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BP's Culture of Cost-Cutting Isn't Just in the Gulf: Danger Looms in Alaska Pipeline

Explosive allegations leveled by managers reveal that severe cost-cutting efforts could put the integrity of an 800-mile Trans Alaska Pipeline System at risk.

Over the past several months, Alyeska Pipeline and the company's Chief Executive Officer, Kevin Hostler, have been under intense scrutiny by a Congressional oversight committee and an independent investigator, who has been probing explosive allegations leveled by managers that severe cost-cutting efforts could put the integrity of the 800-mile Trans Alaska Pipeline System (TAPS) at risk.

Allegations that major oil companies routinely cut corners in areas such as safety and maintenance have taken on new urgency following the catastrophic explosion aboard the BP-operated Deepwater Horizon drilling rig, which killed 11 employees and ruptured a newly drilled well 5,000 feet below the surface, spewing hundreds of millions of gallons of oil into the Gulf. Evidence has surfaced since then that showed BP scrimped on safety and maintenance spending, despite repeated warnings that such moves could prove disastrous.

It's no coincidence that Alyeska has been accused of taking similar risks with TAPS and lashing out at employees who speak up. BP is the largest shareholder of Alyeska and Hostler is a BP executive "on loan" to the company. BP exerts significant control and influence over the way Alyeska is operated, senior BP and Alyeska officials said.

Prior to being named chief executive of Alyeska, Hostler spent 27 years with BP, most recently as senior vice president of BP's global human resources organization. Before that, Hostler was head of BP's subsidiary in Colombia.

A top BP Alaska official asked, in light of the Gulf disaster, whether it is a good idea to have Hostler, "a BP executive," running TAPS, "where BP can exert cultural and economic influence through the president of [Alyeska] as well as its ownership share, in directions that are not good for the safety and the integrity of [the pipeline]."

The BP Alaska official said the fact that both companies are plagued by the same safety and management concerns is evidence of a "pervasiveness of a BP leadership culture that is focused on cost cutting that reduces operational integrity."

"The pervasiveness is due to [Alyeska] being led by a BP executive [Kevin Hostler], and BP can wield enormous pressure on the other owners [of the pipeline] who to a large extent share a desire to operate the pipeline with as little cost as possible," the BP executive said.

Hostler has come under fire for his management style. According to a copy of a confidential employee work survey obtained by Truthout, Hostler was described him as "a narcissistic despot who will be remembered for his management style of intimidation and fear."

"At the senior management level, [Hostler] has made a mockery of the [Open Work Environment] system by neutering our VPs and Directors who are openly afraid to disagree with his initiatives, even when it is detrimental to TAPS," says a copy of the survey.

Other surveys provided to Truthout contained similar descriptions of Hostler.

Last week, Hostler was called into Washington for the second time in a month to meet with staffers from Rep. Bart Stupak's office. Stupak (D-Michigan) is the chairman of the House Energy Committee's subcommittee on oversight and investigations.

The meeting focused on the circumstances behind several mishaps, including a recent oil spill that took place at one of Alyeska's pump stations on the North Slope, which forced the company to shut down TAPS for more than three days in May, and the loss of communication connections used to control pumps and valves at the northern end of pipeline system that also forced its temporary closure.

Staffers also queried Hostler about the findings of an investigation, that recently concluded, conducted by Charles Thebaud, an attorney with the law firm Morgan Lewis. The probe was sparked in February after some Alyeska managers anonymously filed complaints with BP's Office of the Ombudsman about a number of issues, including failures to address matters concerning safety and maintenance and a controversial decision Hostler made last year to relocate about 30 safety and integrity management engineers from Fairbanks to Anchorage, Alaska - hundreds of miles away from the pipeline.

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