U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

30–665 PDF 2007

LOW PRESSURE LIQUID PIPELINES: IN

THE NORTH SLOPE, GREATER

PRUDHOE BAY, ALASKA

(109–95)

HEARING

BEFORE THE

COMMITTEE ON

TRANSPORTATION AND

INFRASTRUCTURE

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

SEPTEMBER 13, 2006

Printed for the use of the

Committee on Transportation and Infrastructure

(
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

DON YOUNG, Alaska, Chairman

THOMAS E. PETRI, Wisconsin, Vice-Chair

SHERWOOD L. BOEHLERT, New York

HOWARD COBLE, North Carolina

JOHN J. DUNCAN, JR., Tennessee

WAYNE T. GILCHREST, Maryland

JOHN L. MICA, Florida

PETER HOEKSTRA, Michigan

VERNON J. EHLERS, Michigan

SPENCER BACHUS, Alabama

STEVEN C. LATOURETTE, Ohio

SUE W. KELLY, New York

RICHARD H. BAKER, Louisiana

ROBERT W. NEY, Ohio

FRANK A. LOBIONDO, New Jersey

JERRY MORAN, Kansas

GARY G. MILLER, California

ROBIN HAYES, North Carolina

ROB SIMMONS, Connecticut

HENRY E. BROWN, JR., South Carolina

TIMOTHY V. JOHNSON, Illinois

TODD RUSSELL PLATTS, Pennsylvania

SAM GRAVES, Missouri

MARK R. KENNEDY, Minnesota

BILL SHUSTER, Pennsylvania

JOHN BOOZMAN, Arkansas

JIM GERLACH, Pennsylvania

MARIO DIAZ-BALART, Florida

JON C. PORTER, Nevada

TOM OSBORNE, Nebraska

KENNY MARCHANT, Texas

MICHAEL E. SODREL, Indiana

CHARLES W. DENT, Pennsylvania

TED POE, Texas

DAVID G. REICHERT, Washington

CONNIE MACK, Florida

JOHN R. ‘RANDY’ KUHL, JR., New York

LUIS G. FORTUN ̃ O, Puerto Rico

LYNN A. WESTMORELAND, Georgia

CHARLES W. BOUSTANY, JR., Louisiana

JEAN SCHMIDT, Ohio

JAMES L. OBERSTAR, Minnesota

NICK J. RAHALL, II, West Virginia

PETER A. DEFAZIO, Oregon

JERRY F. COSTELLO, Illinois

ELEANOR HOLMES NORTON, District of

Columbia

JERROLD NADLER, New York

CORRINE BROWN, Florida

BOB FILNER, California

EDDIE BERNICE JOHNSON, Texas

GENE TAYLOR, Mississippi

JUANITA MILLENDER-MCDONALD,

California

ELIJAH E. CUMMINGS, Maryland

EARL BLUMENAUER, Oregon

ELLEN O. TAUSCHER, California

BILL PASCRELL, JR., New Jersey

LEONARD L. BOSWELL, Iowa

TIM HOLDEN, Pennsylvania

BRIAN BAIRD, Washington

SHELLEY BERKLEY, Nevada

JIM MATHESON, Utah

MICHAEL M. HONDA, California

RICK LARSEN, Washington

MICHAEL E. CAPUANO, Massachusetts

ANTHONY D. WEINER, New York

JULIA CARSON, Indiana

TIMOTHY H. BISHOP, New York

MICHAEL H. MICHAUD, Maine

LINCOLN DAVIS, Tennessee

BEN CHANDLER, Kentucky

BRIAN HIGGINS, New York

RUSS CARNAHAN, Missouri

ALLYSON Y. SCHWARTZ, Pennsylvania

JOHN T. SALAZAR, Colorado

JOHN BARROW, Georgia

(II)
(III)

CONTENTS

TESTIMONY

Page

Barrett, Vice Admiral Thomas, Administrator, Pipeline and Hazaedous Materials Safety Administration, U.S. Department of Transportation ................... 12

Epstein, Lois, Senior Engineer, on behalf of Cook Inlet Keeper and the Pipeline Safety Trust .................................................................................................. 32

Marshall, Steve, President, BP Exploration Alaska, Inc. ..................................... 32

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Carnahan, Hon. Russ, of Missouri ......................................................................... 73

Cummings, Hon. Elijah, of Maryland .................................................................... 74

Honda, Hon. Michael M., of California .................................................................. 88

Poe, Hon. Ted, of Texas ........................................................................................... 136

Rahall, Hon. Nick J., II, of West Virginia ............................................................. 137

Tauscher, Hon. Ellen, of California ........................................................................ 139

PREPARED STATEMENTS SUBMITTED BY WITNESSES

Barrett, Vice Admiral Thomas ............................................................................... 46

Epstein, Lois ............................................................................................................ 79

Marshall, Steve ........................................................................................................ 90

(1)

LOW PRESSURE LIQUID PIPELINES: IN THE

NORTH SLOPE, GREATER PRUDHOE BAY,

ALASKA

Wednesday, September 13, 2006,

HOUSE OF REPRESENTATIVES, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, WASHINGTON, D.C.

The committee met, pursuant to call, at 11:00 a.m., in Room

2167, Rayburn House Office Building, the Honorable Don Young

[Chairman of the committee] presiding.

Mr. YOUNG. The Committee will come to order.

Today the Committee is conducting an oversight hearing on the

operation of low stress pipelines on the north slope of Alaska.

As the Congressman that represents all of Alaska, I am deeply

concerned about what occurred. My caring for the environment in

the State, and especially its workers, has been well known.

In March of this year there was a release of approximately 5,000

barrels in the eastern operating area of the North Slope, a BP Production area.

The Pipeline and Hazardous Materials Safety Administration immediately sent teams to the North Slope. PHMSA issued corrective

action orders to BP following that release which required BP to immediately begin to inspect all its other low stress pipelines on the

North Slope. The process began in the spring and continued all

summer.

On July 19th, this Committee reported out by voice vote the

Pipeline Safety Improvement Act of 2006. In that bill, we required

PHMSA to regulate low stress pipelines nationwide. We defined

low stress pipelines in the bill to include the pipeline on the North

Slope that was involved in the release of oil in March. The bill required PHMSA to complete the low stress pipeline rules within one

year.

In August 2006, in conjunction with inspections which PHMSA

ordered to be conducted, BP detected a release of approximately 25

barrels of oil on another low stress pipeline, this time in the Western Operating Area. As was done with regard to the release that

occurred in March, the leak was immediately cleaned up and

PHMSA ordered repairs to be done immediately.

Last week, PHMSA announced a proposed new rule to regulate

low stress pipelines. This is the same rule making mandated by

this Committee in the bill we reported in July. The vote of the

Committee occurred before the August release of 25 barrels, but

after the March release of 20,000 barrels. This time line is important to put things in context.
2

The context is that PHMSA did its job and continues to do its

job. BP is, and will continue to be, held accountable for future

North Slope operations by PHMSA and other Federal agencies with

enforcement authority. That is how law is supposed to work.

PHMSA must do their job in keeping these pipelines safe, and

I strongly support the efforts and the regulations they put forth.

BP has a job to do on the North Slope, and I will insist that they

do it correctly.

The recent release of oil on the North Slope concerns me because

the oil that we produce in Alaska provides energy for the entire

Nation. I want our oil delivered to its destination safely, without

delay and without harm to the environment.

I will ask what steps are being taken to make sure that BP does

the job and this tragedy doesn’t happen again.

I am not here today to beat a dead horse or old oil. I just want

to make sure it does not happen again.

Investigations are being conducted and all committees are having

hearings and everything is going on, especially for the media, but

my interest is getting Alaskan oil delivered safely, safely within

Alaska, and to the lower 48 without delay, without harm to the environment.

May I suggest respectfully again, I am deeply disappointed in the

actions not of individuals, necessarily, or with BP at this time, but

over the 27 years and not taking the time to understand the pumping of oil that we are pumping now was not the same oil we

pumped at first. There is a problem of more water. There is a problem of more—they call them bugs or whatever it is that caused the

corrosion, and no one paid attention to—microbes, yes—attention to

the corrosive factor in those pipelines, the collection lines.

The other factor—and this may not be known—is the fact that

we are producing less oil. And as you produce less oil, the oil does

not move as rapidly as it would at first with the 2 million barrels

a day. Consequently, there is a more stagnant period of time, a

slower period of time when those microbes and other, I call, corrosive actions can take place.

Having said that, I have high hopes that BP and other oil companies within Alaska that do drill and do deliver oil to Alyeska, that

they understand that this is a more serious problem than they may

have thought in the past. It is a 29-year-old pipeline. Now, people,

keep in mind 29 years old is old for any facility.

The Trans-Alaska Pipeline itself, Alyeska, I may compliment

them. We concentrated on them. We had hearings on the Alyeska

Pipeline. We had complaints. But they have done an outstanding

job. They have used the smart pigs, they have used the way to detect the corrosion. They have addressed it immediately. They have

gone through earthquakes. All these things occurred and we have

been very fortunate.

Now, I will say nothing is fail-safe in any industry. Anybody who

thinks it is is dead wrong. But they have done an outstanding job.

I do think there was a slackness upon certain individuals that the

lines that we collect the oil from were not properly inspected nor

repaired. Now, I have got information that this is all going to be

replaced, if I can from my colleagues, with brand new steel. That

is good. It probably should have been done sooner.
3

I asked the question the other day of some individuals with the

engineering companies have we looked at other forms of pipe. Just

because this was built by steel in 1975, 1976, do we have to go

back to steel, or do we go back to some more modern—by the way,

which comes from petroleum products, such things as Quest. There

is a pipe that is plastic. It doesn’t freeze. That is the first thing,

does it freeze. It doesn’t freeze. It expands and contracts, and it

doesn’t corrode.

So those are the things I hope these hearings will bring forth.

With that, I will yield to my good friend from Minnesota, Mr.

Oberstar, for any opening comment he may make.

Mr. OBERSTAR. Thank you, Mr. Chairman.

First of all, I want to express my appreciation for responding so

quickly as you did, and thoughtfully, to a request for hearings on

this issue. And I concur with you, the issue is not to find fault or

blame, but to make sure that failures of the past are not repeated

in the future.

I held the first hearings on pipeline safety of this Committee

back in the early 1980s, mid-1980s, actually. I actually planned the

hearings well in advance. The Committee staff and I had done a

great deal of work in preparing for a hearing pipeline safety and

then there was an explosion in Mounds View, Minnesota, just outside of my congressional district. It was a gasoline pipeline that

had been put in this area when it was rural.

Over time, suburban sprawl overtook the pipeline. And, as we

learned in the investigation afterward, cathodic protection on that

line had failed, corrosion set in, there was a leak, gasoline was

slowly seeping into a suburban street over a period of a couple of

weeks. And the fumes, which are very heavy, settled down close to

the ground. At 2:00 a.m. one weekday morning, a car driving along

with a loose tailpipe struck the pavement, caused a spark, ignited

the street. The pavement buckled and melted. The mailboxes on

the street melted. A mother and six-year-old child rushed outside

their front door to see what was going on, and they incinerated.

We withheld the hearing until the NTSB investigation was nearing its conclusion and we had factual data, and that is when we

learned the information about failure of cathodic protection. There

were no shutoff valves in that suburban area; there was no action

taken by the pipeline company to limit the damage; there was no

pigging of the line over a period of many years, many, many years.

And it was that series of hearings that we found that the Office

of Pipeline Safety was understaffed, the State inspection offices

were grossly understaffed, the agency was underfunded, and the

result of our hearings was to make recommendations for increase

in staffing and funding of the Federal and the State pipeline safety

offices and increase the frequency of pigging, as well as the automatic shutoff valves, particularly in settled areas, regardless of

whether they are high pressure or low pressure lines or type of

commodity moving through the line.

Norm Mineta was then the Chair of the Surface Subcommittee.

He and I went to the floor with an amendment to increase by $10

million the budget for Office of Pipeline Safety and succeeded in

getting that funding.
4

Over time, the staffing has slipped. Over time, the funding for

the States inspection offices, in partnership with the Federal Government, have slipped.

But what was really important that came out in that hearing,

and a matter that I brought to Pipeline Safety from the hearings

and inquiries we made on aviation safety, was the corporate culture of safety. The Federal Government doesn’t run the pipelines.

The Federal Government doesn’t do the maintenance on airplanes.

The Federal Government doesn’t do the maintenance on railroads

or trucking lines.

But it oversees them to make sure that they are meeting a minimum standard of safety, and that standard is set by the Federal

Government and the role is to see that the pipeline companies conform. And they won’t conform if there isn’t a corporate culture of

safety. It starts in the boardroom, not on the pipeline. And what

is missing in this scenario with the number of failures of BP is a

corporate culture of safety.

The Office of Pipeline Safety, which we reconstituted to the Pipeline Safety Administration, has gone through a number of changes

in personnel, in mode of operation, but I think its current director,

administrator, Admiral Barrett, is the best we have seen in that

office in probably 20 years. He brings from the Coast Guard a culture of safety. He brings a no-nonsense attitude to inspections and

to dealing with pipeline operators.

We also have to set the policy. We have legislation moving along

that we need to strengthen and to improve the oversight of safety

and the conduct of safety by both the Office of Pipeline Safety and

the companies themselves.

In March, in August, crude oil spills substantial amounts, low

stress pipeline, and then subsequently to the Alaska there was a

failure in Toledo, Ohio; 8400 gallons of unleaded gasoline got into

a creek that found its way into Lake Erie. We don’t need a repeat

of the Cuyahoga River experience in 1968, when the river caught

on fire because so much pollution was being dumped, including

crude oil and gasoline. And that had the effect of spurring the Congress on to increasing funding for sewage treatment plant construction and cleanup and the stronger Clean Water Act of 1972.

I am not going to go through all of that, and I will put this into

the record, the Western Operating Area policy that was supposed

to have smart pigs run through the lines every year, the Eastern

Operating Area BP didn’t plan any regular maintenance, or the

markup in which one of our colleagues proposed to eliminate the

requirement in current law to reinspect gas pipelines once every

seven years. The industry standard is 20 years between gas transmission inspections. That is not sufficient. That is intolerable.

Let me just close with the framework within which safety must

be conducted. In the preamble, the opening paragraph of the

PHMSA law establishing this new agency: ‘‘In carrying out its duties, the Administration shall consider the assignment and maintenance of safety as the highest priority, recognizing the clear intent,

encouragement, and declaration of Congress to the furtherance of

the highest degree of safety in pipeline transportation.’’

We have to hold the agency to that highest accountability level.

We have to hold the industry to that highest accountability level.
5

We have the public interest in our hands, it is our responsibility,

and we have to insist that it is carried out in the spirit of the direction of the law, the directive, I mean, of the law. And that is not

something new, this is the opening preamble of the 1958 FAA Act,

that safety in aviation shall be maintained at the highest possible

level.

