Alyeska, Federal Regulators Probing Employee’s “Cover-Up” Claims Related to May Oil Spill

An Alyeska Pipeline Service Company employee who has an engineering background filed complaints with federal regulators and BP’s Office of the Ombudsman claiming internal company documents were altered following a 4,500-gallon oil spill May 25 to cover-up the fact that Alyeska allegedly failed to perform maintenance on a key piece of equipment.

Additionally, the concern letters, copies of which were obtained exclusively by Truthout, also contained numerous other allegations about the safety and integrity of the 800-mile Trans-Alaska Pipeline System (TAPS) and the way in which Alyeska operates it. Alyeska is majority owned by BP. TAPS moves anywhere from 600,000 to 700,000 barrels of oil per day and accounts for 15 percent of the country’s oil supply.

The complaints were filed about a month after an attorney hired by Alyeska wrapped up an investigation into a separate set of employee concerns that alleged Alyeska, under pressure by BP, implemented deep budget cuts which resulted in a “large ‘bow wave’ of deferred projects and program work” and threatened the safety of TAPS. The investigation, conducted by Alyeska confidante Charles Thebaud of the Washington, DC-based law firm Morgan, Lewis & Bockius, substantiated the employee’s concerns about budget cuts, the deferral of maintenance and low morale, but he concluded those issues did not have an immediate impact on the safety or integrity of the pipeline.

The anonymous employee’s letter was also sent to Melvin Jessee, Alyeska’s Employee Concerns Program coordinator, before the company’s senior vice president, Greg Jones, testified before the House Transportation and Infrastructure Committee’s Subcommittee on Railroads, Pipelines and Hazardous Materials about the circumstances behind the May oil spill and safety and integrity concerns related to the operation of TAPS in general. Neither Jones nor any other Alyeska officials disclosed to committee members the allegations in the employee’s letter or that the company was investigating the charges, several committee staffers told Truthout.

Lawmakers have stepped up their scrutiny of oil companies and their corporate practices ever since the explosion aboard the BP-operated Deepwater Horizon drilling rig in April, which killed 11 workers and ruptured a deep sea well that spewed hundreds of millions of gallons of oil across the Gulf of Mexico.

Last month, Sen. Lisa Murkowski (R-Alaska), a member of the Senate Energy and Natural Resources Committee, last week called on Alyeska to conduct its own internal review of the pipeline to ensure its operating safely.

Alyeska said the company would hire a third party to conduct an independent review of TAPS after Alaska State Rep. David Guttenberg (D-Fairbanks), who has been critical of the company’s cost-cutting measures, said Alyeska could not be trusted to investigate itself.

The fact that Alyeska is run by a consortium of oil companies led by BP and, like the British oil company, has a reputation for placing profits ahead of safety and integrity has made Alyeska a target of criticism.

That was certainly the case when staffers working for Rep. Bart Stupak (D-Michigan), the chairman of the House Energy Committee’s Subcommittee on Oversight and Investigations, grilled Alyeska Chief Executive Officer Kevin Hostler in mid-June during a closed-door meeting about the oil spill at pump station 9, located about 100 miles southwest of Fairbanks, Alaska and the site of four other serious accidents, including a fire in January 2007.

The spill resulted when oil started to flow back into a storage tank after a backup battery system failed during a planned shutdown of the facility to test the fire and gas control system. During one of the tests, two uninterrupted power supply systems (UPS), which are supposed to provide backup power, failed and caused critical station control systems to shut down as well.

Because the power was out and the facility was not manned with trained operators, no one recognized that the relief valves, which open during a power outage, discharged oil into the neighboring tank. The oil pouring into the tank eventually overflowed and spilled and forced Alyeska to shut TAPS down for more than three days, which lead to a spike in oil prices.

The employee’s concern letter said Alyeska was well aware about the routine UPS failures at pump station 9, which was the catalyst behind the pipeline being shut down in the past, but failed to take action to correct the issue.

Stupak’s office was not satisfied with Alyeska’s internal report or Hostler’s explanation about the circumstances behind the spill and requested that the company turn over additional documents to the committee, according to two of the panel’s staffers.

Stupak’s office was also troubled by claims that Alyeska would not allow federal inspectors into the pump station for three days following the oil spill. Michelle Egan, an Alyeska spokeswoman, said, however, inspectors were present but “access to the site was limited for safety reasons.” Egan did not say at what point inspectors were permitted to enter the pump station.

“We had to secure the area and ensure there were no ignition sources, etc.,” Egan said, referring to the possibility of an explosion.

Although one of the conclusions in the internal report into the spill determined that Alyeska has suffered from a “trend of operational discipline deficiencies” over the years, the probe was flawed, said a BP master root cause specialist with behavioral safety as well as business management experience, because investigators were unable to replicate the reasons the backup generator failed and as a result were unable to identify the root cause as to why it malfunctioned.

“This is the inherent weakness of strategic reconfiguration: unmanned pump station,” the BP official told Truthout earlier this month. “This event could have been much worse if it had occurred when people were not there. Everything is dependent on no power failures, redundant power supplies to work and all equipment to set up in the right safe condition upon loss of power.

