CORPORATE CRIME REPORTER

 

 

Hamel, North Slope Workers, Allege Falsification of Safety Tests
19  Corporate Crime Reporter 4(3), January 21, 2005

Oil industry critic Charles Hamel alleged that Nabors Industries, Alaska’s largest oil driller, and its client on the North Slope, BP Alaska, have falsified safety tests and drilling records, and concealed from Alaska regulatory officials at least two blowout/spills in the last eighteen months.


In a letter to Senate Ted Stevens (R-Alaska), chairman of the Senator Energy Committee, Hamel writes that “BP and Nabors Alaska Drilling are reported to be falsifying drilling records and critical AOGCC (Alaska Oil and Gas Conservation Commission) required Blow Out Prevention tests as well as concealing from AOGCC and ADEC (Alaska Department of Environmental Conservation) at least two reportable blow-out/spills.”


Hamel said that on December 6, 2004, a Nabors rig, drilling on the North Slope for BP, (Nabors Rig # 9-ES, drilling on the remote L Pad) with BP on-site supervision, “suffered a gas kick/blow-out, spewing gas, liquids, and mud 70 feet into the air and over the Rig wind-walls to the pad.”


“It is reported that Nabors/BP managers were rushing to restart drilling in disregard of identified unresolved problems down-hole,” Hamel wrote to Stevens. “The hands evacuated and took personal photos from two different angles of the eruption to surface. I hope to post the photos for your staff to view on a web-site by tomorrow. This Rig suffered a similar blow-out the first week of July, 2003.”


Hamel said that both events were not reported to ADEC and AOGCC “as required by law.”

In the letter, Hamel also alleges "Blow Out Prevention" (BOP) tests are routinely falsified, except on the “very rare occasions when AOGCC Inspectors are present to witness the performance.”


Alaska law requires such tests to be conducted once every two weeks.


But Hamel alleged that BP and Nabors routinely skip required time consuming test procedures, conceal leaky valves, and doctor log records.


Hamel provided to Corporate Crime Reporter deposition testimony given last month by Nabors rig employees Michael Mason and Antonio Escobar, who claim that BOP tests and logs documenting work at drill sites were routinely falsified.


The standardized logs are known as “IADC logs,” named after the industry group which created the logs – the International Association of Drilling Contractors.


The depositions were taken in mid-December, 2004 in a lawsuit filed by Nabors against Bridgestone/Firestone over a 2001 blowout of a Firestone tire on a vehicle that was transporting a Nabors rig.

The rig caught fire resulting in an estimated $5 million in damages.


Under questioning from Bridgestone/Firestone lawyers, Mason and Escobar said that Nabors routinely falsifies the BOP tests.


To conduct the test, the well is pressurized and held at the required level for five minutes to insure that the well doesn’t blow out.


Mason said that the five minute pressure test is recorded on a chart by a needle on graph paper.


Here’s the back and forth between the lawyer for Bridgestone/Firestone, Michael Noland of the Oklahoma City firm of Noland, Mills & Upton and Nabors’ employee Mason.


Q: How does Nabors falsify that reading on BOPs?”

A: Well, when they get the pressure up to 5,000, they just put their hand on the chart, on the graph against the metal plate behind it and just turn it ahead five minutes.”

Q: So they manually move the needle?

A: Yes.

Q: Okay. Have you reported that practice to anyone?

A: Yes, I have.

Q: And what remedial action, if any, was ever taken?

A: None.

Q: And when you reported it, did you report it to Nabors management?

A: Yes.

Q: Do you know why they have not taken any action on that?

A: No, I don’t.


BP spokesman Daren Beaudo told Corporate Crime Reporter that he would not be able to get comment on the allegations in time for publication.


But Dennis Smith, a spokesperson for the Barbados-based Nabors Industries, said that Mason and Escobar “are two guys who have been very active in the union trying to organize our rigs up in Alaska.”