I hope that the outcome of these hearings will be to illuminate

practices of the industry, the enforcement of the agency, and the

direction we need to go to strengthen both.

Mr. YOUNG. I thank the gentleman.

Mr. Petri?

Mr. PETRI. Mr. Chairman, thank you for holding this hearing.

The Highways Transit and Pipeline Subcommittee, which I chair,

has jurisdiction over pipeline safety, and over the past several

months we have been working to reauthorize the pipeline safety

programs.

The Pipeline Safety Improvement Act of 2002, which this Committee passed four years ago, expires on September 30th of this

year. H.R. 5782, the Pipeline Safety Improvement Act of 2006, was

reported out of this Committee in July. We hope to pass the bill

off the House floor before the end of the month.

I am happy to see Admiral Barrett, the Administrator of the

Pipeline and Hazardous Materials Safety Administration, here

today. His agency has been very active over the past six months

in its efforts to deal with the two pipeline leaks on the North Slope.

In response to the March 2nd leak, his agency issued a Corrective Action Order that required British Petroleum to conduct a rigorous inspection regime on all of its low pressure pipelines on the

North Slope. As a result of this federally mandated inspection regime, British Petroleum discovered several flaws in its low pressure pipelines on the North Slope and are in the process of replacing approximately 22 miles of pipeline.

In addition, last week, his agency published a Notice of Proposed

Rulemaking that proposes new and more rigorous safety requirements for rural low pressure oil pipelines in unusually sensitive

areas like Prudhoe Bay, Alaska.

I look forward to hearing from today’s witness from British Petroleum as well, Mr. Steve Marshall. While I am happy to hear

that his organization will be replacing its entire low pressure pipeline network on Alaska’s North Slope, I am concerned about their

inspection regime for these pipelines prior to the March 2nd leak.

This whole situation basically proves the wisdom of the old saying

an ounce of prevention is worth a pound of cure, and they are now

going to be spending $1 billion. They could have probably done a

lot better for their stockholders and for the industry and for public

confidence in the pipelines of our Nation by being more proactive.

We realize that some of these pipelines were acquired from a previous owner, but I am still concerned that, given their age and the

unique problems that are caused by the extreme climate on the

North Slope, the pipelines have not been thoroughly inspected for

several years. These are unique pipelines, they are low pressure

large pipelines, and they pose some unique problems. Any solution

we come up with for this should be tailored to the nature of the

problem. We would otherwise face the danger of mandating a lot
6

of expense on the industry that would not be appropriate to the

problem that we are dealing with, which is basically created by the

conditions of a large low pressure pipeline and the dynamics of how

that works, is my understanding of it.

In any event, thank you very much, Mr. Chairman. I look forward to the testimony of our witnesses today.

Mr. YOUNG. I thank the gentleman.

Are there any other opening statements? Mr. DeFazio, you had

your cup of coffee. Are you ready?

Mr. DEFAZIO. Yes, Mr. Chairman, I did.

[Laughter.]

Mr. DEFAZIO. Just starting to kick in. I will get better as we go

along. Thank you, Mr. Chairman.

I have got to say that I am, you know, at best, bemused by BP

in this instance. I can’t understand how a publicly held company

could acquire assets from another publicly held company and not

conduct due diligence, that is, what are we buying, conduct a basic

inspection.

You know, that is sort of the beginning of the problem. I mean,

you can reach back and try and blame ARCO and perhaps they

didn’t do enough cleaning and maintenance previously, but when

you actually get to the point of acquisition, you’d think at that

point it would have happened; clean the lines, inspect them. It

didn’t.

And since then they have basically been run to failure, which is

fairly extraordinary to me for a corporation that, by my calculation,

made $55,000 a minute in the last quarter. That is a lot of money

coming out of the pockets of American consumers, and you would

think that a company that could afford to buy back $33.5 billion

in stock could afford to invest a few million, or tens of millions, or

maybe even hundreds of millions, in its basic infrastructure in

Alaska and elsewhere, and none of that happened.

So then you have got to ask why did it happen, and I think then

we have to turn to the regulatory scheme. And I believe that we

need to have regulations that are sensible, sensitive, sensitive to

the public interest, and, you know, not overly burdensome to the

point of not making sense, or just regulating for the sake of regulation. I don’t think we have gotten there with the proposal we have

before us. I will be interested in hearing the witnesses, particularly

from the Administration, justify why we are going to have three

different sets of regulations for low stress pipelines.

Now, I don’t know how that is going to be understandable, easily

executed, and administered. We are going to have the populated

areas with the highest standards, essentially equivalent to the high

stress pipelines. That sounds pretty good to me. But then we are

going to have a slightly lesser level, which is the new regulations

for low stress pipelines in sensitive environmental areas within a

quarter mile.

Well, you know, I come from the West; it is a big area. A quarter

mile isn’t very far for a sensitive environmental area. It would depend upon whether sensitive is downhill from there, uphill from

there, whether there is an intervening ridge. But a quarter mile is

not very far.
7

And I don’t understand why we would have, you know, one regime for the populated areas, another one for the sensitive areas,

and then a third one for many people who live in the West and

much of the Western United States, which is the other areas, the

rural areas. Why are they the third class citizens here?

Why don’t we just have an understandable comprehensive regime

that is the same for all low stress pipelines that assures the public

safety, assures environmental protection, is not overly burdensome,

but requires regular cleaning and inspection? And given the profits

attributable to this industry, I don’t think anybody can claim it

would somehow drive up the cost to consumers. It might mean

some CEO gets less than a $10 million bonus this year. Maybe it

means that they can only buy back $20 billion of stock next year.

Maybe it means that they don’t set record profits every quarter.

But I think most of the American people would think that that was

okay with them and not overly burdensome on the industry.

So I will be fascinated to hear why we are going to have this bizarre regime of three different levels of protection, and the least

going to the most pipelines covering a large portion of this Country.

Thank you, Mr. Chairman.

Mr. YOUNG. I thank the gentleman.

Mr. Gilchrest?

Mr. GILCHREST. Thank you, Mr. Chairman.

I have another hearing and I might have to leave before the end

of the testimony, so I might not be able to ask some questions, but

I wanted to put a few questions on the record to the witnesses.

Do you have any idea what kind of microorganism caused this

corrosion? And have you seen this kind of microorganism before?

Rust is essentially, chemically speaking, like a slow burning fire.

So could this have been anticipated, this type of microorganism?

And has this type of corrosion been treated before by other oil companies?

And how often is a pipeline checked and how is it checked to preclude these types of corrosion leaks?

The interest I have, which is interwoven in all of these questions,

is the actual microorganism. Do we know what it is? Have we seen

it before? Do microorganisms evolve and change the way they affect

the rust or the corrosive effect they have on these pipelines? And

can this kind of thing be anticipated and eliminated?

So I want to thank the Chairman for this hearing and look forward to the witnesses. Thank you, Mr. Chairman.

Mr. YOUNG. I thank the gentleman.

Any other opening statements? Mr. Cummings, I believe.

Mr. CUMMINGS. Thank you very much, Mr. Chairman. And I

thank you for holding this hearing to enable us to examine both

the specific circumstances surrounding the oil spill that occurred in

Prudhoe Bay in Alaska, as well as the adequacy of the current

oversight regime for low pressure liquid pipelines.

As my colleagues have discussed, approximately 270,000 gallons

of oil leaked into the Alaskan tundra through a quarter inch hole

in a BP pipeline in March of this year. Subsequently, this summer,

additional corrosion was found in the pipeline that required it to

be partially shut down. This action took nearly half of the 400,000
8

gallons normally transported through this BP network out of our

national supply chain.

It has been reported that the owner of the pipeline, BP, had not

done a thorough inspection of the inside of the pipeline in almost

a decade. I hope that BP will explain today why they allowed their

pipelines to be so neglected for so long.

BP is a firm that advertises itself as placing a high priority on

operating in a manner that is safe for the environment.

Further, BP is a firm that, according to the New York Times, made $7.27 billion in profits during the second quarter of this year,

which was more than 30 percent higher than the profit it made

during the same period last year, and equated to a profit earning

of roughly $55,000 a minute. Such figures are essentially incomprehensible, particularly to people who are paying or were paying

$3.00 for a gallon of gas on a fixed income, while confronting their

rising expenses.

BP certainly could not credibly say that they did not have the

money necessary to afford to properly maintain their pipelines.

Therefore, one can only conclude that BP simply didn’t have the

will to do so.

Further evidence of this appears in reports of several newspapers

that suggest independent investigators found evidence that BP

tried to intimidate employees who reported problems with the pipelines.

Equally incomprehensible to me is the timid and shortsighted action being taken by the Pipeline Hazards Material Safety Administration, PHMSA, and PHMSA is now considering a rule to require

inspections every five years of pipelines that run through environmentally sensitive areas, which, unlike pipelines in urban areas,

have generally been unregulated by PHMSA. There have been

varying estimates that from 10,000 to 12,000 miles of pipelines

would be left unregulated even if these proposed regulations were

adopted.

So often our Government only reacts after an incident has occurred. It appears that in this case that the events in Alaska clearly show that companies operating low pressure pipelines are unwilling to adequately maintain them even at the risk of losing production capacity and, thus, profit.

Despite this, the Administration is unwilling to act to close the

risks posed by unregulated low pressure pipelines and negligent

companies.

Mr. Chairman, the safety of pipelines across our Nation is of critical importance and the incidents in Alaska reveal serious shortcomings in our safety oversight regime that demand immediate attention.

I look forward to the testimony of today’s witnesses and, with

that, I yield back.

Mr. YOUNG. I thank the gentleman.

Mrs. Kelly?

Mrs. KELLY. Thank you, Mr. Chairman.

According to the Alaska Department of Environmental Conservation, 500 oil spills occur in the Prudhoe Bay oilfields along the 800

mile pipeline each year. While most of these leaks are minor,

quickly detected and remedied, we know from what occurred there
9

in March, and more recently in August, that the threat of another

environmental disaster is very real.

Shortly after the leak detection in August, one BP official referred to the current corrosion detection and control program in the

Trans-Alaska Pipeline as world-class. Yet, the last time the company performed an inline inspection to check that line was in 1992.

We know that most oil pipelines in Alaska have exceeded their 25

year design life; yet, they let 14 years lapse. They yet 14 years

lapse without proper surveillance of this critical stretch of the pipeline. As a result of the recent investigations, now we have learned

that the walls of many of these pipelines have lost as much as 80

percent of their thickness because of corrosion.

The delicate environment in the Northern Slope is at considerable and preventable risk. And those that fail to remedy the problem should be held accountable. BP is currently under investigation by both the Justice Department and the EPA to determine

whether BP violated the Federal Clean Water Act by failing to prevent corrosion in the ruptured line.

I am happy to see this Committee is holding this hearing today

to help find out what corrective actions are being taken, and I look

forward to working with our Chairman Young, who represents

Alaska’s Northern Slope, and I look forward to helping him protect

this magnificent, this beautiful and pristine part of our Country.

I yield back the balance of my time.

Mr. YOUNG. Is there anyone wishing to make a statement? Ms.

Carson, Julia?

Ms. CARSON. Thank you very much, Mr. Chairman.

I would like to thank the witnesses, too, for appearing today before this Committee to discuss this important topic.

Over the past few years, BP has devoted a great deal of time and

money toward promoting its image as an environmentally responsible company. In my neighborhood alone, we had three such operations. I have seen the TV advertisements in which BP brags that

it is the biggest and best in new U.S. energy development. Yet, for

years BP has failed to adequately invest in its own pipelines and

has been grossly negligent. It has not lived up to the image it has

spent so much money creating.

Alyeska Pipeline service, which operates the Trans-Alaska Pipeline, runs a smart pig every three years and maintenance pigs

every 14 days through its pipeline. In contrast, BP has not run a

smart pig through its western line since 1998, and did not pig the

eastern section since 1992, even though smart pigging is a very effective way to spot pipeline damage.

DOT ordered BP to pig its lines on March 15th. I am baffled as

to why it took until July for BP to finally comply with the order.

BP’s sluggish response is a further testament to its arrogant management and wanton disregard for responsible corporate stewardship. As a result of BP’s chronic neglect, over 200,000 gallons of oil

have been spilled, and BP must now replace 16 of the 22 miles of

corroded low stress pipelines in Prudhoe Bay.

I find it incomprehensible that a company that posted approximately $25 billion in profits last year and spent millions in advertising to promote its image, did not allocate adequate funding to do

basic maintenance on its pipelines. How can a company that claims
10

to be environmentally responsible have two oil spills in Alaska in

six months, all along resisting cooperating with regulators?

Yet, BP does not bear all of the blame for the shutdown in

Prudhoe Bay. The public expects Federal and State government to

conduct adequate oversight of companies that fail to do rudimentary pipe maintenance. Ultimately, the average American is

bearing the brunt of BP’s failures and the Government’s failures.

Gas prices are at near record highs, while our biggest oil field is

only producing approximately half of its normal output.

I hope today’s hearing does more than simply assign blame. I

hope that today we determine what steps we need to take to prevent this gross negligence from occurring again. The DOT has proposed a rule which regulates low stress pipelines in unusually sensitive rural areas. In light of this spill, I hope that today we consider expanding the scope of this rule to include all low stress pipelines. Let us not be too lax in our response and open the door to

the possibility of another spill occurring under our watch. Our top

priority must be prevention.

I hope today’s hearing will shed light on the strengths and weaknesses of this proposed rule and help guide our future policymaking on this vital issue.

Thank you very much, Mr. Chairman and Ranking Member for

holding this hearing, and I thank the witnesses for being here. I

am looking forward to your testimony. And I yield back, Mr, Chairman.

Mr. YOUNG. I thank the good lady.

How many other people would like to speak at this time?

Just hang on. I want to know how many. One, two. Two, is that

good?

Admiral, with all due respect to a gentleman in your position, if

you would like to go outside and take a short break, you are welcome to do it until we get done talking, because you are going to

be sitting here a while, after your testimony, answering questions.

So that is up to you. I will give you leave of absence.

Admiral BARRETT. I thank you, Mr. Chairman, but I am happy

to hear the comments.

Mr. YOUNG. I appreciate that. You are not as quite as mature as

I am right now.

[Laughter.]

Mr. YOUNG. Mr. Honda?

Mr. HONDA. Well, in that spirit, I wanted to just ask if I could

enter my comments into the record with your consent.

Mr. YOUNG. You are a great American, a fine individual.

Mr. HONDA. Following your lead, Mr. Chairman.

Mr. YOUNG. Thank you.

Who else? Mr. LaTourette.

Mr. LATOURETTE. Mr. Chairman, I strive to be a great American

too, but I will try and just do a couple minutes.

