The reality of the past and the hope of the future collided June 7 when Tony Brock, head of BP Exploration (Alaska)’s new technical directorate, talked to the House Resources Committee about how BP is moving ahead to fix corrosion problems at Prudhoe Bay, both with a new oil transit line system and with organizational changes.
A number of the committee members, as well as other legislators who sat in, were more interested in some three dozen documents, including internal BP memos dating back a number of years, which focused on cost-cutting issues at the Prudhoe Bay field.
Brock, who arrived in Alaska in August to head up the technical directorate, answered some questions on terminology used in the documents, but said he was not in a position to comment on what went on in the past.
The committee’s concern was two-pronged: was cost cutting in the past responsible for the corrosion discovered last year which resulted in the shutdown of half of Prudhoe Bay for several months and how would the replacement oil transit lines BP is in the process of building impact state revenues under the new Petroleum Profits Tax, which passed the Legislature just as the second Prudhoe Bay leak of the year was being discovered and BP was announcing a field shutdown.
Referring to presentation materials which Brock had brought, House Resources Co-Chair Carl Gatto, R-Palmer, said it was a wonderful-looking brochure, “but these e-mails are the thing that really captures my attention.”
Gatto said he hoped Brock would convey to BP management the frustration of legislators that the brochure won’t “satisfy the difficulties we’re seeing with the record.”
Brock: actions BP has takenBrock told Gatto he would take the message back to BP.
He agreed that “words are words; presentations are presentations. They actually don’t mean anything unless you take action.”
BP has taken action, Brock said.
Setting up the technical directorate which he heads is one step. The directorate is “an independent body,” he said. “So these types of inquiries and queries (represented by the e-mails) actually have a functional oversight rather than being buried within the line organization.”
The technical directorate, he said, has “independence when it comes to issues of safety or integrity of our facilities. We have an independent body now that has oversight on the decision-making process.”
The corrosion group was formerly “imbedded in the Greater Prudhoe Bay organization,” Brock said, but now reports directly to him and he, in turn, reports directly to Doug Suttles, the president of BP Exploration (Alaska). Brock said that means greater transparency, and issues such as those raised in the e-mails about the impact of cost cutting on corrosion “aren’t left buried in the organization itself.”
The company has also reassessed its understanding of risk, he said.
An analysis done for BP by Booz Allen indicated that cost cutting wasn’t the issue, but rather BP’s awareness of risk. In response, BP has put in place a rigorous risk review process. “And that process is being imbedded at the field level; it’s being imbedded at the technician level; (and) at the operator level” and is being “managed up through the field line to the senior members” of BP’s management team in Alaska.
That system will be reviewed on a regular basis, Brock said. “It’s my role to present that to Doug Suttles, the president of BP Alaska, and to ensure that we take proper action on these types of issues so they get resolved.
“Overall we’re focused on reducing risk within our fields.”
Frustration disappointingAsked by Rep. Paul Seaton, R-Homer, about a 2003 e-mail which talked about risk impacts related to budget cuts, Brock said employees were obviously frustrated in “trying to get the balance right between what’s the right amount of expenditure to ensure that our systems are integrally safe and that we have a viable system.” Budget concerns are part of running any business he said, but “certainly the people were frustrated and they felt they were compromised in some of their choices.”
The company is making changes, he said.
The technical directorate currently has more than 150 technical experts. “That is different,” Brock said.
The corrosion management team reports to Brock. “If they have concerns about compromising the program then I will address them. And I will address them independently of the line (organization) whether it relates to production or to costs. My primary concern is about the integrity and the safety of our operations.”
The management team is “committed to changing some of the processes that we use to manage and make decisions,” he said and is also working on open communications. If “our employees have concerns, we want them to be able to communicate them to senior leadership without fear or concern.” Brock said BP is encouraging people “to raise these issues so they can be addressed.”
BP has a new leadership team in place and is starting to address “the systemic culture” and what that culture needs to be so that it can be “a leading operator in Alaska for the next 30 years.”
New pipelines smallerIn reviewing the replacement oil transit line system BP is now putting in place, Brock said the existing system was made for four times the capacity needed now and in looking at lessons learned from the corrosion found in 2006 BP determined it needed to redesign the system for the right level for the next 50 years, with smaller diameter oil transit lines. The new system will be sized right so that velocities in the lines prevent the leak-causing corrosion that occurred in 2006.
There will also be permanent pig launching and receiving facilities which can be accessed and used year round.
The work will include 20 new modules and skids.
Resources Co-Chair Craig Johnson, R-Anchorage, said he was concerned about the new system because of the way the state’s Petroleum Profits Tax is structured. “You’re responsible to your shareholders (and) we’re responsible to ours,” Johnson said.
Brock said BP believes a new system is necessary for the continued operation of Prudhoe Bay over the next 30 years. New facilities are necessary because more and more water is now produced with the oil. Viscous oil is being developed from the western side of the field, which requires modifying the pipeline system to handle that oil. Putting more viscous oil into the exiting lines would “actually further reduce the velocity,” he said. Reduced velocity is one of the factors identified as causing corrosion in the oil transit lines.
BP also has to address “integrity and standards issues” put in place by the U.S. Department of Transportation and the Alaska Department of Environmental Conservation, and now by the Petroleum Safety and Integrity Office.
Those standards are higher, he said, and meeting them with the current pipeline system would be a struggle going forward.
New leak detection systemBP is also trying a new leak detection system.
The Leos system “is sensitive to very small leaks,” Brock said. The existing system did not detect pinhole leaks where drops of oil were coming through.
The Leos system hasn’t been applied aboveground in the Arctic before. “We have a similar system on our Northstar transit line but that’s buried in the seabed,” Brock said.
Using the system above ground exposes it to a much harsher climate and “much greater swings in temperature.”
It will take a couple of years, through summer and winter operation, to prove up the system.
Two sections of the replacement oil transit line were constructed this winter, he said. “It has not been put in service yet; it needs modules to be constructed to allow us to do that.”
Overall replacement of 16 miles of the oil transit lines are expected to be commissioned in the fourth quarter of 2008, he said.
Extensive tests and inspections are being carried out on the existing system, Brock said, “to ensure the integrity of that system.”