Report says BP helped state in cheating probe

Posted: Monday, June 28, 2010

ANCHORAGE — An Anchorage newspaper is reporting that Alaska officials allowed British Petroleum PLC and a drilling contractor to help investigate complaints lodged in 2005 that the contractor cheated on tests of blowout preventers with BP’s knowledge.

The Anchorage Daily News said in a story published Sunday that representatives of BP and the contractor, Nabors Alaska, attended as state investigators interviewed witnesses, including Nabors rig workers and the BP representatives who oversaw their work.

At the time, BP called the probe a “joint investigation” by BP, Nabors, the state Department of Environmental Conservation and the Alaska Oil and Gas Conservation Commission, which ultimately ruled there was no widespread pattern of wrongdoing and declined to levy penalties.

BP’s spill disaster in the Gulf of Mexico is blamed in part on the failure of its blowout prevention equipment.

Chuck Hamel, a longtime Alaska oil industry critic, made the 2005 allegations public in complaints to Congress and the commission. He said there are parallels to the Gulf blowout, such as accusations that BP took shortcuts to save money, that regulators were too close to industry and that there has been a “revolving door” of regulators going to work for the companies.

John Norman, a commissioner of the oil and gas conservation commission, said the agency never agreed to characterize it as a joint investigation.

According to Norman and commission investigator Jim Regg, the presence of the company officials in interviews was for the convenience of the workers, who worked shifts on the North Slope. Norman said the commission’s final report was completely independent of the one by the companies.

At times, company representatives led the questioning, according to the Daily News, which reported that in at least three instances, after witnesses confirmed allegations, company lawyers took them aside for private conversations away from state investigators. State records show that one Nabors employee recanted his statement immediately after emerging from his private meeting with the Nabors attorney.

Len Seymour, BP’s manager of health, safety and environment in Alaska, sent in a Feb. 10, 2005, e-mail to Norman — then chairman of the commission — an attachment of the company’s “talking points,” setting forth what BP planned to say if a reporter asked about the investigation.

The first “key message” in the attachment noted that “An ongoing investigation is being conducted by a multi-disciplinary team comprised of ADEC (Alaska Department of Environmental Conservation), AOGCC (Alaska Oil and Gas Conservation Commission), BP and Nabors.”

The only response message in the record was an e-mail Norman sent to a commission assistant when he forwarded the talking points. Norman wrote, “For incident investigation file.”

Tom DeRuyter, a DEC employee who took part in the investigation, said it was clear to him that the agencies and the companies were working together even though they wrote their own conclusions.

According to documents in the file, at least seven Nabors employees reported they saw incidents of falsified blowout prevention tests on company rigs.

But when the commission issued its decision and order on the matter in June 2005, it said it could not validate “anecdotal reports” of widespread cheating. The commission cited only the two admissions by the single driller, who lost his job.

The commission found the violations “were isolated, not condoned or authorized by Nabors, and not harmful to personnel, the environment or the recovery of hydrocarbons.” It decided against levying a civil fine against Nabors, instead assessing the company $10,000 to partially recover the costs of the investigation. Nabors paid up.

Beside paying the penalty, Nabors agreed to more stringent test procedures and BP vowed to supervise its contractors more closely.

“I just think it’s a cover-up, is all it is,” Mike Mason, one of two former Nabors employees who made the initial allegations, said recently. “They’re just working together to hide it.”

BP and Nabors did not respond to requests by the Daily News for comment.

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