I have been on this Committee for 12 years and have sat through

a number of hearings and markups on pipeline safety, and Mr.

Oberstar’s institutional knowledge will be greater than mine, but

I can remember on high pressure pipelines there was a big discussion.
11

I think Mr. Oberstar had an amendment to reduce the amount

of years between smart pigging of those gas pipelines I think following the explosion to which he referred to in his opening statement. And I don’t remember whether he wanted to take it from

seven to five or five to three, but I listened to his arguments, I listened to the industry’s arguments, and I wound up on that occasion

not voting with Mr. Oberstar in that markup.

I was in Cleveland recently and there was a radio trivia program

in the morning about this spill, and they said, well, how long has

it been since BP ran the smart pig through the pipelines in Alaska,

and they said it was 1992, and I said that can’t be right based

upon that discussion, it had to have been since then. And being

from Cleveland, the former headquarters of BP, the heir apparent

to Standard Oil of Ohio, I found that disconcerting and then looked

into some of the previous testimony by BP most principally at the

Energy and Commerce Committee.

And I hope that the witness today from BP, just sort of as a

head’s up, can talk a little bit about the company audit that found

that BP was without a senior corrosion engineer for more than a

year when the March spill occurred, and also left vacant the top

job in its pipeline corrosion oversight division in Alaska for more

than six months in 2005.

Also, I am interested in a statement that Mr. Marshall made at

that hearing that said that there was a fellow by the name of Richard Willum, apparently, who was the head of the corrosion inspection chemicals group, and it was opined that he had an abrasive

nature which may have intimidated workers from raising questions

about pipeline safety and integrity. And my question would be do

we think that the American public shouldn’t expect the safety

issues shouldn’t be raised at nuclear power plants, air traffic control towers, oil refineries, or pipelines because a boss has an abrasive nature.

I would, just on this Committee, suggest that if working with

someone from Alaska with an abrasive nature was an impediment

to getting our job done, we would never get anything done on this

Committee.

[Laughter.]

Mr. LATOURETTE. I look forward to the hearing and I thank you,

and I yield back my time.

Mr. YOUNG. I am glad you yield back the rest of your time.

[Laughter.]

Mr. YOUNG. If there is no other opening statement, I would deeply welcome and deeply appreciate a gentleman that I have known

when he served in the Coast Guard, and, as you know, I am very

supportive of the Coast Guard, and he has taken on a very awesome responsibility, and I congratulate him for that.

And, unfortunately, right after he took over the job we have had

a couple spills. So, Admiral, you are welcome. I look forward to

your testimony and, of course, the questions that will be asked. Admiral.
12

TESTIMONY OF VICE ADMIRAL THOMAS BARRETT, ADMINISTRATOR, PIPELINE AND HAZARDOUS MATERIALS SAFETY

ADMINISTRATION, U.S. DEPARTMENT OF TRANSPORTATION

Admiral BARRETT. Good morning, Mr. Chairman. Thank you.

Ranking Member Oberstar and distinguished members of the Committee, thanks for the opportunity to discuss actions of the Pipeline

and Hazardous Materials Safety Administration to oversee BP operations at Prudhoe Bay and the steps we have taken to prevent

future corrosion problems on similar low stress pipelines.

Our mission is achieving and maintaining safe, environmentally

sound, and reliable operation of the Nation’s pipeline transportation infrastructure. In practice, this requires understanding the

condition of pipelines and ensuring operators take actions to prevent and address unsafe conditions. As you know, the first responsibility for safety rests with the operator.

Following BP’s March 2nd crude oil spill, PHMSA used its statutory authority to assert jurisdiction over all BP low stress transit

lines at Prudhoe Bay. We have issued a series of orders to the operator to perform long overdue inspections and maintenance, and implement continuing measures for safe restoration of operations.

Since March, senior personnel from PHMSA have been on the job

directing these actions. I visited Anchorage and Prudhoe Bay in

July and again in late August to meet with our field inspectors, BP

and Alyeska executives, State officials in the Joint Pipeline Office

to assess issues firsthand. Acting Transportation Secretary Maria

Cino also visited in August to assess progress in compliance with

our orders.

We do not understand why BP did not more aggressively address

the corrosion problems that led to these leaks. We have found most

pipeline operators demonstrate a higher standard of care than we

saw here.

The recent BP Alaska incidents are not indicative of the health

of the rest of the U.S. energy pipeline infrastructure. The number

of serious incidents in which people or the environment is harmed

is steadily declining. As a result of our integrity management programs, operators have found and fixed at early stages over 57,000

defects systemwide, which otherwise could have grown to failure.

The system risk management approach the agency uses is getting

positive results.

On August 31st, the Administration proposed new safety requirements for rural low stress pipelines that could impact unusually

sensitive areas. This brings forward the integrity management approach that has proven successful on other lines, and we already

regulate low stress lines in populated areas and near navigable waterways. The proposed rules have been under development for several years, well in advance of this spill, and will prevent the type

of failure BP allowed to develop at Prudhoe Bay.

We started work on this proposal in 2003 in discussions with our

technical advisory committees and at public meetings in Anchorage, Austin, and Washington. As we always do, we began by reviewing available data, analyzed our rulemaking record from the

1990s, plus new data on several hundred spills voluntarily reported.
13

Two-thirds of these spills traveled less than 100 feet. No spill

traveled a distance as large as a quarter mile. And unlike the BP

configuration that we are talking about, operators report their

rural low stress lines are primarily short in length, small in diameter, an easily surveyable. The primary causes of failure are corrosion and construction-related external damage.

Given the small size of the operations and predictable failure

modes, we proposed a known set of effective protections. Our proposal applies the same level of integrity assessment we would require for high stress lines, including pigging. Moreover, we have

expanded corrosion requirements beyond what our high pressure

standards require, to include regular cleaning and continuous monitoring for any risk factors that might develop over time.

I emphasize this is a proposal, one that uses a solid risk-based

program approach based on available information. We seek public

input. If better information becomes available through public comment, we will use it to improve our proposed rule.

We will also rigorously inspect these lines once regulated and

bring the added value of PHMSA inspections. In our experience, it

is our inspectors, as well as the regulation, that brings the successful outcomes, because they challenge operators to think and improve their practices. Outside audits of our inspections have validated this approach.

The recent BP failures are serious, but we have other important

work to do, and we need your help, Mr. Chairman. The Secretary

of Transportation recently submitted to Congress the Administration’s proposal to reauthorize and build on success of the 2002

Pipeline Safety Improvement Act. Once again, a risk-based data

driven organization, we focused on a problem that is growing. Accidents are tending up on construction-related damage on gas distributions that transit our neighborhoods, where people live and

work and where our children go to school. The Administration’s

proposal strengthens State programs to prevent this damage, a serious threat to life safety.

The proposal also provides for a risk-based approach for retesting

natural gas pipelines, rather than a fixed seven year interval. A recent GAO report endorsed this risk-based approach.

Mr. Chairman, I am also, frankly, humbled by a couple of the

comments I heard here this morning, and I will do everything I can

to earn this Committee’s trust and to sustain it. But I also want

to say, in my 35 years in the Coast Guard, I got to look not only

at Coast Guard programs, but the programs of many other agencies, and the system risk-based approach that is being implemented

by PHMSA that I have seen in the past several months since I

have been on the job is rock solid. It is a sound, prudent approach

to get at the most serious problems we face.

Mr. Chairman, I assure you and Committee members that the

Administration, the Acting Secretary, myself, and the men and

women of PHMSA share your strong commitment to improving the

safety, reliability, and confidence in our pipeline transportation

system. We appreciate your interest in our work, and we intend to

keep improving our record and do the best possible job for the

American people and our Nation.
14

Thank you very much. With your permission, I will submit my

written statement for the record, and I will be pleased to answer

any questions you may have.

Mr. YOUNG. Thank you, Admiral. I have a series of questions,

and then I will turn it over to Mr. Petri to issue time. I am going

to take a little break for a moment.

Have you or are you, in your department, are you acting as a policeman or as an advisor? And if you are acting as an advisor, has

BP responded in a positive fashion about addressing this problem?

Admiral BARRETT. We provide oversight, Mr. Chairman, as you

know. We direct actions we think are necessary. The first responsibility for safety rests with the operator. My assessment is, prior

to the March spill, BP was not doing the type of job that needed

to be done up there in understanding the conditions of their lines

and reacting appropriately to that.

I went up there in July to assess progress in complying with our

orders, and at that time it was not moving along as quickly as I

liked. Subsequently and currently, I would say that BP is doing the

types of things we would have liked to see them do sooner, but,

nonetheless, they are doing the types of things we think need to

be done to restore safe operations at Prudhoe Bay.

Mr. YOUNG. Do you have personnel on ground watching or overseeing what they are doing now so he or she can report directly

back to you?

Admiral BARRETT. Yes, sir, we do. We have had inspectors on site

almost continuously since the initial spills. We have had senior personnel visit there regularly. We brought in additional technical resources from Oak Ridge National Laboratories to help assess conditions and corrosion issues, and we maintain active inspection. I

would point out we actually validate the data we are getting from

BP. We are receiving a lot of data from them on a daily basis, and

we are assessing it daily on both the western and eastern operating

lines.

But a typical approach for us is BP goes out and shoots a segment of line to look for corrosion. We will spot-check some of those

inspections and we will take down the data, our inspectors will

take down the data. And when their data runs come into our office

in Anchorage or Denver, we are able to benchmark to make sure

that the data we are getting is reliable. So we have been active on

that and we will continue to be that way.

Mr. YOUNG. You issued some new regulations, I believe it was

last week. If they had been in place on low stress lines, would that

have prevented what happened in August?

Admiral BARRETT. Yes, sir, it would have. The proposed regulations would require a comprehensive corrosion management program to be in place, and the approach taken by BP prior to the

March spill would not pass muster under that proposal.

Mr. YOUNG. Of course, we heard a lot—it is so funny to listen

to this, but we heard a lot about what this is going to do to the

price of oil and gasoline at the pump station, et cetera, et cetera

Does PHMSA, when they have these inspections, does this come in

play or do you still have strict regulations to make sure that the

pipeline is safe?
15

Admiral BARRETT. Well, Mr. Chairman, thank you. Our primary

focus is, of course, safety and environmental protection. We are

concerned, obviously, with the impacts of safety failures on the national transportation pipeline infrastructure and, in applying our

rules, we obviously factor that in.

The Administration also, in its reauthorization proposal, submitted to the Committee and the Congress a proposal for a study that

we would conduct with the Department of Energy to get a better

understanding of the redundancy and the reliability of the national

pipeline infrastructure that would give us a better basis, perhaps,

to look at this issue in the future.

Mr. YOUNG. Well, you know, we hear a lot about these lines, and

I have read testimony of some future witnesses about they refer to

the BP lines like other lines. But these lines that were affected, are

these a common form of line that had the spills and are they used

by other operators around the Country? And, if so, have those operators had the same problem? I mean, this is not the collective field

in the world.

You know, I like to say we are the largest producers, but there

are fields in Pennsylvania, there are fields in North Dakota, there

are fields in Montana, there are fields in Texas and Oklahoma and

Arkansas, et cetera, and I have never heard anyone talk about the

collective lines. Are these lines similar or are they different?

Admiral BARRETT. Mr. Chairman, what distinguishes them most

is their size. These are 30 inch and 34 inch lines. The eastern and

western areas each carry 200,000 barrels, roughly, a day of crude.

Most other lines of this type that you are talking about, the low

stress or the gathering, are much, much smaller; they are typically

shorter segments, maybe a mile or two to three or four miles, their

sizes are generally well less than half the size of the BP lines, and,

consequently, the risks they pose are substantially less.

Mr. YOUNG. Well, my time is about up, but you heard my opening statement about the speed in which the oil would flow. Would

it be more advisable, or is this beyond your scope, of having a different line put in place because the field is diminishing in size now

in productivity so that there would be less chance for corrosion? Or

do other lines in the lower 48 have the corrosion problems that we

are having in Prudhoe Bay? Is there a different form of corrosive

oil?

Admiral BARRETT. I think, if I could, two answers. One is corrosion is a constant threat to any line, and those mechanisms are

well known. The risk of the type of microbiological corrosion that

we believe is involved here—and that is still being looked at—is a

known risk on the North Slope, and there are, you know the other

operations up there, including regulated lines, we oversee about

400 miles of regulated lines up there, factor that in to their corrosion management programs.

And so a well maintained, properly operated pipeline can operate

indefinitely, and we typically have not seen, as I said, the same

type—you know, what went on here was basically BP was not

cleaning the line on a regular basis and not understanding the internal conditions in that line. Typically, operators have a much

more aggressive program to get a handle on those issues. They certainly do on the North Slope. Taps, which you mentioned, and we
16

look at regularly, runs cleaning pigs about every 14 days and smart

pigs every several years, and we didn’t see that type of program

here, sir.

Mr. YOUNG. I thank you, Admiral.

I would just like to remind people, because the TV cameras are

on and I have a chance to be on the soapbox, just remind everybody

that we are dealing with the most northern part of the United

States of America and the most hostile climate, and we are pumping oil. And I would just like to remind everybody or ask the question where did the oil come from. I say this for Al Gore specifically.

This was a jungle at one time. This was a forest at one time. This

was a fern-laden area with mammals at one time. And that is the

reason we are pumping the oil. So before everybody jumps off the

edge of the cliff about the hothouse effect, just remember we were

there before.

I am out of time.

Mr. Oberstar?

Mr. OBERSTAR. The Chairman is never out of time.

Thank you very much, Mr. Chairman. Footnote to your comment

about oil being created at that spot, but that was millions of years

ago, and the place was uninhabitable by humans at the time. But

what was created in a period of several millions of years we have

been remarkably resourceful at consuming at a little under 100

years of the industrial revolution. And we will keep digging and

keep looking.

Mr. YOUNG. And we will build more dams and have hydrogen

gas, too.

Mr. OBERSTAR. That is right.

And your reference, Mr. Chairman, to the hostile environment,

I would call the Committee’s attention—I think it would be useful

for members and for the Committee to get the History Channel’s

review of the construction of and operation of the Alaska Pipeline.

It depicts in very factual, straightforward manner and very compelling recitation of the hostile environment in which the line was

built, continues to operate, the protections to the permafrost that

were necessary in construction of the pipeline. And you and I both

served on the Merchant Marine Fisheries Committee at the time

that that was made possible, so you are quite right about the conditions under which BP is operating.

Now, let’s look at the record of this company, Admiral.

In March of 2005 there was a Texas refinery explosion of BP. Fifteen people died, 100 or so injured.

March of 2006, 270,000 gallons spilled, the worst spill, up to that

point, on the North Slope, BP. The Eastern Operating Area, they

did a smart pig of an eight mile segment, identifying 187 anomalies

of pipeline wall loss, 16 in which the loss was 70 to 80 percent, according to the documents your agency has provided us.