“The recommendations resulting from this investigation as well as other investigations identified in the report lack specificity as to what [Alyeska] needs to do in order to prevent future failures of equipment and people,” the BP official said. “Investigators were not able to replicate the breaker failure and therefore were not able to identify a root cause for the failure. This means that the device remains in service with the likelihood of a similar failure in the future.”

The UPS failure could not be replicated, according to the employee concern letter, because Bill Amberg, the Fairbanks Maintenance Base manager, who responded to the spill at pump station 9, “did not do as directed.”

The anonymous employee claims Amberg “was instructed not to do anything so that the [the technical failures leading up to the spill] could be recreated.”

The employee also sent an anonymous email to Hostler informing him that he needs to speak to Amberg to find out why the UPS failure could not be replicated. Hostler announced his retirement from Alyeska one day after Truthout published an expose on the company.

“The emergency generator had a charger and battery fail a couple of months prior to the [oil spill],” one of the concern letters alleges. “Amberg’s team failed to address this maintenance issue. When [oil that spilled into the tank began to overflow], Amberg rushed down to [pump station 9] and repaired the above charger and battery” and backdated a work order to “cover-up the fact that it had never been done.”

“Why wasn’t the work done?” the employee asked in the concern letter. “This is the most critical piece of equipment of the new [Strategic Reconfiguration Plan] installation.”

The Strategic Configuration Plan is a cost-savings measure that, among other things, calls for removing personnel from pump stations to address declining oil production on Prudhoe Bay.

The plan “calls for electrification of pump stations and installation of new control systems for the pipeline. After reconfiguration, each pump station will be manned from Alyeska’s operations control center in Anchorage,” according to congressional documents released last month.

“According to Alyeska’s prior president, David Wight, who also served as President of BP Amoco Energy Company: ‘When we are done, Strategic Reconfiguration will shave millions of dollars from the annual cost of moving oil from Prudhoe Bay to Valdez.”

Amberg referred calls for comment to Egan, who said the company is investigating the anonymous employee’s claims as well as others the employee raised about the overall integrity of TAPS.

Egan emphasized that the allegations against Amberg are unsubstantiated.

“One should not assume that any allegations are true until all of the facts are known and the investigation is complete,” Egan told Truthout, adding that the findings of the investigation will be communicated directly to the employee who filed the written complaints.

Jerry Brossia, an official with the federal Joint Pipeline Office (JPO) in Alaska, said his agency, which also received a copy of the anonymous Alyeska employee’s concern letter, is “just getting started” on its own investigation into the allegations. Brossia said the charges leveled against Amberg in particular does not square with what his office knows about Amberg’s integrity and reputation.

“I know Bill Amberg from Valdez [Marine Terminal where Amberg was maintenance manager],” Brossia said. “He cleaned up an awful lot of the maintenance problems there. These charges from an anonymous employee does not fit with the reputation [Amberg] has with our office.”

Brossia added that Alyeska told his office that the allegations against Amberg are “flat-out not true.” But he did not know whether there was validity to the claim that the company did not perform maintenance on the backup generator that failed to kick in during the power outage prior to the spill.

Brossia did say, however, that “things have been tripping on and off” at pump station 9 “for years” and it’s a concern “because it can lead to a catastrophe.”

Alyeska has “had a variety of different problems” at pump station 9 related to the UPS, he said. “I know Alyeska is looking at that.”

A spokesperson for the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) told Truthout the agency’s “highest priority is safety and we are continuing to investigate the failure at pump station 9.”

PHMSA inspectors and congressional staffers were supposed to be in Alaska earlier this to inspect the pipeline and the pump stations as well as review internal Alyeska documents and records to ensure the company is in compliance. But the trip was delayed due, in part, to the tragic death of former Alaska Sen. Ted Stevens, who was killed in plane crash.


Another serious allegation the employee raised in the concern letter says Alyeska does not have updated “as-built” drawings for its fire and gas system and the Strategic Reconfiguration Plan.

As ProPublica reported, “final design drawings, called ‘as-built’ drawings, are considered an essential safety component. They prove that a piece of equipment…was built the way it was supposed to be. Those drawings are thus the final checks to make sure the equipment operates properly. They also serve as instruction manuals for emergencies.”

But according to the employee’s concern letter, Alyeska “put [pump station 9] online without [as-built] drawings being complete” and although the company is “gradually” updating the drawings the fact that they have been unavailable for at least three years led to an untold number of near catastrophes.

Moreover, “hundreds if not thousands of these [Strategic Reconfiguration Plan] drawings have been stamped ‘poor quality’ for a brand new installation,” the employee’s concern letter alleges. “We complain and complain but the atmosphere is so bad that we can only push so hard.”

The fire and gas drawings are in an even worse “state of affairs.”

“We do not know how the [fire and gas systems] are supposed to work,” the letter says, adding that some of these critical as-built drawings are also unavailable for pump station 1, and likely missing for pump stations 3 and 4.

The letter goes on to say that electrical technicians have not been properly trained on electrical equipment and systems but are still expected to work on them. Other equipment failures have led to pipeline shutdowns, which the company is not addressing in a timely manner due to a personnel shortage.