Some odious little things are starting to creep out from the woodwork over the British Petroleum pipeline problems and their stunning lack of preventive maintenance.
Greg Palast is an Energy Economist and has already had dealings with British Petroleum (or BP as they like to be called) From his weblog:
British Petroleum's "Smart Pig"
Is the Alaska Pipeline corroded? You bet it is. Has been for more than a decade. Did British Petroleum shut the pipe yesterday to turn a quick buck on its negligence, to profit off the disaster it created? Just ask the 'smart pig.'
Years ago, I had the unhappy job of leading an investigation of British Petroleum's management of the Alaska pipeline system. I was working for the Chugach villages, the Alaskan Natives who own the shoreline slimed by the 1989 Exxon Valdez tanker grounding.
Even then, courageous government inspectors and pipeline workers were screaming about corrosion all through the pipeline. I say 'courageous' because BP, which owns 46% of the pipe and is supposed to manage the system, had a habit of hunting down and destroying the careers of those who warn of pipeline problems.
He cites several examples of this career assassination and continues:
Now let's talk timing. BP's suddenly discovered corrosion necessitating an emergency shut-down of the line is the same corrosion Dan Lawn has been screaming about for 15 years. Lawn is a steel-eyed government inspector who has kept his job only because his union's lawyers have kept BP from having his head.
Indeed, it's pretty darn hard for BP to claim it is surprised to find corrosion this week when Lawn issued a damning report on corrosion right after a leak and spill were discovered on March 2 of this year.
Why shut the pipe now? The timing of a sudden inspection and fix of a decade-long problem has a suspicious smell. A precipitous shutdown in mid-summer, in the middle of Middle East war(s), is guaranteed to raise prices and reap monster profits for BP. The price of crude jumped $2.22 a barrel on the shutdown news to over $76. How lucky for BP which sells four million barrels of oil a day. Had BP completed its inspection and repairs a couple years back - say, after Dan Lawn's tenth warning - the oil market would have hardly noticed.
But $2 a barrel is just the beginning of BP's shut-down bonus. The Alaskan oil was destined for the California market which now faces a supply crisis at the very height of the summer travel season. The big winner is ARCO petroleum, the largest retailer in the Golden State. ARCO is a 100%-owned subsidiary of - British Petroleum.
BP could have fixed the pipeline problem this past winter, after their latest corrosion-caused oil spill. But then ARCO would have lost the summertime supply-squeeze windfall.
Enron Corporation was infamous for deliberately timing repairs to maximize profit. Would BP also manipulate the market in such a crude manner? Some US prosecutors think they did so in the US propane market. The Commodity Futures Trading Commission (CFTC) just six weeks ago charged the company with approving an Enron-style scheme to crank up the price of propane sold in poor rural communities in the US. One former BP exec has pleaded guilty.
Lord Browne, the imperious CEO of BP, has apologized for that scam, for the Alaska spill, for this week's shutdown and for the deaths in 2005 of 15 workers at the company's mortally sloppy refinery operation at Texas City, Texas.
BP touts itself as being very environmentally aware. Here is a little bit BP's environmental record and the Exxon Valdez shipwreck:
Exxon took all the blame for the spill because they were dumb enough to have the company's name on the ship. But it was BP's pipeline managers who filed reports that oil spill containment equipment was sitting right at the site of the grounding near Bligh Island. However, the reports were bogus, the equipment wasn't there and so the beaches were poisoned. At the time, our investigators uncovered four-volume's worth of faked safety reports and concluded that BP was at least as culpable as Exxon for the 1,200 miles of oil-destroyed coastline.
But something else is going on here. The output from the Prudhoe Bay fields is dropping. Here is some data from the BP Prudhoe Bay Royalty Trust IRS form 10-K:
Historical Production
Production from the Prudhoe Bay field began on June 19, 1977, with the completion of the Trans-Alaska Pipeline System. As of December 31, 2005 there were about 1,111 active producing oil wells, 33 gas reinjection wells, 82 water injection wells and 136 water and miscible gas injection wells in the Prudhoe Bay field. Production from the Prudhoe Bay field has declined over the past five years. The average well production rate was about 546 barrels of oil per day in 2001, 375 barrels per day in 2002, 350 barrels per day in 2003, 317 barrels per day in 2004 and 293 barrels per day in 2005.
Emphases mine - down almost 50% in only five years. I do not have production data from before 2001 but I'll be digging a bit... The other thing of interest is the size of the pipeline and the size of the replacement. From the 10-K again:
Transportation of Prudhoe Bay Oil
Production from the Prudhoe Bay field is carried to Pump Station 1, the starting point for the Trans-Alaska Pipeline System, through two 34-inch diameter transit lines, one from each half of the Prudhoe Bay field. At Pump Station 1, Alyeska Pipeline Service Company, the pipeline operator, meters the oil and pumps it in the 48-inch diameter pipeline to Valdez, almost 800 miles (1,287 km) to the south, where it is either loaded onto marine tankers or stored temporarily. It takes the oil about seven days to make the trip. The pipeline has a capacity of approximately 1.4 million barrels of oil per day.
And from Yahoo/AP
But in the meantime, there are still concerns about what this recent leak will mean for the short-term oil supply. Dean, the BP spokesman, said the company is working with suppliers to get replacement pipeline quickly to the site.
BP has approached the Japanese firm JFE Steel Corp. and other steel producers about buying 18-inch pipe to replace the corroded sections at Prudhoe Bay, said David Belvin, senior technology manager of sales and service at JFE's Houston office.
Belvin said the company, a unit of JFE Holdings Inc. that is one of the top steel pipe manufacturers, is asking for deliveries in September, which will be a challenge.
Emphases mine. Hmmm... The area of a circle is computed by multiplying the the square of its radius by 3.141. The area of an 18" circle is 254 sq. in. The area of a 34" circle is 907 sq. in. We are talking about a three-times reduction in carrying capacity. And this is their permanent solution. Is Prudhoe Bay running dry?
