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Alaskan Oil Pipeline Leak Raises Environmental Concerns

August 8, 2006 at 5:05 PM EDT
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GWEN IFILL: Now, to questions about what went wrong at the Prudhoe Bay oil field in Alaska and its possible impact. For the record, the operator of the oil field, B.P., is a NewsHour underwriter. Ray Suarez begins our coverage with some background.

RAY SUAREZ: With B.P.’s announcement that it was shutting down the nation’s single-biggest source of domestic crude oil came official apologies.

BOB MALONE, Chairman and President, B.P. North America: B.P. deeply regrets that it’s been necessary for us to take this drastic action.

RAY SUAREZ: Speaking at a news conference yesterday, Bob Malone, chairman of B.P. America, said the world’s second-largest oil company was beginning to turn off the taps at its Prudhoe Bay production site after severe corrosion was discovered in most of its 22 miles of transit pipeline.

BOB MALONE: B.P. will commit the necessary human and financial resources to complete this job safely and as quickly as possible.

RAY SUAREZ: Prudhoe Bay is the largest oil field in North America. Located 650 miles north of Anchorage, it spreads over more than 200,000 acres.

The B.P. facility was producing about 2.6 percent of the nation’s daily supply of oil, or about 400,000 barrels a day. Malone said it could take weeks or months to replace the pipelines, and the company will shore up infrastructure, evaluate maintenance and safety, and, if possible, keep some parts operational.

BOB MALONE: We want to focus on four priorities. The first is to assure the safety and integrity of our operating infrastructure. Secondly, to minimize any impact to the environment. Third, to continue to cooperate and work closely with the agencies, both state and federal. And to restore production as soon as it is safely — and I want to reinforce “safely” — possible.

RAY SUAREZ: B.P. operates the Prudhoe Bay field for itself and nine other companies, including Conoco-Phillips and ExxonMobil. B.P. officials said the aging pipeline system, built in the 1960s and ’70s, had not been cleaned properly over the years.

STEVE MARSHALL, President, B.P. Exploration Alaska: Clearly, in hindsight, that program was insufficient and will be rectified going forward.

Federal government regulations

Lois Epstein
Cook Inlet Keeper
The federal government's pipeline safety rules do not apply to this type of pipeline, and that has to at least have contributed to the problem.

RAY SUAREZ: The corrosion problem was only detected after government- ordered inspections following a pipeline rupture in March that caused the biggest oil spill ever recorded on Alaska's North Slope, up to 270,000 gallons. The spill is also the subject of a criminal investigation of B.P.'s Alaskan operations.

Now, concerns about oversight and environmental risks at Prudhoe Bay. For that, we turn to Lois Epstein, senior engineer and oil industry specialist at Cook Inlet Keeper, a not-for-profit conservation and watchdog group based in Alaska. She's also a member of the federal government's Pipeline Safety Oil Advisory Committee.

Lois Epstein, in your view, why did this happen in Prudhoe Bay?

LOIS EPSTEIN, Senior Engineer, Cook Inlet Keeper: I'm actually not 100 percent sure why it happened. Corrosion is a very complicated business. There are lots of reasons why it could have happened. And if you trust the media reports from B.P., they're not 100 percent sure why it happened and why the corrosion got this far before they were feeling the obligation to actually shut down their operations.

I can tell you, however, that the federal government's pipeline safety rules do not apply to this type of pipeline, and that has to at least have contributed to the problem.

RAY SUAREZ: Well, explain that. Is there no either Alaska or federal government oversight of whether those pipelines are being maintained properly over the long haul?

LOIS EPSTEIN: This is a low-pressure pipeline located in a rural area that's not near commercially navigable waters. That's the exemption. If it were a higher pressure pipeline or if it were located where there were people more around, it have been regulated for corrosion, for its design, for operations and maintenance.

If it was in a particular type of environmentally sensitive area, which I believe this pipeline is, it would have had to use smart pigs, which is a device that goes through pipelines, looks for wall thinning. Those devices are now being used only because the federal government came in after the large March spill and said that B.P. needs to look and use those devices and see what the wall continue is, and that resulted in the decision to shut down.

At the state level...

RAY SUAREZ: So the federal government is, in a sense, in a reactive role, only after a spill like last March's would it come in and tell B.P. what to do on the line?

LOIS EPSTEIN: That's right, and that's unfortunate. For this type of pipeline where there is an exemption, the federal government is now considering removing it, and Congress is absolutely considering looking at removing this exemption because of what happened and its enormous economic consequences, both to the country and certainly to consumers and to small businesses.