“I’m familiar with the names because of many other incidents with them,” Smith told Corporate Crime Reporter. “We’ve been at about a three-year stalemate with the union. These guys are the two main activists with the union.”


“We have had a string of made up allegations from the union,” Smith said.


Smith said that Hamel’s allegations about the December 6 blowout were “not believable.”


“There are about 50 or 60 people that would have seen it,” Smith said. “To not have reported that is beyond reason. It’s unfeasible. I don’t believe it. Either he has his facts wrong or its grossly distorted.”


When told about the deposition testimony of Nabors and Escobar, Smith said that this is the first he had heard of it.


“We have no records of those guys ever reporting to anyone that I know of,” Smith said. “That is something that we would take ultra-seriously and would investigate. I’ll get a copy of the deposition and make sure it gets to the right people. But that’s something that Nabors, the entire company, the customer BP, and the state of Alaska would take very seriously.”


“I’ve been in operations side for 30 years,” Smith said. “I’ve been in corporate office for a few years. This is very hard for me to believe. If they reported this to somebody, we would want them to tell us who they reported it to and we would go after it. And it is something that is of inconsequence. It is an allegation by a couple of employees. But we’ll look into it, that’s for Goddamn sure.”


“I spent 14 years in Alaska,” Smith said. “In all that time, I never had one instance of anything like this. Anytime we had any kind of allegation, we looked into it, and it always was a disgruntled employee. But this is in a deposition, it’s on the record, and we’ll certainly look into it. But the consequences are zero. Obviously, falsifying a report is something we would take super seriously. But I really doubt it has happened, particularly with these guys (making the allegation). It’s not anything about risk to the environment or risk to safety.”


As for Escobar’s claims that Nabors falsified IADC logs, Smith said he found it hard to believe.

“BP is there 24 hours a day, signing off on the IADC logs every day,” Smith said. “So that’s why this is hard for me to believe that this is credible testimony here. We will get the deposition, we’ll read the thing thoroughly, we’ll get the President of that business and we’ll get into it.”

He said that the President of Nabors Alaska unit was “out of pocket” and couldn’t be reached for comment.


But after the first conversation with Corporate Crime Reporter, Smith called back and said that he did get in touch with the company’s operational chief in Alaska – he wouldn’t give his name – and said that “this is the first he ever heard of” the allegations. “He has never had any reports of any falsification or anything,” Smith said.


“We’ve got a whistleblower hotline posted on every single rig and its been in operation for 18 months now,” Smith said. “It’s required under Sarbanes/Oxley. And we’ve never had a single report on that line anything like this.”


“We will look into this pretty thoroughly,” Smith said.


Smith added that state inspectors just don’t show up for every BOP test.


“The state doesn’t always show up for every test,” Smith said. “You have to notify them. You give them so many hours ahead of when they are going to get there. They have a full-time guy in that area. He might come by to witness or not. He can tell you wait until I get there. Or he can say – go ahead and test and document. He has the option to witness it or to not witness it.”


Smith said the tests are done once a week on every well.


In his letter to Stevens, Hamel said he was warning the Senator of the alleged violations on the North Slope “because we consider you to have the power and the interest to bring these types of violations to an end.”


“The concerned technicians share with you a keen desire to see ANWR (the Arctic National Wildlife Refuge) development come to fruition,” Hamel wrote. “The perpetrators of the reported violations abuse your trust and the public interests. These failings threaten the health and safety of the technicians and the environment. A single spark or static electricity could ignite a blow-out into a blazing inferno.”


“Nabors/BP are performing the vaunted directional drilling and small footprint operations that ANWR proponents and President Bush are relying upon as their argument for drilling the Refuge,” Hamel wrote. “These money saving ‘Russian Roulette’ risks taken are jeopardizing the vital North Slope crude deliveries to the lower 48.”


Hamel said that “the Murkowskis and Don Young will scream, but Senator Ted Stevens will take the high road and take action as in the past to swiftly bring these illegal activities to a halt.” (See Interview with Hamel, page 11)


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