pratley says in the Guardian,

It is less easy to be sympathetic after yesterday's confession to 16 anomalies in 12 locations that have "called into question the condition of the oil transit lines". In other words, this appears to be a case of straightforward corrosion. As one or two US politicians were already saying yesterday, it is extraordinary that such a crucial pipeline could deteriorate to the degree that a full shutdown is required.

Rightly or wrongly, there will be suspicion that capital investment was trimmed during the 1990s, when the oil price was low and cash was tight. It is far too early for anybody to make that allegation in concrete terms, but sentiment is what often counts in the oil game. The growing lobby in the US for a windfall tax on the oil majors has just been handed another weapon.

Use it! With extreme prejudice.

We know that Enron was able to boost its profits during the California electricity crisis a few years ago by manipulating the transmission lines that supplied electricity; is it far-fetched to wonder whether BP might be doing something similar with oil pipelines?

Do you suppose anyone in the Bush Administration cares enough to investigate?

Oh, well—I didn't need another reason to buy gas from CITGO, but now I've got one.