BP's Ombudsman Gave Congress Wrong Information

Last January, Reps. Henry Waxman (D-California) and Bart Stupak (D-Michigan) sent a letterto John Minge, BP's Alaska president, seeking information about how the company was managing its Prudhoe Bay operations on Alaska's North Slope, as well as internal reports about the circumstances behind five serious incidents dating back to September 2008.

In addition, Waxman, the chairman of the House Energy Committee, and Stupak, the chairman of the Subcommittee on Oversight and Investigations, wanted information from BP's ombudsman's office regarding the "number and type of [employee] concerns received and the actions the company has taken in response."

The ombudsman's office was set up in the aftermath of two oil spills in March and August 2006 and investigates concerns raised by employees about a wide range of issues, such as safety, maintenance, retaliation and harassment.

Minge wrote to Stanley Sporkin, the retired judge and former CIA General Counsel, who has been ombudsman since the position was created, and asked him to prepare a report to turn over to Waxman's committee. On February 3, Sporkin sent Minge a six-page letter, a copy of which was obtained by Truthout and has not been previously released.

Sporkin said that, since 2006, the office has registered 202 employee concerns, more than half of which generated from Alaska.

"The majority of the employee concerns that our office has received since its inception have come from [BP Exploration Alaska]," Sporkin wrote. "We have received 112 concerns from [BP Exploration Alaska] employees or contractors that work at or support BP's North Slope operations. Those concerns have been classified into the following categories:

Harassment, Intimidation, Retaliation and Discrimination (HIRD): 35
Personal Safety: 25
Process Safety Issues: 20
Human Resource Issues: 11
Material Condition: 9
Industrial Safety: 5
Leadership: 4
Environmental: 3

Sporkin also said his office "had the opportunity to address concerns at two off-shore platforms, including a case that came in on Christmas Eve 2006 regarding potential safety issues in an operation planned for over the holiday." It's unknown what was the substance of the incident involving offshore drilling platforms Sporkin was referring to.

The Office of the Ombudsman, Sporkin's letter says, places employee concerns into three categories: Level 1 represents "system integrity or safety issues" and is the most serious; issues that could impact safety are classified as level 2, and human resources issues are identified as level 3. The ombudsman's office is currently conducting 57 investigations. In explaining how successful he felt the ombudsman program has been, Sporkin cited a level 1 safety incident that took place during the summer of 2008, "involving a high pressure gas line that runs across the field, including in close proximity to several North Slope housing camps and critical facilities."

"The Concerned Individual identified that the line, which was scheduled for 'smart' pigging [a device used for cleaning and identifying corrosion], was not going to be pigged in 2008 as a result of deferred work necessary to enable the pigging operation," Sporkin wrote. "As a result of the Ombudsman's intervention, and management support, [BP Alaska] undertook substantial compensatory actions through alternative testing to assure that those parts of the line that presented potential a safety risk to people or facilities were evaluated. Indeed, several areas of risk identified and repaired during the operation, and other areas were more closely monitored. The level of effort undertaken throughout the winter season was extraordinary, and the line was successfully pigged in 2009, with additional repairs ongoing. This is an example of the value from our intervention activities."

There was just one problem with Sporkin's explanation prepared for Congress: it wasn't accurate. Employees said BP management did not immediately deal with the issue involving the natural gas injection line, nor was it originally brought to the attention of Sporkin in 2008 as he indicated in his letter. In fact, the issue surfaced three years earlier when Stuart Sneed, a contract employee with a stellar safety record, brought the matter to the attention of Paul Flaherty, an external investigator who, since 2002, has provided a confidential avenue for BP Alaska employees to raise concerns.

Flaherty also works with Sporkin.

In an interview, Flaherty confirmed employees' accounts that Sneed brought the corrosion issue to his attention in late 2005. Flaherty said he looked into the matter and found enough evidence to prove the allegations were true, and that a large number of "ultrasonic external corrosion inspections" indicated the integrity of the line was a major concern that needed immediate attention.

Flaherty said he raised the issue with BP's officials in Alaska, and was given assurances that they would take action to correct the corrosion. Flaherty said he monitored the progress roughly every six months, and became concerned that corrective measures on this line were not being implemented on a timely basis.

In late spring of 2008, Flaherty discovered BP Alaska had made little progress repairing the line. During this time, he started working with Sporkin and shared the issue with the ombudsman's office, and together they characterized the issue as a level 1, "potential for imminent danger."

Flaherty said Sporkin's involvement got former BP Alaska President Robert Malone to take the issue seriously. Without Sporkin's support and intervention, Flaherty said, serious risks and potential harm to the slope and its workers were possible.

Interestingly, Malone unexpectedly retired from BP in early 2009, which two BP Alaska officials say was due in part to differences he had with Chief Executive Tony Hayward and Chief Operating Officer Doug Suttles over Malone's support of the Office of the Ombudsman and between others within BP that wanted to shut down the office.

According to Jeanne Pascal, the former debarment counsel at the EPA's Seattle office who worked on BP cases for a decade, BP's primary goal in negotiations with EPA in February on a settlement related to debarment was to get rid of Sporkin's office and replace it with a BP employee. Pascal said BP wanted to control the outcome and information being divulged to the government, which Pascal said she "adamantly" opposed.

But Pascal also acknowledged that while many people "feel BP’s external ombudsman’s office is important to keep in place, there are still problems and concerns involving its effectiveness and independence of operation, and implementation of recommended outcomes by BP."

Sporkin's February 3 letter to Minge said that Lamar McKay, the president and chairman of BP America, has extended the ombudsman's contract until June 30, 2011.

