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BP sides with AOGCC against Alyeska Issue whether commission’s inspectors must participate in Alyeska employee safety program; BP says it can’t compel regulators Kristen Nelson Petroleum News
The Alaska Oil and Gas Conservation Commission, which regulates downhole activities and typically deals with oil and gas companies, is involved in a dispute with Alyeska Pipeline Service Co. over whether the commission’s inspectors must comply with Alyeska safety protocols when witnessing meter tests at Pump Station 1.
The commission does not regulate pipelines, and is only embroiled with Alyeska because commission inspectors witness tests of lease automatic custody transfer, or LACT meters, which measure oil going into pipelines — important to the state since it collects royalties based on production volumes.
One such meter is inside a metering building at Pump Station 1. Alyeska argues that Occupational Safety and Health Administration regulations require that agency inspectors comply with energy isolation safety protocols by “hanging a lock” when present for meter testing, based on OSHA requirements that companies treat all those involved in energy isolation situations as employees for safety purposes.
This is a new requirement, and not one that commission inspectors encounter when witnessing other meter tests. The commission maintains that its inspectors are not required to participate in Alyeska’s safety protocols.
BP disagrees with Alyeska At the end of an Oct. 11 hearing where Alyeska officials discussed the pipeline operator’s safety culture and its reading of OSHA regulations as requiring that even an inspector observing a test must be treated as an employee and comply with company safety protocols, an attorney with BP Exploration (Alaska) told the commission that BP does not believe it is required to treat regulators as employees for safety purposes.
Randall Buckendorf told the commission that BP takes the position that it can ask regulators to comply — by asking state and federal agency personnel to drive safety at its fields, for example — but does not believe it can mandate compliance with its safety standards.
Buckendorf said he’d discussed the issue with BP Exploration (Alaska) President John Minge, and said the issue has the attention of the pipeline owners. BP is the regulated entity and doesn’t believe it is in noncompliance, he said.
BP, at 47 percent, is the largest of the owners of the trans-Alaska oil pipeline system, which is managed for the owners by Alyeska; other owners are ConocoPhillips, ExxonMobil, Unocal Pipeline and Koch Alaska Pipeline.
Alyeska: hanging a lock required In addition to Alyeska officials, the pipeline operator was represented at the hearing by Kenneth Eggers, an attorney with Groh Eggers LLC.
Eggers told the commission that he believes the law requires a commission employee to hang a lock; and, he said, from a practical perspective, the requirement is in the interests of safety.
Eggers offered to sit down with the commission or its staff and work on the issue.
Greg Jones, senior vice president of Alyeska’s technical support division, said he believes the commission’s position is misguided. Alyeska is not trying to regulate a regulator, he said: This is truly about safety.
Jones said that a decade ago, Alyeska had some 30 injuries a year, but with changes in the company’s safety procedures starting in about 2002, that has dropped to only four injuries a year.
Whitney Grande, Alyeska senior health and safety manager since 2008, said safety is embedded in everything Alyeska does. He said when he joined the company he focused on “life critical” programs, and one of the big three was energy isolation — the issue around hanging a lock for the meter test.
Grande said a 2008 OSHA directive put the burden on the employer for both its own employees and for the employees of others, with three options for other employers: follow the host’s program, follow their own energy isolation program or combine the two.
Different procedures at different locations Commissioner John Norman said it was problematic for the commission when there are different procedures at different locations. He told Grande he was trying to understand why, when commission inspectors witness multiple meter tests, there is an issue only at the Pump Station 1 location.
Grande said he couldn’t speak for other operators’ procedures; our program is compliant, he said.
In a back and forth with Commissioner Cathy Foerster, Jones said everyone who enters facilities is asked to comply; he said Alyeska’s position is that if you have your own procedure, you’d do that, or you could comply with ours.
Eggers said he believes the law requires hanging a lock for energy isolation and said his legal opinion is that the commission is required to have a program.
Asked by Forester if locations where inspectors are not required to hang a lock would be in violation, Eggers said he’d have to look at the situation.
Foerster pointed out that the commission’s inspectors are never without an Alyeska escort.
She was also concerned that Alyeska personnel testifying were unfamiliar with AOGCC regulations on custody transfer meters and asked if Alyeska was an operator under AOGCC regulations.
Norman questioned the location of the meter and asked if the meter needs to be at that location. Why is the meter at a location where one company is restricting access but the meter is owned by someone else, he asked.
Norman said he keeps returning to the meter test witnessing which ordinarily would be a nonevent. He said the commission does not become an active participant in fulfilling its role in witnessing the meter tests and normally an escort would suffice.
And, he said, the commission doesn’t want to be confronted with a variety of requirements at different locations.
BP considering ramifications BP is the largest owner of Alyeska, and BP’s Buckendorf said Alyeska’s safety goals are laudable. He said he was at the hearing to testify on whether BP believes a commission inspector is required by law to hang a lock.
He said BP does not believe it is required to treat agency employees as company employees for purposes of energy isolation.
Buckendorf said BP does not believe it can mandate such actions as hanging a lock.
In response to a question from Foerster, Buckendorf said the Prudhoe Bay unit is the owner of the meters, but since the 1970s Alyeska has always done the proving and AOGCC has always witnessed.
On an issue raised by Foerster — whether Alyeska was designated as operator of the meter on behalf of the owners — Buckendorf said he did not know. The meter is original equipment and has been in place since 1974 or 1975, he said.
The meter is oversized for current needs and there is a plan to replace it, Buckendorf said, although it would be very costly to move it.
He said other LACTs operated by field operators are on Alyeska property but outside the fence.
Norman suggested the attorneys, and the commission’s assistant attorney general, look at some accommodation to recognize the commission’s needs while allowing Alyeska to continue its program of safety improvements.
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