At the state level, there are some requirements. However, the state also was not doing its job. It wasn't out in the field. It wasn't fining B.P. when there was a spill. There was another spill at a B.P. pipeline on the North Slope that was very serious in May of 2003. Once again, no fines.

It's a troubling situation when the government feels that they are so close to the industry, they're negotiating with them on a very big project that would bring natural gas to the lower 48, there's a conflict of interest. So at the state level, there's a problem, as well. There's no federal regulation, and the state rules and enforcement are not working well.

Regulating other pipelines

Lois Epstein
Cook Inlet Keeper
This is Alaska. We're a resource development state. We depend on the oil industry for close to 90 percent of the government's revenue. This is not a place where you're going to get very tough environmental enforcement.

RAY SUAREZ: Well, does an incident of this kind put pressure on the state to tighten up its regulatory regime?

LOIS EPSTEIN: It does, but I think it's important for your viewers to remember this is Alaska. We're a resource development state. We depend on the oil industry for close to 90 percent of the government's revenue. This is not a place where you're going to get very tough environmental enforcement.

We had some good regulations in place. There are some gaps. The corrosion requirements at the state level are nowhere near as stiff as the federal requirements, so we are really counting on the federal requirements to take up the slack when the state doesn't do its job.

RAY SUAREZ: Well, given what you said about the reasons why there were no regulations on this particular transport line -- because it's low pressure, because it was away from water -- are there a lot of other pipelines in your state that might be in the same condition that this one was in?

LOIS EPSTEIN: There are definitely some other pipelines. We know we have other operators on the slope, on the North Slope. We have operators in Cook Inlet. That's near Anchorage. There are operators around the country that are going to be kept out of the federal regulatory framework because of this particular exemption.

It's up to the federal government to put in place a regulatory regime that makes sense and prevents this type of serious problem. And of course, they have to be out there inspecting and enforcing, as well.

RAY SUAREZ: Well, the company has responded by shutting down the line, starting to do more inspections on remaining lines. In your view, have they made a good-faith effort to what they've discovered, as far as the condition of their operations?

LOIS EPSTEIN: I'm glad B.P. has taken that pro-active step to shut down, but I think it's important to remember that there was enormous wall thinning of this series of pipes, over 80 percent in some places. That means only 20 percent of the pipe was remaining.

And from an engineering standpoint, looking at the industry standards, they were pretty much forced to do this shutdown because there are liability issues. And that's the fallback position. If you don't have the government regulations and you don't have the industry doing what it needs to do in the first place, then you have the court system and the industry standards that will kick in.

So, you know, there are several levels of attention here, but I think it's a fair question about whether they did this to ensure safety or because they really felt they had to. But either way, I'm glad that they are shut down right now to get some new pipe in place.

RAY SUAREZ: Well, given the state of play, can oil be extracted in safety to the environment from a place like Prudhoe Bay?

LOIS EPSTEIN: Well, B.P., with all its resources, all its access to experts, corrosion experts on staff and outside, it's really troubling to me as an engineer, as an Alaskan, as an American, that they were not able to prevent this kind of corrosion and even now don't know what the exact cause was.

I think it sends an important message to those who are deciding about whether we should be drilling in new areas when we don't even do as good a job as we should be doing in existing areas. And that includes areas like the arctic refuge, opening up new areas offshore.

It's an important question. We're at an engineer crossroads in this country, and we really need to make some decisions: Do we continue with older technologies that are known to be dirty and have problems? Or do we move to newer, renewable, and other types of energy that are less dependent and less likely to cause environmental problems, less likely to cause global warming, and these kinds of unfortunate spill situations and disruptions?

RAY SUAREZ: Lois Epstein, thanks for being with us.

LOIS EPSTEIN: Thank you.

B.P.'s regulatory system

Steve Marshall
BP
Going forward, we need to put in place systems, including pigging, and ultrasonic testing, and whatever technology we need to bring to bear to make sure an incident like this does not happen again.

RAY SUAREZ: Now a response from B.P. Steve Marshall is president of B.P. Exploration Alaska. He oversees company operations at all of Alaska's oil fields, including Prudhoe Bay for the company.

Mr. Marshall, you heard what Lois Epstein just said about a sort of re-examination of whether oil can be extracted with safety to the environment from that area. What's your response?

STEVE MARSHALL, President, B.P. Exploration Alaska: Ray, before I answer that question, I'd like to just add my apology to your viewers and to the nation for the actions we've undertaken to disrupt the supply of oil. And I pledge my commitment and that of my team to do everything we can to get the production of crude oil from Prudhoe Bay back to the nation as quickly and as safely as we possibly can. That's the job we're committed to do.