Sneed, who employees were interviewed by Flaherty during the course of a separate investigation he conducted into safety issues Sneed raised, said he, "was likely to be the most careful technician on the Slope," and was "considered by his peers to be a very thorough and competent inspector." Sneed became the subject of retaliation by the company under contract to BP, Acuren, for reporting a number of issues on safety and retaliation both through internal BP-sanctioned safety programs, and to Flaherty.

He was eventually fired in 2007, and waged an unsuccessful and costly legal battle against Acuren. Sneed noted that he felt BP management supported Acuren's action of retaliation against him through "passive support of Acuren and no intervention on his behalf even though his efforts were exactly as BP indicates it wants people to behave."

"In my opinion, Stuart was blacklisted and is without a job since 2007 because of his willingness to raise integrity and safety issues," Flaherty said. "In addition to the pain Sneed has experienced for doing the right thing," Flaherty expressed "a deep concern that other workers may not raise safety and other issues to management that need attention, because they are well aware of what happened to Stuart Sneed."

Sporkin noted in his letter to Minge that "contractor retaliation complaints" continue to be "the biggest single category of concerns that our office receives," Sporkin said. "We have made specific recommendations regarding the need to tackle this issue on a programmatic basis. We are now in discussions with [BP Exploration Alaska] and BP America, Inc. to address these issues."

Flaherty said he did not know why Sporkin's letter contained incorrect information. He said he didn't see it until after it was sent to Congress, but he advised Sporkin that the facts surrounding the 2008 case in his letter were incorrect. According to an investigator on the Energy Committee, Sporkin never did contact them with corrections.

Cost-Cutting Concerns

In his letter, Sporkin also said "the most pressing issue at this time" involves BP Alaska's 2010 budget.

"We have received several concerns that come from [BP Exploration Alaska] employees and contractors pertaining to proposed budget cuts that the [concerned employees] claim could lead to safety issues at the Alaskan facilities," Sporkin wrote.

More than a dozen employees allege that BP Alaska has deferred a number of critical safety and maintenance projects due to budget cuts and is performing only minimum upgrades to others.

BP's Alaska budget for 2010 is $1 billion, compared with $1.1 billion in 2009 and $1.3 billion in 2008.

Two BP Alaska officials claim that projects related to "safety and integrity" have been cut by 30 percent this year and BP’s senior managers receive bonuses for not using funds from BP’s designated maintenance budget.

However, a document BP sent to Stupak and Waxman before the Deepwater Horizon explosion said budget cuts have not impacted projects that need to be funded at Prudhoe Bay. The company said the fear by employees that budget cuts would impact "integrity investment" was likely due to "dramatic changes in oil prices and economic uncertainty in late 2008 and continuing into 2009."

"This perception was likely heightened by [BP Alaska's] challenge to its contractors in early 2009 to deliver cost efficiencies," the budget document sent to the House Energy Committee said. "Our commitment to safety as the top priority, continuous risk reduction and bottoms-up planning. Our commitment is to activities that reduce risk - we target efficiency improvements to complete these activities at lower cost."

The document indicates BP deferred or "re-paced" some projects, but the company said it "risk-assessed each of the activities and identified mitigative measures to reduce any risk to safe operations." Deferral of maintenance projects was determined to be the same issue that contributed to the oil spills in 2006, according to a congressional investigation.

Steve Rinehart, spokesman for BP Alaska, said the company is "committed to integrity management and safe, reliable operations. Those projects are priority. The BPXA capital spending plans for 2010 are down about from roughly $1 billion in 2009 to about $850 mil in 2010."

One senior BP official asked, in response to Rinehart's statement: "At what point is credibility stretched too far not to realize you cannot reduce the budget as has been done and not have an impact?"

Still, Sporkin said his office requested and was provided with "a briefing on the budget process underway."

"Since it appeared to be driven by a 'top down' process we inquired into the decision making procedure," he added. "We engaged in a robust discussion including reviewing the perceptions of some members of the workforce that budget cuts were being arbitrarily driven by a requirement for a percentage decrease regardless of potential safety impact, and the position of [BP Exploration Alaska] management that it needed to achieve better efficiencies, improve competitiveness and performance of its contractors, and that it could do so without compromising safe operations."

Sporkin said BP management engaged in a "facility by facility review of the proposed budget and those projects impacted by the budget." Sporkin said the process was well received by employees and managers and BP increased funding for projects, a claim disputed by more than a dozen employees and senior BP Alaska officials interviewed by Truthout.

Marc Kovac, a a mechanic and welder who has worked for BP on Alaska's North Slope for more than three decades, and other BP employees said they don't believe BP has the wherewithal to tackle the issues plaguing Prudhoe Bay nor does he believe Sporkin has been as successful as his letter claims.

"Judge Sporkin and I have had heated discussions over the phone" about safety issues plaguing Prudhoe Bay, Kovac said. "Judge Sporkin seems genuinely concerned. But safety concerns regarding Prudhoe Bay’s mechanical integrity, non essential workers still occupying blast zones and fire and gas warning system projects [remain] years behind schedule and have not been addressed. Rather, they are ignored. The BP Ombudsman’s office appears to exist only to protect BP financial interests and not focus on resolution of safety concerns."

Cross posted from Truthout: http://www.truth-out.org/bps-ombudsman-gave-congress-wrong-information-about-employee-retaliation60912

Jason Leopold is the Deputy Managing Editor at Truthout. He is the author of the Los Angeles Times bestseller, News Junkie, a memoir. Visit newsjunkiebook.com for a preview.

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