Didn’t an alarm bell go off somewhere in BP? Apparently not.

August 6th BP began shutting down the Eastern Operating Area

when the network lost 200,000 barrels. April of 2006, 12,000 cubic

foot natural gas loss also in Alaska. In March of 2006, Toledo,

Ohio, 8400 gallons of gasoline. Just fortunate that that didn’t explode like Mounds View in Minnesota. In 1998 BP pigged the line,
17

found six areas of internal corrosion, but never did anything further.

In Little Falls, Minnesota this year, just a few months ago, Koch

Industries—that is K-O-C-H Industries—Pipeline broke, sent a geyser of oil 75 feet in the air. Passing motorists, realizing that Morrison County is not in the oil belt, it realized that that was unusual,

called 911, which called the Koch Pipeline headquarters in Wichita,

Kansas, and they had already been alerted by their own sensors

that there was a break and began the process of shutting it down.

There were 135,000 gallons of oil that contaminated the land. Fortunately, it was far enough from the Mississippi River that it didn’t

get into the Mississippi to contaminate that extraordinary body of

water.

I will say that Koch responded very promptly, very vigorously,

but there too they had pigged the line. They noticed that there

were anomalies several years ago. They decided it was not within

the ambit of seriousness to do anything about it, so they let it go,

and that is where the corrosion occurred, that is where the break

occurred, and that is where the damage was done to the land.

Now, when there is an isolated incident you can say, well, somebody missed something or they didn’t take it seriously enough. But

here is a pattern of conduct, and that is what we look for in safety,

in systems of safety. And here is a pattern of conduct that deviates

from safety, from that standard that I cited that is in the law:

maintenance of safety is the highest priority, highest degree of

safety in pipeline transmission.

This is not a pattern of conduct of highest level of safety. This

is a corporate culture of neglect of safety. And when the corporate

boardroom fails, a Federal agency must be there to make sure that

they correct their failures.

Now, what do you think we need to do from here forward? We

have a five year inspection in high pressure liquid lines, we have

a fire year requirement for low pressure liquid lines that are in

populated areas of 50,000 SMSA or greater. But all others—gas

transmission lines are seven years and all others unregulated. How

can we justify, how can the department, the agency justify that distinction? There are only 600 miles of line in low density population

areas that are environmentally sensitive. The rest of them don’t

count? Admiral?

Admiral BARRETT. Thank you, Mr. Oberstar. Two things. One,

the proposal we have on the low stress lines would bring forward

the type of regular inspection you are talking about on the high

stress lines, that is, a pig or equivalency with every five years or

so. It actually goes beyond that and would require regular cleaning

of the lines, continuous monitoring and remediation.

So I think we are, with the lines that we are talking about here,

the BP lines, we are taking essentially the same approach and, in

some senses, enhancing it, certainly with respect to cleaning. It requires operator qualifications, it requires leak detection systems,

and it requires better record keeping so we get a better handle on

what is going on.

But in terms of your broader question, I think the answer is that

over the last, certainly, six, eight years the agency has brought

forth a very aggressive, what we term and you know—and I think
18

you had some fingerprints on some of this—an integrity management program. And our inspection approach, our regulations are

quite comprehensive. They include a broad range of how operators

look at their lines, identify the most serious risk, and then have to

react to that. And we have, through that process, corrected over

57,000 defects on lines through that process.

But I don’t know if people understand how comprehensive that

is. We typically, on the IM inspections, we will put a team out

there for as long as two weeks. We frequently partner up with

State inspectors if they are part of our program in a particular

State, and we will take a rigorous look at what the company is

doing at all levels to ensure that they have a safe system of risk

management and continuous adjustment on their programs.

We, in fact, to respond specifically with respect to BP on the

North Slope, we also oversee their regulated lines on the North

Slope, and for the past several years we have been engaged with

them in getting them to bring up the integrity management programs on those lines. And we have talked to them about their lines

in the lower 48 and inspected them, again, from the same approach. Ms. Girard called in—this was before I got here—the CEO

of BP North America, to discuss exactly that, how you are bringing

forward an effective integrity management approach in areas

where we were identifying problems. And we do look at operators’

records of performance and we do identify where we think they are

sleeping.

So I appreciate the comment. I understand it. I think the agency

is moving against it. That is not to say we can’t always do things

better. Certainly on the low stress proposal we are soliciting comments, and if there is data or information out there that people feel

suggests we should do something more or less rigorous or with

some different approach, we are certainly open to it. But I appreciate the comment and I understand the concern, sir.

Mr. OBERSTAR. Well, I have a number of other questions, but this

place clears out pretty fast after opening statements, Mr. Chairman, and in deference to those who remain, I will withhold. But

I will come back to a number of issues in your comment.

Mr. PETRI. [Presiding] Thank you.

Mr. Gilchrest.

Mr. GILCHREST. Thank you very much, Mr. Chairman.

Admiral, thank you for coming and giving us your testimony.

Can you identify the specific microorganism that caused this corrosion to occur? And is it a new microorganism, has it evolved in any

way, or is it a known entity?

Admiral BARRETT. Mr. Gilchrest, thank you. We do believe that

the spills up there were likely caused by microbiological activity.

We are looking into that. We haven’t completed our look. We don’t

know specifically what organism may have been involved or may

not. We will continue to look at that to pin down what is going on.

What I did want to offer to you, though, is the risks of this type

of corrosion are well known up on the North Slope. Typically, they

inject sea water or water into the wells. The risk of organisms getting through the production separation process, where the water

and gas is taken out, and into some of the product and moving
19

down the transfer lines is a known risk, and there are methods, including cleaning, corrosion inhibitors.

Mr. GILCHREST. So this is not anything that caught anybody off

guard? There are known mitigation measures to these kinds of corrosion and it is known that those mitigation measures, even in this

circumstance, done on a regular basis, would have been effective?

Admiral BARRETT. Yes, sir, and the other operators do that. And

without understanding exactly what the mechanism, as you said,

I would qualify on that basis, but generally regular cleaning of

lines like this and effective corrosion management programs would

preclude this type of problem.

Mr. GILCHREST. So years of experience in this kind of environment, pumping out this quantity of oil, using sea water probably

on a fairly regular basis over the decades, this kind of problem

with corrosion is known to be mitigated with regular treatment so

it wouldn’t happen.

Admiral BARRETT. Sir, I would say the risk is generally well

known up there, and operators have to have a comprehensive corrosion management program in place to address it, and most do.

Mr. GILCHREST. So as a result of past experience and known

mitigation measures, who do you think is at fault for these leaks,

BP, Pipeline Safety Administration, a combination of the two, or

what other factor?

Admiral BARRETT. I would say the primary responsibility for

safety always rests with the operator. Prior to the March spill,

these lines were not regulated by us, and we have proposed, as has

been indicated this morning, bringing them under Federal oversight.

Mr. GILCHREST. Who regulated the mitigation measures to corrosion?

Admiral BARRETT. Well, typically, on most of the lines up on the

North Slope, we have oversight programs in place and, again, the

operator would have primary responsibility, but we would oversee

the way in which they manage it.

Mr. GILCHREST. Now, you would oversee the way they manage

the mitigation measures to prevent corrosion. That is in statute

right now?

Admiral BARRETT. Yes, sir. In our regulations, Part 195 of Title

49 describe the approaches we would take and what requirements

we have in place to do that.

Mr. GILCHREST. So those approaches weren’t taken or you missed

some of the scheduling clean-outs?

Admiral BARRETT. Well, these requirements did not apply to

these lines prior to the March spills.

Mr. GILCHREST. Oh, I see.

Admiral BARRETT. We have imposed a lot of requirements subsequent to that spill by order and we have proposed regulations to

address it on a broader scale.

Mr. GILCHREST. I see. Thank you very much.

Admiral BARRETT. Thank you, sir.

Mr. GILCHREST. Thank you, Mr. Chairman.

Mr. PETRI. Mr. DeFazio.

Mr. DEFAZIO. Thank you, Mr. Chairman.
20

Admiral, in response to one of Mr. Gilchrest’s questions you said

the companies have to have comprehensive corrosion management

in place and most do. I am concerned about the most do part. Can

you tell me who those that don’t?

Admiral BARRETT. I was thinking specifically, sir, of the discussion about BP and what transpired recently up there, and specifically with respect to the North Slope. The other lines that we see

have the type of cleaning and corrosion controls in place that the

regs require and that we would expect, quite frankly.

Mr. DEFAZIO. Okay, so you are talking about the comparison between the regular maintenance cleaning, inspection that Alyeska

does versus BP, that sort of thing.

Admiral BARRETT. Yes, sir.

Mr. DEFAZIO. It wasn’t something more generally broadcast

around the Country—

Admiral BARRETT. No, sir.

Mr. DEFAZIO.—where we might have other problems we don’t

know about?

Admiral BARRETT. No, sir.

Mr. DEFAZIO. Okay.

Admiral BARRETT. In fact, to the contrary.

Mr. DEFAZIO. I am just curious—and I will be asking BP about

this, but what does it cost to clean or smart pig a line? I mean,

I assume, if Alyeska does it every two weeks with cleaning and

then regularly—I mean, it can’t be prohibitively expensive.

Admiral BARRETT. No. It would vary, obviously, with the size and

nature of the line, but typically a cleaning pig is much less expensive, maybe $1,000 a mile, you know, for a line the size of Alyeska.

It is still substantial. But the ILI, the inline inspection device, is

much more expensive—of course, you not only have to run the device, you have to analyze the results—but you might be looking at

about, I would guess, $6,000 to $8,000 a mile for that type of approach.

Mr. DEFAZIO. Okay. So here is sort of—I mean, you are talking

about risk-based management, and that is sometimes the best way

to go versus a hard rule, but I am concerned here that BP was apparently following industry standards for 20 years, and they supposedly were following a risk-based management approach proposed by industry. I am concerned about something that isn’t more

prescriptive, particularly in all these other thousands of miles of

line we are talking about and whether or not a risk-based approach, given that prevailing mentality, is adequate.

And I guess it kind of reminds me of a fight I engaged in from

when I first came to Congress that, unfortunately, never came to

fruition until after a horrible tragedy, but for years I argued that

the FAA was conflicted because it had to regulate both the public

health and safety, but it also was mandated under historic statutes

to promote the industry, and balance those two things. It was only

after the Value Jet crash that I was able to get an amendment to

strip them of that charge and move them much more toward pure

public safety regulation. And I am concerned here.

Yes, we don’t want to impose unnecessary costs, but we don’t

want to lean toward avoiding costs to the industry that might prevent depredation of public resources. I mean, again, on your low
21

pressure, as I understand it, it doesn’t—you know, a creek isn’t

necessarily a sensitive area, it just might happen to be your creek.

It isn’t defined under Federal law as particularly sensitive. And

then the quarter mile, as I pointed out earlier, yes, you said many

spills don’t go more than 100 yards, but, you know, there are many

places where pipelines have been built in essentially following

rights of way and cuts that are above valleys with water, you

know, below sometimes critical resources more than a quarter mile

away. Again, where did we come up with a quarter of a mile?

So I guess I have a couple of questions. Why wouldn’t we regulate all pipelines and move away from the risk-based approach for

the majority? Where did we get the quarter mile standard? Why

don’t we apply the standard in any and all watersheds with at

least the minimum quarter mile standard? Those would be three

questions.

Admiral BARRETT. Thank you, sir. Let me approach it on a couple levels. First, for clarity, I have said repeatedly, and I would emphasize, with respect to the specifics of the BP spill, I don’t think

BP was following the type of standards we typically see in the industry, whether the lines are regulated or not, by not having a regular cleaning program and understanding the conditions of their

lines. So I don’t want to leave the impression that they were following the practices we typically see.

On a broad sense, the risk management issue I think is important, and in the rule making we propose, for example, and we

apply elsewhere, you know, you have to continuously monitor and

assess conditions on your lines, understand them, and then react

to your most serious risk. But what gets lost sometimes is one of

the reasons that approach is so important, and I also think one of

the reasons it has been so effective in other areas that PHMSA has

regulated, is the risk changeover time. In other words, it can

change from external circumstances, such as development coming

up around a line, maybe we are building more houses or more

schools; maybe the data we have is showing a new problem, Mr.

Gilchrest mentioned maybe it is a different kind of microbiological

activity you need to adjust to.

But the risks change. And I believe firmly you have to have a

program in place that requires the operator to look at their risk

profile, catch changes in that, and react to it in a way that cuts

those risks off early. And I think that is the fundamental value of

those types of approaches, and the more prescriptive approaches

typically cannot get to that.

I heard the comment earlier about the five year. We generally require, and would in this rule, pigging of these lines about every five

years. But there are some lines that you can’t pig; they are either

telescoping in nature, they may have bends or valves in the lines

that would prevent that. So you have to have some other way to

provide equivalent levels of safety, and, again, manage that risk in

some prudent way.

And with respect to the quarter mile, again, we are a data driven

organization, and I think that is our charter—

Mr. DEFAZIO. If I could, before you answer that. But as I understand it, you do not mandate that data be submitted on all the unregulated lines So since there is no mandate that you receive the
22

data, unless you read about it in the newspaper or it somehow is

brought to your attention, you won’t necessarily know about it. So

how can you be data driven on those thousands of miles of line if

people don’t have to report?

Admiral BARRETT. We have looked at the lines that are out

there, the nature of the lines. Many of these, as I said, are small.

A couple States have good records on them, Texas in particular.

And we have looked at the nature of those lines, the amount of

product that they hold, and generally where they are being operated and how, and, simply, our assessment is that they don’t pose

the same level of risk as the larger lines, particularly the big lines

you are talking about with BP.

But I want to be clear. We are a data driven organization, and

the record is open. This is a proposal. And if there is information

or data out there that suggests the scope of what we are approaching should be expanded or contracted, or the requirements should

be different, if that information is brought forward on the record,

we are certainly receptive to it. And I want to be clear on that.

This is a proposal and we are open to information that suggests the

answer could be adjusted.

Mr. DEFAZIO. Okay, thank you.

Thank you, Mr. Chairman.

Thank you, Admiral.

Admiral BARRETT. Thanks.

Mr. PETRI. Let’s see, Mr. LaTourette.

Mr. LATOURETTE. Thank you, Mr. Chairman.

And, Admiral, thank you for the work that you do and the quick

response. I just have one question, and I will try and make it short,

but it is a follow-up on what the Chairman was discussing with

you. I don’t think that my district is unique from other members’,

and probably the number one phone call we received until recently

was about the price of gasoline.

Now, thankfully, normalcy has almost come back in that gas is

about $2.29, and we have a lot of discussions and debates around

here about everybody wants gas to be about a buck a gallon again,

the good old days; we fight about whether we should explore for

more oil; we ask questions about why we haven’t built any new refineries since 1981. I can remember a couple years ago Marathon

Oil wanted to build a pipeline across Ohio and everybody wanted

cheap gas, everybody wanted more pipelines, but nobody wanted it

in their backyard in Ohio.