I certainly regret the leaks that have occurred, and certainly it has revealed a gap in our corrosion management system, one which is very comprehensive, which relied on a lot of inspections, but clearly that wasn't enough. And one thing I'm proud to say is I work for a company that is committed to learn from incidents and mistakes, and we are pledged and committed to do things far, far better in the future going forwards.

RAY SUAREZ: Ms. Epstein noted that, because this was a low-pressure line and because it was not near large bodies of water, there was a fairly loose regulatory standard applied to that pipeline. Without government looking over your shoulder, what did B.P.'s own internal standards require as far as inspection and maintenance of that line?

STEVE MARSHALL: For me, the regulation -- we'll always abide by whatever regulations. And as those change, we will clearly adopt, and adapt, and meet those.

For me, what we're about is about doing good business, and good business is about producing energy safely, without harm to people, without damage to the environment. And whenever we find a gap in our systems and something like this occurs, we take it very seriously, whether it's a low-pressure system or a high-pressure system.

What we relied on was a series of ultrasonic tests and did not rely on maintenance pigging, which is something that's used commonly across the industry. But we do over 100,000 inspections every year of our systems.

We thought that was sufficient; clearly, it wasn't. Going forward, we need to put in place systems, including pigging, and ultrasonic testing, and whatever technology we need to bring to bear to make sure an incident like this does not happen again.

RAY SUAREZ: As I understand, a pig is something that moves through the line and breaks up congestion and breaks up sludge. What's a smart pig, though?

STEVE MARSHALL: You're absolutely right. The pigging that we do is what we call a cleaning pig which removes the solids and the sediments in the waters. A smart pig is a device that's put through the line, an oil line or a gas line, and it measures across the circumference of a pipe, the wall thickness, the entirety of the line. That data is processed.

We analyze that, and then it allows us to precisely pinpoint where there may be wall thickness losses. We can then go back and use other techniques, such as ultrasonic testing, to confirm or verify or corroborate that information. And in fact, that's what we were doing this weekend when we found the most recent leak on the transit line.

RAY SUAREZ: Well, when was the last time a smart pig had been run through that line?

STEVE MARSHALL: A smart pig had not been run through this line in its history.

RAY SUAREZ: Which is how long?

STEVE MARSHALL: This line has been in operation since 1977. And typically, this is dry crude oil. The gas, the water, and the sands have been removed in the upstream facilities. And we generally consider this to be a low-risk fluid, a dry fluid.

There was some scale in the line in the '90s which precluded being able to pig. And because of that, we increased the level of ultrasonic testing of these lines on a frequent basis. And where we found and where we do find that either the wall thickness loss is too high or the corrosion rate is too high, we increase the frequency of testing and take the appropriate actions, whether it's repairs, adding sleeves or whatever we need to do to get that line into shape.

What we found in this incidence is small pitting, very discreet and localized pitting that our techniques were inadequate to detect, and that's clearly something we need to correct going forwards.

The way forward

Steve Marshall
BP
What may have contributed in this case to the corrosion is the accumulation of solids and the inability to protect some of the pipe itself from microbial corrosion. That is the belief; it's by no means proven.

RAY SUAREZ: It's reported that some of the linings of the pipe lines themselves had thinned from a third of an inch down to 4/100th of an inch in thickness. What contributes to that kind of thinning? And might there be a problem with the materials used in the production of the line itself?

STEVE MARSHALL: The Prudhoe Bay fluid is a highly corrosive environment. We rely very much on chemicals, corrosion inhibitors, to protect all of our equipment, not just pipelines, but many of our vessels and pumps and compressors. Typically, that is what's used in the industry to offset what could otherwise result in about a quarter of an inch per year of wall loss otherwise.

What may have contributed in this case to the corrosion is the accumulation of solids and the inability to protect some of the pipe itself from microbial corrosion. That is the belief; it's by no means proven. So the investigations that are ongoing right now will try and determine precisely the exact mechanism and allow us to modify our programs going forwards.

RAY SUAREZ: And finally, Mr. Marshall, word came from B.P. this afternoon that the company may be able to salvage part of the production from that area while repairs are being made. How long do you think it's going to be until you're up and running again?

STEVE MARSHALL: It's very difficult to say precisely, Ray. We are working right now amongst ourselves with our commercial partners, with the state and federal agencies, to look at what we can do to increase inspection, to give confidence in the remaining lines that have not leaked.

And only if we're satisfied -- and more importantly if the agencies are satisfied jointly -- that we can say it is safe to operate will we do so. We're proceeding with that work around the clock, and hopefully over the next few days we'll be able to come up with a plan of action that we can move forward on.

RAY SUAREZ: Steve Marshall from B.P., thanks for being with us.

STEVE MARSHALL: Thank you.