BRITISH PETROLEUM'S "SMART PIG"
The Brilliantly Profitable Timing of the Alaska Oil Pipeline Shutdown
by Greg Palast
For The Guardian (UK)
Tuesday, August 9, 2006
Is the Alaska Pipeline corroded? You bet it is. Has been for more than a decade.
Did British Petroleum shut the pipe yesterday to turn a quick buck on its negligence,
to profit off the disaster it created? Just ask the "smart pig."
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.
But $2 a barrel is just the beginning of BP's shut-down bonus. The Alaskan oil
was destined for the California market which now faces a supply crisis at the
very height of the summer travel season. The big winner is ARCO petroleum, the
largest retailer in the Golden State. ARCO is a 100%-owned subsidiary of …
British Petroleum.
BP could have fixed the pipeline problem this past winter, after their latest
corrosion-caused oil spill. But then ARCO would have lost the summertime supply-squeeze
windfall.
Enron Corporation was infamous for deliberately timing repairs to maximize profit.
Would BP also manipulate the market in such a crude manner? Some US prosecutors
think they did so in the US propane market. The Commodity Futures Trading Commission
(CFTC) just six weeks ago charged the company with approving an Enron-style
scheme to crank up the price of propane sold in poor rural communities in the
US. One former BP exec has pleaded guilty.
Lord Browne, the imperious CEO of BP, has apologized for that scam, for the
Alaska spill, for this week's shutdown and for the deaths in 2005 of 15 workers
at the company's mortally sloppy refinery operation at Texas City, Texas.
I don't want readers to think BP isn't civic-minded. The company's US CEO, Bob
Malone, was Co-Chairman of the Bush re-election campaign in Alaska. Mr. Bush,
in turn, was so impressed with BP's care of Alaska's environment that he pushed
again to open the state's arctic wildlife refuge (ANWR) to drilling by the BP
consortium.
Indeed, you can go to Alaska today and see for yourself the evidence of BP's
care of the wilderness. You can smell it: the crude oil still on the beaches
from the Exxon Valdez spill.
Exxon took all the blame for the spill because they were dumb enough to have
the company's name on the ship. But it was BP's pipeline managers who filed
reports that oil spill containment equipment was sitting right at the site of
the grounding near Bligh Island. However, the reports were bogus, the equipment
wasn't there and so the beaches were poisoned. At the time, our investigators
uncovered four-volume's worth of faked safety reports and concluded that BP
was at least as culpable as Exxon for the 1,200 miles of oil-destroyed coastline.
Nevertheless, m'Lord Browne preens himself with his corporation's environmental
record. We know BP cares about nature because they have lots of photos of solar
panels in their annual reports -- and they've painted every one of their gas
stations green.
The green paint-job is supposed to represent the oil giant's love of Mother
Nature. But the good Lord, Mr. Browne, knows it stands for the color of the
Yankee dollar.
BP claims the profitable timing of its Alaska pipe shutdown can be explained
because they've only now run a "smart pig" through the pipes to locate
the corrosion. The "pig" is an electronic drone that BP should have
been using continuously, though they had not done so for 14 years. The fact
that, in the middle of an oil crisis, they've run it through now, forcing the
shutdown, reminds me, when I consider Lord Browne's closeness to George Bush,
that the company's pig is indeed, very, very smart.
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Greg Palast, an energy economist and investigative reporter, is the author of
"Exxon Valdez: A Well-Designed Disaster." His reports can be seen
on BBC Television's Newsnight, Democracy Now! and in Harper's Magazine.
Beginning noon today, at www.GregPalast.com, read, "Trillion Dollar Babies:
Big Oil's War Bonus" from Palast's recently-released New York Times bestseller,
"ARMED MADHOUSE: Who's Afraid of Osama Wolf?, China Floats Bush Sinks,
the Scheme to Steal '08, No Child's Behind Left and other Dispatches from the
Front Lines of the Class War."
Media requests to: interviews(at)GregPalast.com