So if it is not only a supply and demand question, it is also an

infrastructure question. When the shockwaves on gas prices first

were felt in my part of the world maybe three years ago, when

there was a disruption in the Wolverine Pipeline in Michigan and

then also one on a pipeline whose name I don’t recall, but between

Oklahoma and Texas, and gas went up to $2.25 and people were

screaming then. And we have seen now, when it has crested $3.00,

people really don’t know what to do.

The Chairman’s question, and I think my question to you is I

heard you answer him that when you look at the things that you

need to look at relative to regulation, safety trumps everything

else. And I think that that is exactly as it should be. But I think
23

what he was getting as is do you have the authority today to consider economic impact.

And by that I mean not all pipelines are created equal, and in

this day—I think we are in an energy crisis, and in this day of energy crises, do you feel that, at PHMSA, you currently have the authority to take into consideration the economic impact that would

result in the disruption of a certain pipeline as you move forward?

And, if you don’t, is there something that you think we need to do

to give you more tools?

Admiral BARRETT. Thank you, sir. No, I believe we have the authority that we need. And what I would say is we certainly can

look at the, just from a transportation agency, the impact on transportation, as I said, our safety oversight and environmental oversight does provide benefits to the reliability and integrity of those

lines.

I think the real issue is the appropriate way to factor that in to

our oversight programs, and obviously we are going to look a bit

harder at that and pay more attention to it. But I think the real

issue is we have the authority, it is how we can bring that forward

in an effective manner.

Mr. LATOURETTE. I thank you.

Chairman, I yield back.

Mr. PETRI. Thank you.

Mr. Pascrell?

Mr. PASCRELL. Thank you, Mr. Chairman.

Vice Admiral, I looked through your testimony very carefully,

and I want to bring your attention to a couple of places. You know,

my conclusion was, when I read your testimony, here we go again.

Page 3 of your testimony, the second paragraph: ‘‘We have proposed new federal regulations for low stress pipelines, including the

BP lines that recently failed. The rules have been under development for several years and would prevent the type of corrosion failure BP allowed to develop at the Bay.’’ This, to me—and I can only

give you my perception of this—is nothing more than bureaucratic

drivel, because you also say, on page 4, in the second paragraph:

‘‘Based on the information developed in connection with our rulemaking proposal, we believe that most other unregulated low stress

pipelines are operated to a higher standard of care.’’ You see where

I am talking about?

Admiral BARRETT. Yes, sir.

Mr. PASCRELL. And on page 8 you say, first paragraph: ‘‘Based

on information received in connection with developing our proposed

rule making for low stress pipelines, we believe most operators

demonstrate a higher standard of care in their operations whether

or not they are federally regulated.’’

I want you to tell this panel what leads you to that conclusion?

What evidence can you put before us that the process of self-regulation in these low stress lines actually has credibility? And I can go

on to cite to other places, but start off with that.

Admiral BARRETT. Well, first—

Mr. PASCRELL. Admiral, the reason why I am asking this question, sir, with all due respect, is BP is only a small part of this

problem. We passed legislation on this very panel not too long ago.

It didn’t even include liquid pipelines. It didn’t even include it.
24

That was six weeks after the disaster in the Bay. So I come with

a perception here, and I want you to correct my perception.

Admiral BARRETT. In two senses I would. First, the agency has

been working on these regulations for several years, well in advance of these bills, and it is one of the last pieces of the puzzle,

if you will, that we brought forward in response to the 2002 Pipeline Safety Act, and the highest priority of the agency has been on

lines that threaten life safety and our communities. The type of situation Mr. Oberstar mentioned at Moundsville is acutely on my

mine—

Mr. PASCRELL. Vice Admiral, you know, back in 2002 it was not

because of your agency which brought us to that point, it was because this bipartisan Committee kept on insisting that we come to

some compromise and some change. The Administration did not

run point on that, has not run point three months ago, and has not

run point on it now. So what happened in 2002 is not because of

the agency, it is because of a bipartisan cooperation on this Committee.

Admiral BARRETT. With respect, sir, I would suggest that the

record—and it is in my statement—of performance that the agency

has brought forward in this industry over these years has shown

a steadily decreasing trend in the serious incidents on pipelines.

But I want to answer your second question also, and that is

where did we get this information. In the several years we were

working on this, we had a number of public hearings. We had multiple meetings of our technical advisory committee. We solicited

input from the public and from the industry on these low stress

lines, in terms of where they were, what size they were, how much

product they carried, what areas they threatened, and how they

were being overseen and managed by the industry.

And that is where that information came from, that extensive,

several year process of gathering data, and that is what our proposal, frankly, is based on. And the contrast that I was drawing

there was what we were seeing with respect to the very large low

stress lines that BP had on the North Slope and the vast majority

of these lines in the United States, which are far smaller, much

shorter segments, and pose, in many respects, a different problem;

and the proposal goes at the most serious risks that those lines

pose.

Mr. PASCRELL. The specific issue that we are addressing today,

and I was trying to put it into context, we are talking about 22

miles. It costs 8,000 miles to clean, you have heard this, to pig.

That is $176,000. There is something wrong here, because this is

a corporation which had a $226 billion profit last year. And the cost

of cleaning this up is $100 million. There is something wrong. And

you are not here defending—are you? I don’t think you are.

Admiral BARRETT. No. To the contrary—

Mr. PASCRELL. I know you are not defending any particular corporation, but are you defending the possibility that we can do this,

these thousands of miles of pipeline, we can do this part self-service and then the Government inspect some of it? Or are you saying

there needs to be regulation for all of the lines? What are you saying?
25

Admiral BARRETT. Well, two things. First, the type of inspection

you refer to with respect to BP, we have in fact ordered, subject

to the March bills, the eastern line that turned out to have the

problems in August was being assessed by a smart pig because we

ordered it. And so understanding the conditions of the lines is

something we expect in all of our programs and in any area we

oversee.

But in terms of the regulation we are bringing forward, it is tailored to address the most serious issues we believe these lines pose,

and not be unduly burdensome to many smaller operators with

smaller lines, where we believe the risk is not as great. But we are,

as I indicated, open to data if the public or anyone else believes

that the proposal should be more or less stringent. You know, that

is a normal process for us and it is a normal process for Federal

regulatory agencies, to put what we think the best thinking out is

there and solicit public input on that, and that is what we are

doing.

Mr. PASCRELL. Mr. Chairman, I just have one further point. BP

just had an accident on what we would consider is a small low

stress unregulated line in Long Beach last week. The point I am

trying to make, in conclusion, Mr. Chairman, is that all of these

lines we need to sit down—as we did with the gas lines—we came

to a compromise, we came to an understanding, after many years

of gridlock. This is not a question of regulation versus deregulation.

This is not the question. We missed the point. We should have regulation that we could all agree with, and I hope that that is the

direction you are going in.

Admiral BARRETT. Sir, and in fact, the Long Beach line you mention is regulated by one of our State partners, California, and we

are working with them now and will look at what may or may not

have transpired there.

Mr. PASCRELL. Thank you, Vice Admiral.

Thank you, sir.

Mr. YOUNG. [Presiding.] Mr. Boozman?

Mr. BOOZMAN. Thank you, Mr. Chairman.

Admiral, can you help me a little bit with the extent of the problem? After Katrina and the episodes there, when we got into really

looking at our dams and dikes and things like that, we really found

a tremendous problem that is going to cost a great deal to rectify.

You know, with this additional 600 miles or whatever, what is your

gut feeling as to the extent of the problem that is out there? I

mean, are they in good shape or are they not going to be in good

shape?

Admiral BARRETT. They will be in much better shape once we

apply the requirements that we have got in this package. And we

are directing that at the lines we believe have the most risk.

But, in fairness, what is coloring the picture right now is the low

stress line that BP had on the North Slope, which is more than

twice the size of most of these lines. Most of these lines are far

smaller, they are in rural areas, they do not threaten population

or navigable waters. Certainly, there are risks there and, certainly,

we are being attentive to that, but, candidly, we do not believe that

they pose the same level of risk that a line like the BP lines at

Prudhoe Bay pose.
26

Mr. BOOZMAN. And yet, like I say, there are dikes that have more

level of risk as far as population and stuff like that, but a bad dike

is a bad dike. As we get into this, are a lot of the 600 miles, are

we going to find problems that is going to take a lot of money to

correct?

Admiral BARRETT. No, sir, I don’t believe it will. In many cases

these lines are, as I indicated, from the public record we have got,

being indicated with a generally reasonable standard of care. And,

obviously, we are looking to make that a bit more rigorous, but I

think our estimate in the rule making was about a $17 million target. I would have to go back and look at the cost benefit, but we

are bringing the regs forward in a way we think will be effective

and where the cost benefit analysis sustains the action we are proposing.

Mr. BOOZMAN. Good.

Thank you, Mr. Chairman.

Mr. YOUNG. I thank the gentleman.

Mr. Honda?

Mr. HONDA. Thank you, Mr. Chairman.

Vice Admiral, thank you for being here. I guess I am trying to

understand. PHMSA is an organization that is to regulate pipelines, is that correct?

Admiral BARRETT. It is one of our charters. We also do hazardous

materials.

Mr. HONDA. And you are about to put together regulations that

would cover low stress pipelines?

Admiral BARRETT. Yes, sir.

Mr. HONDA. And it hasn’t been done before because it was considered that, if it is in the rural areas, that they are not of great

concern?

Admiral BARRETT. No, sir, not that they weren’t of concern. We

have been working on the rule making for several years. But they

did not have the same priority as high stress high pressure lines,

oil and gas, that run through populated areas. I mean, we put our

first priority on life safety.

Mr. HONDA. Okay, so the low stress pipelines in rural areas were

of low priority, so, therefore, they were exempt from inspection?

Admiral BARRETT. No, sir. We were moving to bring them under

regulation. I am just trying to understand your question, though.

We moved first. That is, the agency moved, since 2002, first against

higher risk.

Mr. HONDA. Okay. And then since they were exempt and they

were going to be done later, the industry was—they were required

to do the inspection?

Admiral BARRETT. The operator is always responsible for, you

know, the safety of the operation of the line.

Mr. HONDA. They were required to do the inspection?

Admiral BARRETT. They would have to maintain their lines as

any responsible operator.

Mr. HONDA. Is it required for them to create the—do we, by statute, require them to maintain their own—I mean, you know, when

we go on the road and drive, we are required to have certain kinds

of levels of proficiency. Are we requiring—did we require them to

have a certain level of maintenance or oversight?
27

Admiral BARRETT. Well, again, I think the level of care that the

operator—

Mr. HONDA. That is yes or no. By statute, did we or did we not?

Admiral BARRETT. Well, no. We are proposing to bring them

under regulation, which is what we propose—

Mr. HONDA. Okay, so they were not regulated. They were supposed to be responsible.

Admiral BARRETT. Yes, sir.

Mr. HONDA. Okay, and they were not.

Admiral BARRETT. And we were bringing forward regulations to

oversee them.

Mr. HONDA. Now, the evidence of corrosion was detected by the

smart pig that you required them to use, and found about 187

anomalies in the walls of the 22 miles or 8 mile section up in the

Eastern Slope of wherever it was?

Admiral BARRETT. Prudhoe Bay.

Mr. HONDA. There was some discussion about sea water and organisms. I am not sure that is—you know, I don’t know how pertinent that is if the inspection is supposed to look at anomalies in

walls, right? So are we looking at ways to conduct these kinds of

inspections in the future?

Admiral BARRETT. The proposal we have put out would require

a much more extensive corrosion management program, but fundamentally—I think I understand your question. Fundamentally,

an operator has to understand the condition of his lines. He has to

be able to understand what—

Mr. HONDA. Not to interrupt—

Mr. YOUNG. Would the gentleman yield? Let him answer the

question, please, Mr. Honda. Don’t interrupt him as he is answering.

Mr. HONDA. Okay, I just have a certain amount of time. I am trying to get to certain points.

Mr. YOUNG. I will yield time.

Mr. HONDA. Go ahead, Admiral. Thank you.

Admiral BARRETT. I think, so, fundamentally, any operator has

to do that. And our requirements, in many cases, require them to

do that, and that is exactly what our proposal would require these

low stress lines to do.

Mr. HONDA. Does the proposal require an audit of how many low

stress pipes we have out there?

Admiral BARRETT. It would require that—obviously, one of the

things that we will do is, once the rule is in place, we will go out

and inspect these lines, and we will assess if all the lines that are

within the scope of the regulation are being covered. And that inspection program is a very critical portion of what we do. And, typically, when we go out and look at, on the ground with our inspectors, we will typically pick up some lines that perhaps we weren’t

aware of, and we will bring them into the program.

Mr. HONDA. Do we have an inventory of low stress pipelines?

Admiral BARRETT. On the national level they are not mapped in

all States, so the answer is—

Mr. HONDA. No.

Admiral BARRETT.—we are basing our estimates on what we

were able to get from States that have these lines mapped.
28

Mr. HONDA. So we don’t have an inventory as of yet. Are we

going to require that in our guidelines?

Admiral BARRETT. We will go out and look at, you know, the

lines that are within our scope, and we will put inspectors out and

see what is in those fields.

Mr. HONDA. Are we going to require, under the guidelines, to

have an inventory of low stress pipelines?

Admiral BARRETT. On a national level we will require mapping

of the lines that are within our program, and we will look to ensure

that all lines that are covered by the regulation are mapped.

Mr. HONDA. Within the programs, your program, who is not included?

Admiral BARRETT. I mean, we do not require mapping of lines

that are not regulated by us or by the States. We have substantial

partnerships with the States, and they oversee a lot of this.

Mr. HONDA. So—

Admiral BARRETT. But on a Federal level we only map the areas

we are responsible for.

Mr. HONDA. Then help me understand the delineation between

State responsibility and Federal responsibility over the inventory of

low stress lines.

Admiral BARRETT. Well, again, if we bring them in the scope of

our regulations, we will inventory them and map them.

Mr. HONDA. What are the criteria in order to bring them into the

inventory?

Admiral BARRETT. Well, again, what we know from States, our

partners, our primary partners, and, secondly, what we find when

we go out and look at these lines and assess the fields that they

are in. We get information from the operators. We ask and we get

a lot of data.

Mr. HONDA. Who are the primary authors of the guidelines that

PHMSA is putting together?

Admiral BARRETT. Well, of course, we are.

Mr. HONDA. You in partnership with the States and with the industry, or what?

Admiral BARRETT. Well, the national pipeline infrastructure, if

you will, is overseen not only by Federal agencies, but by States;

they play a significant role. In fact, one of the proposals, Mr. Chairman, in the reauthorization package would be to strengthen State

oversight of the area we feel that is currently the most treacherous,

which is the natural gas distribution systems. But that is a State

program that we are looking to bolster.

