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State trying to lift the industry veil Alaska is looking for a way to get the oil industry to share confidential information in order to craft a risk assessment Eric Lidji Petroleum News
The state is trying to coax major players in the oil industry to hand over confidential material needed to complete a risk assessment of oil and gas infrastructure in Alaska.
The problem is figuring out a way to assure the industry that any confidential information given to the state won’t also end up on the desk of competitors, or someone more sinister.
The state needs the information to get an accurate snapshot of the risks facing wells, pipelines and gathering lines, processing plants, and marine loading docks in Alaska.
Oil companies working in Alaska give confidential information to state agencies all the time, particularly through tax filings, permitting requests and reservoir management.
Those exchanges are typically protected by strict statutes, though, many of which even prohibit one state department from sharing information with another state department.
The team behind the risk assessment doesn’t have all those protections.
The industry is concerned that information shared for the assessment could become subject to an open records request. If so, they say, competitors could get trade secrets, while potentially sensitive blueprints and diagrams could end up in the wrong hands.
Even if an open records request is denied, it could open the door to lawsuits.
“I’m sympathetic,” said Ira Rosen, state project manager for the risk assessment. “I think that there are a lot of good reasons for that.”
But the information is central to the assessment. Without knowing the current condition of the infrastructure, the state can’t accurately judge the likelihood of various risk factors.
Not much sharing so far The $5 million assessment is probably the most comprehensive undertaken in Alaska, a look at what can go wrong at major infrastructure on the North Slope, in Cook Inlet and along the trans-Alaska oil pipeline, as well as the likelihood and impact of failure.
The assessment grew out of high profile oil spills on the North Slope in 2006 caused by corrosion. In requesting funding for the project in May 2007, Gov. Sarah Palin tied the assessment to the Petroleum Systems Integrity Office, which she formed around that time to revise and replace a broader program from the Murkowski administration.
In June 2008, the state hired Doyon Emerald and ABS Consulting to design and implement a methodology used for assessing risk factors. Those contractors are working closely with a broad range of state agencies, as well as the university and Legislature.
Throughout the second half of 2008, Doyon Emerald held meetings around the state, not only with the public, but also with local governments, state departments and the industry.
The goal was to educate various stakeholders about the assessment, but also to get ideas about how to go forward, including the scope of the project and the methodology.
“We didn’t get very much input from industry at that point,” Rosen said.
For the assessment, the Alaska Oil and Gas Association is representing the major infrastructure owners in Alaska, including ConocoPhillips, one of the largest producers and operators in the state, but not a member of the statewide oil and gas organization.
According to a progress report released in January, Doyon Emerald and a team from the state met with AOGA and/or with other industry representatives several times last year.
While both sides insist they have managed to open lines of communication, they haven’t yet found a way to share information. The state particularly wants information about existing risk management programs and previous risk assessments on infrastructure.
“In some respects it’s a little bit of a chicken and egg situation,” said Marilyn Crockett, executive director of AOGA.
Crockett said industry couldn’t provide information without a better sense of the scope of the project, but the project leaders wanted industry information to help develop the scope.
“Frankly, the project scope is between the state and the contractor,” Crockett said.
In an attempt to resolve the deadlock, the state assigned a lawyer from the Attorney General’s office to work on crafting a confidentiality agreement to cover information given to the state from the industry. The two sides are currently tweaking that document.
Next few months critical But the clock is ticking.
In the coming weeks, the focus of the project will shift from gathering information and ideas to designing the methodology that will be used to perform the risk assessment.
Rosen said industry participation would be more important during this coming phase.
“It’s an opportunity for them to be inside the process as opposed to outside the process,” Rosen said.
The state hopes to have a draft version of that methodology done by early March.
Any confidentiality agreement needs to be in place well before July, when Doyon Emerald starts implementing the risk assessment methodology it is currently crafting.
While the state wants industry cooperation, it said the project would continue regardless.
“We have to forge ahead, and forging ahead means making certain assumptions,” Rosen said.
If the state doesn’t get the information it wants from industry, it plans to use “worst case scenario” assumptions about the infrastructure to guarantee all possibilities have been covered. By definition, many of those assumptions would be harsher than reality.
Crockett said she isn’t worried.
“I’m confident we are going to be able to reach an agreement,” she said, adding that AOGA and the industry it represents want to see the project succeed and are “not at all standing in the way of this project moving forward.”
The project is scheduled to run through 2010.
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