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"Crime Scene": Oil Industry Vultures Pick Over Alaska

In this excerpt of investigative journalist Greg Palast's new book "Vulture's Picnic," Palast tracks the mess wrought by the oil industry in Alaska.

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Why is the pipe going to hell? I asked the Inspector for just the facts.

“They haven’t pigged it.” That is, they didn’t run the Pipeline Inspection Gauge, the PIG, the robot that runs inside the pipe. If they had, the Smart PIG (one with sensor-feelers) would have squealed at every crack and rusty chunk of the tube.

Sure enough, the records show that 400 miles of the Pipe hadn’t seen a PIG in eight years. Why? It costs up to a million dollars a mile to operate. Four hundred miles, $400 million. BP must have realized it’s cheaper to pay a fine.

After endless government scoldings, the company merely threw coins on the ground for the fines and laughed until Pump Station #9 caught fire and spewed oil, then laughed some more. The Inspector filled me up with another book’s worth of scary info, then dropped us in Fairbanks and began his second sleepless night of driving. Badpenny, worried, stayed up past dawn chatting with him by cell every hour to keep him awake and safe. If you need a guardian angel, you could do worse.

But here’s what bugged me. There was one time when the Smart PIG did squeal. And its timing was brilliant.

In 2006, BP’s Trans-Alaska Pipeline suffered a remarkably timed accident. They ran the PIGs and found that the pipes converging on Prudhoe were cracking, eaten up by corrosion. The BP consortium, thinking about safety first, shut down the pipeline. It was an emergency. And it was August.

How could they suddenly discover massive corrosion that had been there for years? Inspector Lawn had written jeremiads about the corrosion seven- teen years earlier. And his umpteenth warning was published just five months before the panicked shutdown.

Besides, BP should have known about the problem years before that, if only because they had tapped the Inspector’s home phone. (BP was caught spying on the Inspector, had to pay him a bundle, and he used it all to create a foundation for oil transport safety. In other words, the man is a Passion Play in a parka.)

They missed the corrosion for seventeen years until August 2006. So why did a PIG suddenly oink?

That was some smart pig. The business pages of the August 8 Washington Post might give us a clue:  



News that BP would have to suspend production equal to 8 percent of U.S. petroleum output for an indefinite period helped push the price of crude oil up by 3 percent yesterday, to $76.98 a barrel on the New York Mercantile Exchange. The price jump underlined the fragility of world oil markets, already anxious about the thin cushion between global supply and demand and potential threats to flows from Iran, Nigeria, Iraq and the hurricane-prone Gulf of Mexico.  

BP sold eight million barrels a day. In just a few days, the windfall would more than pay that $20 million fine.

Am I saying that BP chose to shut the Pipe at that exact moment when they could squeeze the world market? Would BP lie and manipulate the market like that? I am saying nothing. I shall, however, note that six weeks before the shut- down, a BP executive pleaded guilty to criminal manipulation of the U.S. pro- pane gas market.

OK, we have motive. But opportunity? Something was very odd about BP’s PIGs. The Inspector said they weren’t run. But now we knew that when they were run, they didn’t see a thing for years. Then suddenly, they did.

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