Mr. HONDA. Okay, then I guess the sense I am getting is that

no matter how much work we do on oversight and bringing low

stress pipe into the system, there is going to be still some low

stress pipes out there that are not going to be inspected nor have

any oversight, whether at the State level or the Federal level. Is

that correct?

Admiral BARRETT. Well, we are proposing to oversee the areas

where we believe the risks exist, and we are certainly open to data

that suggests that that proposal should be more or less stringent

or have different requirements. But, you know, we are a data driven, risk-based organization, and so we tailor our proposals to where

we believe the risk is.
29

And in this particular case, with low stress line, we believe the

risk exists where there are threatened environmental areas. We already do the populated areas and the navigable waters, but where

there are threatened or endangered species, where it could threaten community water supplies, and where the history of spills suggest that a failure on one of those lines could threaten those activities, the quarter mile buffer that we have talked about.

Mr. HONDA. Last question, Mr. Chairman.

It seems to me, if you are data driven, it sounds like the data

is acquired reactively.

Admiral BARRETT. Not necessarily. We have gone out over several years extensively with public hearings, public announcements,

public meetings to draw in as much data as we can get. Is it perfect? No. Typically, unregulated line—I mean, we are gathering as

much data in as we can, and we are receptive to any data that is

available.

Mr. HONDA. Okay. And—

Mr. YOUNG. The gentleman’s time has run out.

Mr. Boustany?

Mr. BOUSTANY. Thank you, Mr. Chairman.

Admiral, has the quality of your inspections changed within the

last six months?

Admiral BARRETT. Well, I think not only in the last six months,

but probably over the last several years the quality of our inspections has become much more rigorous through the integrity management program. As I indicted, a typical inspection for that program is not a one shot by one inspector looking at a thing, but it

is basically a two week program oversight of what an operator is

doing; it is checking their data, checking their programs, going out

and validating it in the field and making sure that they are paying

attention to the most serious issues; and, as a follow-up to those

inspections, ordering, if necessary, any corrective action. And, typically, our inspections lead, about 80 percent of them, lead to us obtaining or directing some type of follow-up enforcement or compliance action by operators.

Mr. BOUSTANY. Thank you. What kind of review has PHMSA’s

oversight activities received from the Inspector General of DOT or

the GAO?

Admiral BARRETT. Those reviews have been multiple over the

years and generally highly favorable. Most recently, GAO came out

with two reports the end of August which are, for the most part,

highly complimentary, the approaches used. And what I would also

say is, frankly, we have been very aggressive in clearing recommendations from the National Transportation Safety Board in

our lanes.

I think probably over the last four to six years over 40 NTSB recommendations—and I believe we only have about three that are

still open, and they are open with acceptable actions. So I would

say the endorsement has been strong. And, quite frankly, as I indicated, based on my experience, I think the program approaches

being used are rock solid.

Mr. BOUSTANY. And one final question. In talking about your

risk-based approach in answering Mr. LaTourette’s question about

looking at economic impact, and you said, yes, you do have the au-
30

thority to do that, do you also consider our Nation’s energy security

and distribution as part of that equation? And do you communicate

with the Department of Energy on these issues or are you really

stovepiped in this approach?

Admiral BARRETT. No, I would say one of the strengths we have

is outreach with other agencies, and we are working on that all the

time. As I indicated, we have submitted—the Administration has

submitted a proposal to help us get a better handle on that with

a study that we would do jointly with Energy to understand the

issue a little more clearly. I believe we have the authority, but I

think, frankly, we would like a little better understanding of where

these issues might be so we can tailor our approaches appropriately.

Mr. BOUSTANY. Do you have a time line on that study?

Admiral BARRETT. I believe it is one year. I would have to go

back and check, but—

Mr. BOUSTANY. We would be interested.

Admiral BARRETT. It would be—it is in the Administration’s proposal. And I appreciate—I believe the Committee has endorsed

that, and we would look forward to that.

Mr. BOUSTANY. Thank you very much.

Mr. Chairman, I yield back.

Mr. YOUNG. I thank you.

If there are no other—oh, excuse me, Mr. Oberstar.

Mr. OBERSTAR. Thank you, Mr. Chairman. I have just a couple

of points that I desisted earlier so that other members could have

their full opportunity.

Admiral, I want to come back to your statement that the internal

inspection requirements of the proposed rule are the same as the

inspection requirements in current law. But the proposed rule provides that the operator may use inline inspection tools. That is not

the same as current law that says must.

Admiral BARRETT. If there is any lack of clarity there, sir, we

would be glad to clear that up, but basically—

Mr. OBERSTAR. You would be willing to substitute must for may?

Admiral BARRETT. Sure. Because, in reality, as you well know

and the Chairman knows, you can’t pig lines all the time. So we

have to permit some alternative equivalencies. I think the language

that may or must are certainly getting at the same intent, to make

them pig the lines or have another acceptable program to do that.

Mr. OBERSTAR. I think we have to have that clarity. You also

made a very thoughtful comment that the operator has to understand the condition of the line.

Admiral BARRETT. Yes, sir.

Mr. OBERSTAR. There is a duty to know and a duty to protect on

the part of the company. Surely, they knew they were running into

a lower grade of oil. Surely, they knew that there was sand coming

up with that oil. Surely, they knew that there was natural gas, and

the aromatic hydrocarbons that accompany it, along with water

that then create the conditions for corrosion.

Admiral BARRETT. Those risks are well known on the North

Slope, sir.

Mr. OBERSTAR. And the Chairman has—and I attribute directly

to him a very—who understands this; it is in his State, in his back-
31

yard—that the Alyeska line—Mr. Chairman, if I understand you

correctly—has a filter at the beginning of the line to filter out unwanted materials. Is there no filter on this line at the beginning?

Admiral BARRETT. Well, I think the sediments and solids you are

talking—one of the risks we looked at when we went up on BP was

to make sure they didn’t create any problems for the Trans-Alaska

Pipelines. And, frankly, the—because they didn’t understand the

condition of the lines, the BP lines, how much sediment or solids

actually existed in those lines and what could be pushed forward

into taps was a concern of ours and a concern of taps. BP is now

building bypasses with assistance from Alyeska, actually, to manage those solids in a way that doesn’t produce a risk to the line.

But what I was getting at is Alyeska Pipeline and other operators on the North Slopes clean these lines much more regularly, on

a basis of every several weeks to several months. They run the pigs

on a regular basis. And we just did not see that here.

Mr. OBERSTAR. Yes. And you also pointed out in the discussion

that we had in my office that there is at least one segment where

the pipeline dips—

Admiral BARRETT. Yes, sir.

Mr. OBERSTAR.—for the caribou crossing. And because the pressure is less, the flow has slowed down, there is an aggregation of

sediment that creates the conditions for corrosion, rather than a

condition where the line is flowing more freely.

Admiral BARRETT. Yes, sir, you are right. Where you have elevation changes on a line, again, your standard risk assessment

would suggest you have an increased risk of corrosion—of water

collecting, basically, and creating a corrosion risk in those locations. That is fairly well known.

Mr. OBERSTAR. I appreciate that. And that suggests we need to

strengthen the law, require more frequent inspections, and actions

to be taken to clean those lines as a matter of responsibility of the

company and as a responsibility of your agency to oversee them.

Admiral BARRETT. Sir, and we are proposing that. I understand.

Mr. OBERSTAR. Thank you.

Admiral BARRETT. Thank you.

Mr. PASCRELL. Mr. Chairman, make one more quick point,

please?

Mr. YOUNG. One quick one.

Mr. PASCRELL. Thank you, sir.

I just wanted to put into the record, as I understand the testimony and the questions and answers that have been provided

today, that for low stress lines there is no accident reporting, there

is no data reporting required, and there is no mapping required. I

want to put that into the record.

Admiral BARRETT. Sir, that is not entirely accurate.

Mr. PASCRELL. Well, then make it accurate.

Admiral BARRETT. There is still reporting required under the

Clean Water Act, depending on the nature of a spill that might

occur from those lines and where it would occur. We had extensive

voluntary reporting of spills on those lines and we took that into

account in developing our rule making. So there has been a fair

amount of data that we collected in shaping our proposal. Now, not

all of it was required by us—
32

Mr. PASCRELL. Excuse me. I used the word required. I will stick

by the statement. Thank you.

Mr. YOUNG. Without any other questions, Admiral, thank you for

your testimony, and God bless you and the work you have to do,

and let’s make sure we can produce this oil fairly for the Nation

as well as the State of Alaska.

Admiral BARRETT. Mr. Chairman, thank you, and I appreciate

the Committee’s support in all these areas.

Mr. YOUNG. Thank you.

At this time we will call up—and I will tell you ahead of time—

the second panel—at 1:00 I do have to leave—Ms. Lois Epstein and

Steve Marshall. Ms. Lois Epstein is the Senior Engineer on behalf

of Cook Inletkeeper and Pipeline Safety trust and Mr. Marshall is

President of BP Exploration Alaska, Incorporated.

Ms. Epstein, you are first.

TESTIMONY OF LOIS EPSTEIN, SENIOR ENGINEER, ON BEHALF OF COOK INLET KEEPER AND THE PIPELINE SAFETY

TRUST; STEVE MARSHALL, PRESIDENT, BP EXPLORATION

ALASKA, INC.

Ms. EPSTEIN. Thank you, Mr. Chairman, Mr. Oberstar, and

Members of the Committee. I appreciate your inviting me to testify

today.

My name is Lois Epstein, and I am an Alaska and Maryland licensed engineer and an oil and gas industry specialist with Cook

Inletkeeper in Anchorage, Alaska. Cook Inletkeeper is a nonprofit

membership organization dedicated to protecting the 47,000 square

mile Cook Inlet Watershed and a member of the Waterkeeper Alliance of 150+ organizations headed by Bobby Kennedy, Jr. Additionally, I am a part-time consultant for the Pipeline Safety Trust, and

my testimony today reflects both organizations’ views.

The Pipeline Safety Trust came into being after the 1999 Olympic Pipeline tragedy in Bellingham, Washington which left three

young people dead, wiped out every living thing in a beautiful

salmon stream, and caused millions of dollars of economic disruption.

As is well known because of BP’s recent pipeline problems on the

North Slope, releases from low pressure, also known as low stress,

liquid pipelines can have serious, adverse environmental and economic consequences. The two photos included in my testimony—

and one is up right now—show the extent of the damage and the

cleanup. Investing in pipeline safety pays off in nationwide environmental and economic benefits.

The U.S. Department of Transportation’s Pipeline and Hazardous

Materials Safety Administration, or PHMSA, has jurisdiction over

BP’s pipelines. However, BP’s so-called ‘‘transit’’ pipelines currently

are exempt from Federal regulation, which means that other pipelines like BP’s have no Federal corrosion prevention requirements,

no smart pigging or equivalent requirements, and no Federal inspectors checking on operations.

Based on the BP situation and industry’s own data showing a

disproportionately high release rate on these types of pipelines—

and I would refer PHMSA and the Committee to the August 1st
33

letter that was sent to PHMSA—there are strong technical and

economic reasons to regulate low pressure transmission pipelines. Among the economic costs, the State of Alaska lost $6.4 million

in royalties and taxes for each day the entire oil field was shut

down. Additionally, there was a noticeable spike in the price of

crude oil for several days following BP’s initial announcement, raising oil costs for both industry and the public. And PHMSA’s resources have been stretched thin as a result of this situation, which

is another cost.

The BP situation also demonstrates, one, the value of smart pigging pipelines regularly and as frequently as possible to identify

wall thinning and, two, the need for Federal oversight of pipelines.

Importantly, when USDOT surveyed pipeline operators in 1992, it

found that 84 percent of the unregulated low pressure pipeline

mileage nationwide was not operated in compliance with the requirements of Part 195. My written testimony provides extensive

detail on these conclusions.

Additionally, my written testimony shows that 18 years after

State pipeline safety regulators asked DOT to remove the exemption, PHMSA, just last week, proposed only to regulate an incremental sliver of the unregulated low pressure transmission pipeline

universe. And I would like to point out to the Committee, having

participated in the public meetings and on the advisory committee,

that much of the discussion there was on gathering lines, not on

the low stress transmission lines.

This means that many miles of low pressure transmission pipelines remain unregulated and susceptible to the problems BP experienced. And PHMSA will never even know about most such problems because the unregulated pipelines need not report their releases to USDOT. Out of sight and out of mind.

In developing its proposed rule, PHMSA ignored technical and

other information provided it by public interest organizations and

the proven efficacy of smart pigging and, instead, moved forward

with industry’s proposal to address these lines substantially intact.

The proposed requirements are not equivalent, and we heard some

questioning on that today, and contrary to PHMSA’s testimony, six

pages of rules were reduced to one paragraph that is not as enforceable. And as a member of the advisory committee, we spent a

long time making those regulations as enforceable as possible. The

‘‘must’’ is incredibly important.

Additionally, the Committee’s marked up version of the pipeline

safety law reauthorization, H.R. 5782, is not something that we

support as public interest public safety groups, as far as it addresses the low stress pipelines. Cook Inletkeeper and the Pipeline Safety Trust will submit detailed comments to PHMSA on the 2006

proposed rule; however, Congress needs to know right now that

PHMSA’s proposed rule is just a patchwork of requirements taken

from Part 195, with no substantial evidence that such requirements will decrease releases significantly.

In addition to improving pipeline safety regulation, Cook

Inletkeeper and the Pipeline Safety Trust recommend that Congress consider adopting the following measures: authorize, perform,

and implement the recommendations of an independent audit on

the maintenance and operation practices of all North Slope oil and
34

gas facilities; create a citizens oversight group modeled after the

Prince William Sound Regional Citizens Advisory Council created

after the Exxon Valdez oil spill; harness clean, renewable, and

homegrown energy sources like properly cited wind, solar, tidal,

and farm-based bio-fuels, and promote the use of plug-in hybrid vehicles; reduce our Nation’s dependence on oil through increased efficiency and conservation; and, last, consider the difficulty of preventing oil and gas-related releases before making sensitive onshore, for example, the Arctic National Wildlife Refuge, or sensitive

offshore environments available for oil and gas drilling.

In conclusion, PHMSA’s current proposal deserves aggressive

congressional questioning and it will receive strong negative public

comments. Cook Inletkeeper and the Pipeline Safety Trust believe

there are sound safety, environmental, and economic rationales for

PHMSA to issue a rule requiring all low pressure transmission

pipelines to meet existing transmission pipeline standards, just as

the non-rural low pressure alliance must meet.

We commend BP for admitting fault for its technical and related

financial misjudgments with respect to its North Slope transit pipelines. Let’s learn from this situation and make certain it does not

happen again by ensuring that no low pressure pipelines remain

unregulated.

