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Alyeska Pipeline on hook for Deepwater Horizon spill consultations

Patti Epler

0211-pws-auditA recent audit of Alaska's premier oil industry watchdog group by Alyeska Pipeline Service Co. is raising concerns over whether the oil company consortium is trying to undermine the highly touted independence of the citizens' group.

The Prince William Sound Regional Citizens' Advisory Council was born in the aftermath of the 1989 Exxon Valdez oil spill and has grown into what many consider to be an international success story and a model for the rest of the country. The council conducts its own scientific research projects and is closely involved in monitoring oil-shipping operations in Valdez. It has no enforcement authority but is influential on issues affecting oil shipping and the marine terminal, including testifying on legislation, discussing employment and staffing concerns and pushing for adequate funding for state agencies that oversee and regulate oil shipping.

The group operates on about $3.2 million, virtually all of that provided by Alyeska under a contract set out in federal law, the Oil Pollution Act of 1990 often referred to as OPA90. Under the contract, Alyeska is allowed to review how the money is being spent and whether the citizens' advisory council is sticking to the rules of the contract.

Alyeska spokeswoman Michelle Egan was reluctant to talk about the Dec. 16 audit, saying it is the same as any audit the company does of any contractor and mainly involves resolving whether the expenses are allowed under the contract. "We look at their response and we kind of push it back and forth," she said Tuesday, adding that the audit process is still in progress. She declined to talk about some of the concerns the audit has raised.

But a copy of the audit provided to Alaska Dispatch by the citizens' advisory council under a public records request shows Alyeska is protesting more than $184,000 the group spent in the past year, including more than $22,000 to help address questions and concerns related to the Gulf of Mexico oil spill. The pipeline company also is challenging money paid to a former executive director and specific though small amounts paid out by staff, mainly while attending conferences, throughout the three-year audit period.

But it's the questioning of Gulf spill related costs that is raising the most eyebrows. Moreover, the audit also suggests that Alyeska will be protesting other "outreach" expenses in the future, and it questions -- although is not now challenging -- money the group spent to travel to conferences and scientific workshops in Canada, Russia, Sweden, Denmark, Estonia and Mexico.

Deepwater Horizon a lesson for Alaska?

The challenged dollar amount, if it's ever upheld either in agreement with Prince William Sound Regional Citizens' Advisory Council or in a court ruling -- if it came to that -- would basically be deducted from next year's budget. The group's executive director, Mark Swanson says it's a "reasonably significant amount but it certainly won't stop us, or keep us from doing the things we need to do."

The biggest concern, he said, is over the independence of the citizens group and its ability to keep up with relevant developments surrounding oil spill response efforts and technology. He believes that there's no question that the contract put in place after the Exxon Valdez spill anticipated and allows for the group to learn from others' experiences -- and for others to learn from what happened in Alaska and how the citizens' oversight effort has played out.


That was the case last summer when more than a dozen people from the Gulf traveled to Alaska to meet with the Prince William Sound group's staff and visit communities that had been hard hit by the 1989 spill. Swanson said not only did the Gulf visitors learn a lot about the effects of the Exxon Valdez spill and how communities have coped over the past 20 years, but local residents in Cordova and Valdez learned a good deal about oil spill response capabilities and efforts that were going on in the Gulf. That information will be valuable when issues arise here, he said.

On April 20, BP's Deepwater Horizon drilling rig exploded, killing 11 people and spilling more than 5 million barrels of crude into the Gulf. Gulf residents, scientists, the press and others involved in the spill flooded the Prince William Sound group's offices with requests for information and guidance on how they handled the aftermath of the Exxon Valdez spill. Several members of Congress and the National Oil Spill Commission have recommended putting in place similar oversight groups in other areas where offshore drilling occurs, including the Arctic.

Alyeska says any costs related to the Gulf of Mexico spill are not allowed under the contract.

"The scope of RCAC's activities to be funded by Alyeska consist of those promoting environmentally safe operations of terminal facilities in Prince William Sound (PWS) and the crude oil tankers in PWS, for the benefit of its stated membership," the audit says. "The activities and related costs coded to the Gulf Spill account do not appear to fall within that scope."

Swanson noted that the citizen advisory council has hosted visitors from Kazakhstan and other oil regions and that this is the first time Alyeska has challenged the costs.

"What we're doing is consistent with OPA 90 and the contract," he said, "so we're a bit mystified as to why these things are being raised. And we're pushing back."

Is BP trying to keep Deepwater Horizon victims in the dark?

Alyeska's largest owner is BP, and that has some wondering if BP is trying to thwart Gulf of Mexico residents' efforts to recoup financial damage they've suffered, or even to put in place the kind of effective oversight Alaska has maintained through the Prince William Sound Regional Citizens' Advisory Council.

BP owns 46.93 percent of the Alyeska Pipeline consortium. Other owners are ConocoPhillips with 28.29 percent, Exxon Mobil with 20.34 percent, Koch Industries with 3.08 percent and Unocal with 1.36 percent.

"Alyeska is mainly BP and BP is trying to limit the lessons shared in the Gulf. There's a distinct conflict of interest there," said Rick Steiner, a marine biologist and former University of Alaska Anchorage professor who was deeply involved in the Exxon Valdez incident and has spent the past 20 years advocating for environmental restoration and financial restitution for victims of the Exxon Valdez spill.

Steiner spent much of the summer helping Gulf of Mexico spill victims and advising on the response and cleanup efforts.


Steiner says there's no question that the citizens' advisory council has benefitted from attending scientific and technical conferences in other parts of the world where the latest oil spill cleanup and response techniques are being discussed. And, he noted, the Prince William Sound staff has contributed to the world's knowledge on those issues as well from the lessons learned here.

"They need to be doing that; there's nothing new about that," he said. "What's new here is BP trying to shut this sort of thing down."

BP spokesman Steve Rinehart declined to comment.

Other costs Alyeska questioned in the audit include $160,000 the council spent to pay off former executive director John Devens when he left the group last year. The circumstances surrounding Devens' departure are unclear, and no one at Prince William Sound Regional will talk about it, calling it a personnel matter.

"Circumstances that remain confidential caused the PWSRCAC Board to call into question whether Mr. Devens was able to continue serving as executive director," the group's response to the Alyeska audit says. The $160,000 was the result of a settlement with Devens, it said.

The audit also challenges small amounts of money staff spent at various times, such as a meal while attending a conference instead of eating at the conference or paying for gas for a relative who drove a staffer to the airport instead of paying for a taxi.

"It is simply extraordinary that Alyeska seems more worried about the trivial details of the RCAC staff's eating habits at conferences than their own aging, broken down pipeline," Steiner said. "The PWSRCAC has saved the Alyeska owners tens of billions of dollars by helping them prevent catastrophic oil spills."

Contact Patti Epler at patti(at)alaskadispatch.com