|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,
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 [really?
might it be more difficult to do in winter? -- JD], 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
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.
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