Thank you very much for your attention to these concerns.

Mr. YOUNG. Thank you.

Mr. Marshall?

Mr. MARSHALL. Mr. Chairman, members of the Committee,

thank you for the opportunity to speak today. I am Steve Marshall,

President of BP Exploration, Alaska.

In the past six months we have had two leaks from the oil transit lines at Prudhoe Bay. These occurred on my watch and, as

President, I am in overall charge of the business in Alaska. The

buck stops with me. And my team and I will do everything we can

to rectify this situation going forwards, to get production back as

quickly and as safely as we can, and apply the lessons learned

going forwards.

We have fallen well short of what you and the American people

expect of BP, and have fallen far short of the standards we expect

of ourselves. We know, going forwards, that we will be measured

by not what we say, but what we do, and we are in action to fix

the problems and, in doing so, regaining your trust and that of the

American people.

Both spills have been cleaned up. We have received positive comments from the State agencies about the quality of our responses,

and we believe there will be no lasting damage to the environment.

We won’t know the exact cause of the leaks until we complete the

failure analysis of the pipes. That work is underway in cooperation

with both State and Federal regulators.

We believed we had a very comprehensive corrosion management

system, one that covers over 1500 miles of oil pipelines, flow lines,

gathering lines, oil separation facilities, and, indeed, transit lines.

The inspections that we did told us time and again that these pipelines were in good condition. In retrospect, since these leaks, we

have identified gaps in that program, and we are going to take the

lessons and apply them going forwards.
35

Currently, our primary focus is on the safe resumption of oil production from the east side of Prudhoe Bay. Let me speak first to

the western side of the field.

Currently, the west is producing over 200,000 barrels per day.

We continue to gather additional inspection data, and so far 25 percent of the transit line on the west has been surveyed and, so far,

appears to be in good condition for service. Our confidence in that

line increases every day.

On the east side of the field we are pursuing two options for the

safe resumption of production. We are vigorously inspecting the

transit line, and, to date, we have completed nearly 6,000 inspections, again, about 25 percent of the line, and so far this data set

also indicates fitness for service; and we are currently working

with the DOT to submit an application for restate of the east to

allow maintenance and smart pigging of that line.

We are also aggressively pursuing bypasses to connect the production facilities in the east to existing lines which are known to

be of good condition. We expect those bypasses to be complete by

the end of October. And, beyond that, pipeline replacement will

start during the latter part of this year at a project expected to cost

in the order of $150 million.

Looking ahead to the longer term, I would like to make five

points:

First, we will implement a program of routine maintenance and

smart pigging going forwards on all our transit lines on the North

Slope;

Second, we will determine the precise corrosion cause and modify

our corrosion management system accordingly;

Third, we will voluntarily include all of BP’s operated transit

lines, all 122 miles, in the DOT’s internal management program;

Fourth, we will replace 16 miles of transit lines; and

Fifth, we have already made organizational changes, adding a

technical directorate, to review and modify operating standards

and, importantly, to verify that those standards are indeed being

met.

Since 2000, we completed many internal and external reviews of

our corrosion management system, covering the work environment,

the technical integrity of the program and the integrity of the data

we use. I rely daily on experts, teams of experts in Alaska to manage the corrosion management, as I do on all aspects of our business, indeed, as I rely on many teams to manage the entirety of

our business in the State.

But it doesn’t stop there. I welcome challenge, scrutiny, whether

it comes from government, from partners, our commercial joint venture partners, whether it comes from external consultants and, indeed, from our workforce. Having worked on the Slope for five

years early in my career, I know the importance of getting worker

input, and I take very seriously any way we can to shine a spotlight on our systems and continue to make improvements to all of

those.

We have had State reviews, multiple internal audits, including

two reviews by our chief engineer of our corrosion management

system. As we have gone back over those reviews, no one pointed
36

to these transit lines as a particular problem. If they had, we

would have acted on it.

In closing, we are committed to accomplishing all of this with full

transparency with all of our stakeholders, and with the full involvement and enrollment of regulators, partners, and employees;

and I am personally committed to investing the time, effort, and resources to regain the trust of you and the American public. Thank

you.

Mr. PETRI. [Presiding.] Thank you. Now we will turn to questions

and begin with Mr. Oberstar.

Mr. OBERSTAR. Ms. Epstein, when the Committee acted earlier

this year to move the pipeline safety bill, you had some comments

on the bill at the time. Do you recall what those were?

Ms. EPSTEIN. I was invited to testify in March, and I was not as

involved in the actual markup, although we were very interested

in participating in that. But our position has been consistently that

the low stress pipelines need to be regulated, all of them need to

be regulated. If they are not, we have no assurance that the corrosion prevention measures, the cleaning measures, and all the other

Part 195 measures that are required are actually being carried out.

And it is of concern to me that by not requiring all those measures to be done that the excellent record of declining releases that

PHMSA is touting would not apply to these types of pipelines, even

for the small segment of lines that they are going to be regulating

as part of their proposed rule, should that rule be made final in its

current form. There is just overwhelming technical evidence that

they need to be regulating all these lines.

Mr. OBERSTAR. Do you support change in the proposed rule,

which I discussed with Admiral Barrett earlier, that current law

says operators must inspect the integrity of the pipeline using internal inspection measures and the proposed rule says the operator

may use inline inspection? He seemed willing to return to the current law of a requirement, a must inspect. Would you support that?

Ms. EPSTEIN. If you look at the proposal, some of the existing requirements are referred to in whole. In the case of the integrity

management, six pages, as I mentioned in my testimony, of very

specific requirements were reduced to a one paragraph section of

the proposed where it does say ‘‘may.’’ And with due respect to Vice

Admiral Barrett, the situation where some pipelines are not

piggable is true for higher stress and higher pressure transmission

lines as well, and there is an equivalent approach that can be

taken there. It is also true for the lower stress non-rural lines.

Mr. OBERSTAR. Thank you.

Mr. Marshall, thank you for being here. It is somewhat courageous on your part to come and defend a record that is rather unsavory, frankly.

I want to understand your response to every five-year, in-line inspection of high-pressure liquid lines, low-pressure liquid lines in

only populated areas, or so-called environmentally sensitive areas,

and gas transmission in-line inspection every seven years. What

would be your reaction, or what is your opposition to, as apparently

has been the case for BP, to five-year inspection of all of those lowpressure pipelines carrying liquid material wherever they are?

Mr. MARSHALL. Mr. Oberstar, thank you for the question.
37

On the North Slope, BP has a very active pigging program. Each

year, we run over 350 maintenance pigs across the entire of our

system. Again, we operate about 1,500 miles of pipelines. These

transit lines represent about 1/100th of those lines.

In addition, we inject over two million gallons of corrosion inhibitors with biocite added to try and eliminate the propensity of microbes to occur. We focus our maintenance pigging activities in the

areas where we believe the probability of corrosion to be the highest. We start at the wellhead. Unlike many pipeline management

systems, we have the opportunity to go further upstream to try and

protect the entirety of the system, which hopefully protects the system going through to these transit lines.

We do employ and have employed smart pigs, maintenance pigs

and smart pigs on the transit lines on the western side of the field

in 1990 and 1998, and in the interim we have used a combination

of techniques, ultrasonic testing and corrosion weight-loss coupons

to verify the condition of the lines in the interim years.

On the west, it was only in late 2005 that we started to see the

indications of higher corrosion rates that caused us to put a smart

pig in the plan for 2006. Unfortunately, that was too late to prevent the March spill.

Mr. OBERSTAR. That was a good apologia pro vita sua, but it

didnFEt answer my question. What objection do you have to a fiveyear inspection requirement of liquid pipelines, regardless of

whether they are in populated areas or in so-called environmentally sensitive areas? With what you have just recited, I should

think you would have no objection, it not in favor of.

Mr. MARSHALL. Mr. Oberstar, thank you again. I apologize for

not addressing the question the first time.

I can only really speak for the Alaska operation. That is my

scope of responsibility. Certainly, going forward, for these transit

lines and for the replacement transit lines, we are committed to

maintenance pig as regularly as we need to, to smart pig as least

as often as the regulations require, and five years is not a problem

on these transit lines.

Mr. OBERSTAR. And just one final point. I raised with Admiral

Barrett a matter that Chairman Young had discussed on various

occasions, that the Alyeska pipeline has a filter at the beginning

of its line to filter out sand, water, corrosives. Why don’t you do

that?

Mr. MARSHALL. We actually do have, I wouldn’t call them filters.

If you can see the chart, the second of the two charts, there are

on the North Slope in Prudhoe Bay, six producing facilities which

are separation plants, which take the raw crude streams of oil, gas

and water and actually do the separation, the straining of the solids, water, and take the gas off, to produce sales-quality crude that

goes into these lines. So that is the highest quality crude oil that

we can provide. So we actually have some very sophisticated facilities to do just that.

Mr. OBERSTAR. Well, according to data provided to us by the

pipeline inspection agency, in 1998 there was an inspection of six

areas that showed six areas of internal corrosion. It was no repigged and nothing was done to address those areas of corrosion.

The agency also reports that BP covered or inspected only a portion
38

of the eastern section in July. I think there is a much broader area

of responsibility here for the company to address. I will have to

leave it at that.

Mr. PETRI. Thank you.

Mr. LaTourette?

Mr. LATOURETTE. Thank you very much, Mr. Chairman.

Thank you both for coming. Mr. Marshall, I think when you were

in the room and I was talking to the Admiral, obviously anytime

there is a leak or a disruption in the Nation’s pipeline system, it

has potential environmental and safety difficulties. I want to focus

on the economics for the moment.

There are a number of people in my district, I would describe

some as conspiracy theorists. They believe that you and other oil

companies are manipulating artificially the price of gasoline on the

world market. When they hear that there has been no smart-pigging of these lines since 1992 and you throw in executive compensation and you throw in record profits, it sort of fuels that.

So I want to read about page and a half, and then I have two

questions, if you would just be patient. It is my understanding that

the United States Government has initiated investigations both

civil and criminal of BP, alleging among other things that BP manipulated U.S. crude oil and unleaded gasoline markets. It is my

understanding the company has acknowledged the investigation

and said that they are cooperating. The Commodities Futures

Trading Commission has issued subpoenas, which has focused on

the possible manipulation of the global over the counter market in

2003 and 2004.

The separate gasoline inquiry, it is my understanding, focuses on

a single day’s trading on the New York Mercantile Exchange in

2002. In the broader civil investigation into crude oil trading, investigators are examining whether BP used information about its

own pipelines and storage tanks at a key delivery point in Cushing,

Oklahoma to influence the crude oil price benchmarks.

When the leak occurred in March, the Office of Pipeline Safety

issued a corrective action on March 15. It is my understanding that

on July 20, they had to come back in and evaluate what the company was doing or not doing, and issued an amendment on July 20.

I was struck that we should judge the company not by what you

say, but by what you do.

So my first of two questions would be, it is my understanding in

the amended corrective order that BP was instructed to conduct additional gamma ray scans at Prudhoe Bay west and east in the Lisbon lines, extract and analyze samples from the failed Prudhoe Bay

west pipeline wall, install facilities to handle solids from cleaning

pig operations, develop contingency plans to send solids directly

into the transatlantic pipeline tanks, and by August 1 develop a

plan to remove the standing crude oil in the Prudhoe Bay west

pipeline by August 22. It was my understanding that was about

17,000 barrels of oil, and report within 30 days on actions and

plans for replacing, abandoning and restoring the operation of the

Prudhoe Bay west pipeline.

Can you tell us, please, what the status is of the company’s compliance with the amended corrective action order?

Mr. MARSHALL. Thank you for the question, Mr. LaTourette.
39

To the best of my knowledge, we are in full compliance with the

amended order. We are working very closely with the Department

of Transportation on all aspects of that line, of all aspects of the

amended order. With specific reference to the western line, that indeed has been drained. You are absolutely correct on the volume.

We are proceeding to put in place the necessary bypasses, working

with Alyeska to put a bypass into tank 110 at pump station one

to allow the solids to avoid plugging up the filters, if there is that

potential.

Mr. LATOURETTE. I thank you for that.

My second question is going to be really a simple ‘‘why.’’ It is my

understanding that the findings that the Office of Pipeline Safety

made, among other things, was that your predecessor, ARCO, had

suspended the cleaning of the Prudhoe Bay east pipeline in 1992,

when solid deposits clogged the strainers that have been discussed

here, in the tap system. Again, I mean, I have heard a lot of we

didn’t do it, or some people don’t do it because it wasn’t required.

The Government doesn’t require me to change the oil in my car

every 3,000 miles, but I do because I would like my car to continue

to run.

So my question, I think on behalf of the folks that I represent,

and by the way, the biggest building in downtown Cleveland is the

BP Tower. We are very proud of your presence when you were

there. Why, why since 1992 didn’t somebody at your company, or

the company you subsumed, decide that this was a good idea?

Mr. MARSHALL. I can’t speak for the intervening years between

1992 and 2000, but when BP took over the lines in 2000, we instituted a program of inspection, ultrasonic testing of the line. We

compared the results of that testing with the results of the smartpigging that have been done on the west side only two years previously. Prudhoe Bay consists of two halves broadly similar, eight

miles with three facilities on each side. We found the results of our

ultrasonic testing to confirm the line was in very similar good condition to that in the west. So we continued that through until the

present time.

Mr. LATOURETTE. The only thing I would say is that I knew that

you did that, and to me that is a little bit akin to my doctor putting

a stethoscope on my chest and making a determination that I

didn’t have heart disease. I think sometimes more is needed, and

I think it saddens me that more wasn’t done in this situation, and

you have acknowledged that.

Ms. Epstein, you look like you wanted to say something. Do you

want to say something?

Ms. EPSTEIN. No.

Mr. LATOURETTE. Okay, very good.

Thank you, Mr. Chairman. I yield back.

Mr. PETRI. Thank you.

Just housekeeping, I am reliably informed that there will be

some votes on the floor starting in five to ten minutes. This hearing

room will need to be cleared about 1:30 or so for another hearing

at 2:00 o’clock. With that in mind, we obviously can accommodate

members.

Mr. DEFAZIO. Mr. Chairman, thank you. I appreciate it.
40

To Mr. Marshall, do you handle a significantly different substance than Alyeska? I mean, is there a tremendous difference in

the oil that you are moving and they are moving?

Mr. MARSHALL. To the best of my knowledge, we handle oils from

a variety of fields. Indeed, the quality does vary considerably.

Mr. DEFAZIO. Right. I mean, they have a mix; you have a mix.

You would think that maybe some of the same contaminants in

theirs are in yours and yours are in theirs.

Mr. Marshall. They do take an aggregation of all the fields, including those that we operate and those that ConocoPhillips operates.

Mr. DEFAZIO. So then you are saying your fields may be particularly problematic?

Mr. MARSHALL. No, I wouldn’t say they are particularly problematic. We have a variety of crude oils of different qualities.

Mr. DEFAZIO. Right. Well, I guess the question I am getting to

is you have such a long history in Alaska and as I understand it

you have been top dog for the last five years up there. If Alyeska

thinks that they have to smart-pig every three years and they do

cleaning pigs every seven to fourteen days, I guess the question

would be, why was there a management decision made to wait between eight and fourteen years on your lines? I mean, wouldn’t you

think if they are cleaning them every seven to fourteen days, you

should maybe clean a little more frequently than once every 14

years?

Mr. MARSHALL. When we pigged the western side of the field in

1998, there was very nominal solids came back, less than two cubic

yards of solids, which did not indicate a solids problem.

Mr. DEFAZIO. That was the cleaning, and then you followed it

with a smart pig?

Mr. MARSHALL. A smart pig, yes.

Mr. DEFAZIO. Yes. And then you found some anomalies when you

did that?

Mr. MARSHALL. We found some anomalies, but we believed that

the management of those was under control through the subsequent testing. But we do run cleaning pigs and smart pigs on a

number of our lines. Northstar runs a pig every 14 days. We run

that for preventing paraffin buildup. There are a number of reasons why pigs are run. One is for cleaning lines. The other is to

avoid the potential for wax buildup. An 800-mile pipeline is quite

a different proposition than an eight-mile pipeline, with cooling effects and the need to inject reducing agents.

We believe that the systems we had in place using ultrasonic

testing and corrosion coupons were sufficient. As I have said before,

clearly in hindsight, they fell short.

Mr. DEFAZIO. They were not.

Mr. MARSHALL. And we will rectify that going forward.

Mr. DEFAZIO. Yes, and as I understand it, I mean the cost, do

you agree with the costs we heard earlier, a 22-mile line, approximately, we had here $175,000, or somewhat? I think we got a little

lower number out of the Admiral.

Mr. MARSHALL. I think that is in the ballpark, yes.

Mr. DEFAZIO. Yes. So you said you have 1,500 miles of line in

Alaska. Was that it, when you said 1,500 miles?
41

Mr. MARSHALL. That includes oil well lines, gathering lines, flow

lines and transit lines, yes.

Mr. DEFAZIO. Okay. So for those which are well lines, you mean

horizontal? Or you are talking—

Mr. MARSHALL. All on the surface lines. These are all typically

above-ground.

Mr. DEFAZIO. Okay. So what kind of regime are you going to impose on the 1,500 miles now that you have this problem in terms

of cleaning and smart-pigging?

Mr. MARSHALL. We have had, even prior to the spills, a very comprehensive program of maintenance-pigging and smart-pigging

across the slope.

Mr. DEFAZIO. On some of the lines.

Mr. MARSHALL. On some of the lines, yes.

Mr. DEFAZIO. Yes. Well, how about all of them in the future? I

guess the question would be, will you commit in the future that all

your lines are going to be cleaned and smart-pigged on some sort

of regular interval? When I look at the costs involved, they are infinitesimally insignificant in terms of the revenues of your corporation. I realize you are managing one particular part of it and there

is probably a lot of pressure on you to maximize profits up there.

But when you look at the downside, the interruptions, the costs,

the pollution, the cleanup, it seems that your higher-ups would

need to recognize that that is a cost that would be well-spent.

Mr. MARSHALL. We are certainly committed to doing everything

we can to make sure the inspections of those lines, whether it is

involving maintenance-pigging, smart-pigging, the injection of corrosion inhibitors, looking at reformulation of corrosion inhibitors,

which we do many times a year to make sure we have the best

chemicals that we can possibly use, and are indeed effective.

We are certainly committed to doing a baseline reassessment of

all our lines going forward to make sure we truly understand the

condition of the lines and implement whatever practices we need

to.

Mr. DEFAZIO. Ms. Epstein, are you reassured by this commitment here? Do you think a little more needs to be done?

Ms. EPSTEIN. I do. I understand that BP historically has paid an

extensive amount of attention to its flow-lines up there, the vast

majority of the mileage with respect to preventing corrosion. That

is a good thing. The problem is that these were judged to be lowrisk lines. Clearly, that was a technical mistake. It is something

that highlights that even what the Federal Government considers

low-risk can be inaccurate as well.

But what I think we really need to focus on today is just making

sure that all of the low-stress lines get the regulation they deserve.

Mr. DEFAZIO. So could we say a low-risk line is a line that hasn’t

yet had a problem?

Ms. EPSTEIN. You could if you don’t have the data. Absolutely.

Mr. DEFAZIO. Yes. Thank you.

Thank you, Mr. Chairman.

Mr. PETRI. Thank you.

Mrs. Kelly?

Mrs. KELLY. Thank you.
42

Mr. Marshall, I grew up in Lima, Ohio, where there is a BP catalytic cracking factory. In the late 1970s and early 1980s, three percent of all the air pollution in the United States of America was

thrown up into the air by that factory. So my feeling about BP is

somewhat tainted by all the acid rain that came over, because I

then lived in New York, from a lot of that kind of thing.

I am concerned that there is a pattern in BP of not maintaining

what they have. You state in your testimony you took over BPXA

during a critical juncture for the company as it emerged from a period of low prices, and that you wanted to re-instill pride trough

improving both the physical facilities in the oilfield and our operating practices.

So what has stopped you from reinvesting your companyFEs

record profits into a new pipeline inspection regime, to restore

those aging and deteriorated pipelines, and rededicate that environmental damage that has already been brought to us by these

pipeline failures? I would like to know if you can do all this repair

without passing the costs of the repair, maintaining your pipelines,

onto the consumer?

So I am asking you two questions.

Mr. MARSHALL. Mrs. Kelly, thank you for the question.

Since I arrived in Alaska in 2001, I am proud to say we have actually increased significantly the amount of money we spend, not

only capital investment, but also the amount we spend to operate

the field. Our corrosion management program has increased 80

percent over the five years. We have increased our major repair

spend, a four-fold increase in that since 2004 to 2007. We continue

to invest. The infrastructure that we have up there is of vital importance not only to us, but to the Nation.

These two spills have very painfully reminded us of the obligation we have to provide safe fuel to the Nation. We are going to

leave no stone unturned making sure that the pipeline repairs, the

replacements that we do every year, are indeed brought forward.

We accelerate our renewal programs that had in place. We are

going to bring those forward. We are bringing extra people in to

make sure that we can actually more aggressively address those

programs and make the necessary investments.

We have been doing that. I am proud to say that the business

is in far better shape, notwithstanding these two spills, but I am

not satisfied we have gone far enough. I won’t be satisfied until we

have actually reestablished the trust of both the American Nation

and all our stakeholders.

Mrs. KELLY. I appreciate that. Would you now address the second question I asked you? How can you do this without passing the

costs on in the form of higher gasoline to the consumer?

Mr. MARSHALL. Quite frankly, that is not an issue I have been

focused on. We need to understand what our plans are, our investment. Every year we invest something in the range of $600 million

to $700 million per year capital investment on the North Slope. We

see that investment going forward increasing dramatically with the

prospect of a gas pipeline. We need to make sure that we have facilities that are fit for service. As a number of the members have

talked about this morning, the flow-rates have dropped. We need

to make sure that the infrastructure there is replaced with infra-
43

structure not because it is in bad shape, but is more appropriate

to the condition of service that it is in.

One of the lessons that I have learned from this is, from these

last two incidents, is the importance of understanding changing

conditions. If I could go back and do a better job of something, it

would be to truly understanding the changing nature of the oilfield

and make sure we are doing everything we could to address that.

Mrs. KELLY. Perhaps, Mr. Marshall, you might send somebody by

my office to try to help me understand how you are going to do this

without increasing the cost of gasoline. We are struggling right

now. You know that.

Mr. MARSHALL. Okay. I would be happy to do that.

Mrs. KELLY. Thank you.

Ms. Epstein, do you have something?

Ms. EPSTEIN. Yes, Representative Kelly. I have one small point

to add. I had stated in my testimony that pipeline safety is a good

investment for the public and small business, for just the reasons

that you are raising. When we don’t do pipeline safety right and

we have serious disruptions, of course it is the public and the small

business community that ends up paying, and we will never get

that money back because no matter what happens, no matter who

is at fault.

So that is why we feel so very strongly that we need a regulation

that covers all low-stress pipelines, so we donFEt wait until there

is yet another accident and then go back and have this same sort

of hearing again, and say there is another type of low-stress pipeline that we need to cover. The State safety regulators recommended in 1988 that all these pipelines be covered by PHMSA

and we are still waiting.

Thank you.

Mrs. KELLY. Thank you. I yield back.

Mr. PETRI. Thank you.

Mr. Pascrell?

Mr. PASCRELL. Thank you, Mr. Chairman.

Thank you, Mr. Marshall. You have been pretty straightforward

in your answers. I want to ask you a couple of questions.

To your knowledge, where did DOT get the data it used for the

proposed rule? In your experience, working for over 10 years on behalf of the environmental and safety community, has DOT ever

called you to obtain data or other information on the number of

low-stress pipeline miles, on the seriousness of low-stress pipeline

releases, or on the number of spills themselves, in order to develop

specific rulemakings? That is my first question.

Mr. MARSHALL. Mr. Pascrell, I have to confess that I donFEt

have that information in front of me. I will be happy to take that

away and provide a written response back to you as soon as we can

gather that.

Mr. PASCRELL. Do you know the answer to that question, Ms. Epstein?

Ms. EPSTEIN. No, I don’t know the specifics with BP. I do know

general surveys that have been done by PHMSA and I do know

some of the problems with the data they have collected and the inconsistencies, and some of the recent data that I cited that was

submitted just before the Prudhoe Bay shutdown from industries
44

showing that 21 percent of the larger spills from 1999 to 2004 were

from these low-stress pipelines, and they represent far less percentage of the overall Nation’s mileage than that.

Mr. PASCRELL. We got a rude awakening when we investigated

the natural gasline situation in the United States of America, that

the Federal Government was not doing its job, and the Federal

Government is standing there. I am wondering what they are doing

in this kind of work. So there is responsibility here on all accounts

for everybody.

I want to ask you another question, Mr. Marshall. You state in

your testimony on page seven that corrosion rates are not static,

and they can increase or decrease depending on fluid properties or

changes in conditions that affect the efficacy of corrosion inhibitors.

For that reason, locations that are prone to corrosion damage, or

where damage has been identified, are inspected as often as every

three to six months. You said that.

In 1998, corrosion was detected in the western side of the line.

This is where the March leak was located. How often was that section of pipe inspected between 1998 and 2006?

Mr. MARSHALL. Mr. Pascrell, to the best of my knowledge, the

pipe was inspected on a regular basis with ultrasonic testing. What

we try and do with that ultrasonic testing is determine the actual

corrosion rate, and with coupons try and understand what the corrosion rates in terms of potential wall loss per year might be.

Mr. PASCRELL. But what you have heard today, Mr. Marshall, is

that there is some question about the sufficiency of ultrasonic, and

other proposals have been suggested here. I would like, if you could

possibly give me a written answer to both my first question and my

second question, which I just asked you. I would like that, and I

would hope that you could submit that within a week through the

committee to me. Is that a problem?

Mr. MARSHALL. I would be happy to do that, yes.

Mr. PASCRELL. Thank you, sir.

Thank you, Mr. Chairman.

Mr. PETRI. Thank you.

I would like to thank you both for your testimony. We are about

to conclude. I can’t help but ask a question or two myself. I hesitate. I was trained in law school and I was told never to ask questions you don’t know the answer to, but I guess I will violate that.

Do you have any idea how much the cleanup is going to cost BP,

in dollars?

Mr. MARSHALL. That should be a question it would seem I would

know the answer to. That is again something we have not focused

on. I will be happy to get the answer. We don’t look at costs at all

when it comes to cleanup. We do what it takes. We have brought

whatever equipment, people and resources we need to do that. As

I said earlier, the feedback on our response has been first-class. I

will be happy to give you an estimate of what the spill in March

and the leak in August have actually cost us.

Mr. PETRI. It occurs to me that under the leadership of Lord

Brown and others, BP has spent hundreds of millions of dollars

changing its whole corporate image to this green and gold, and a

huge public relations effort. And that investment is probably going

to have a reduced payoff because of episodes like this. So there are
45

not only the direct costs of the consequences of cleanup, but the

enormous long-term costs in terms of trying to create a favorable

environment in which to service your customers and do business.

Mr. MARSHALL. Mr. Chairman, I am very conscious of the impact

on reputation, public trust, confidence in BP. I know that track

record takes a long time to build, and it is very easy to lose it. We

are determined. I am determined to earn that trust back. As I said

at the start, it is about action, sustained action, not just in a few

short months, but over a sustained period, many years. I have the

backing of the company to do just that, to put whatever investment, both capital and operating, into our business to make sure

we get back to where Alaska has enjoyed, with the highest standards, setting those standards, and actually meeting those standards.

Mr. PETRI. We would appreciate any informed, thoughtful suggestions you might have as to how we in this Congress or different

Federal agencies could help you with that process in terms of not

just beating you about the head and shoulders, which may be deserved in this case to some considerable extent, but also in terms

of helping figure out the most useful ways we can to reduce the

chances.

Nothing is perfect, and you are going to have errors in life, and

you can always fight the last war, but we would like to encourage

you to help, as a leader in the industry, in developing not just industry policies, but legal frameworks that we are in the business

of helping to create, and regulatory frameworks that are conducive

to the most environmentally helpful and safe and efficient operation of these pipelines.

It is one thing to say we are doing a good job. It is another thing

to do it in an intelligent way that actually really lowers costs over

time for everyone and makes a cleaner world. Costs and good

environmentalism are not enemies. They often work hand-in-glove,

as you know.

Mr. MARSHALL. Mr. Chairman, you have my pledge that not only

do we want to meet regulations, we want to be proactive in setting

the standards, working with Congress, working with the DOT, to

apply whatever lessons we learn from these incidents into the future, not only for us, but for the industry.

Mr. PETRI. We look forward to hearing from you with any suggestions as to how we can help make sure. Sometimes there are competitive disadvantages, if you want to do the right thing and the

competitors donFEt. It makes sense to have a standard that is set

across the board. In my part of the world, in the paper industry,

they were very much in favor of trying to put in some environmentally good rules, but they wanted Federal regulations or laws

because they did not want to be put at a competitive disadvantage

if they did do that.

So there is a proper place for us to help good corporate citizens

be in real terms good corporate citizens. And also to help people

live up to the standards they set for themselves, and we would like

to do that in this case.

Mr. MARSHALL. Okay. I would be happy to do that.

Mr. PETRI. This hearing is adjourned.

[Whereupon, at 1:38 p.m. the committee was adjourned.]
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140

Æ