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Stones & Bones: history / volume 7 number 7, July 2005 Uncelebrated Anniversaries in the Alaska Oil Patch The logo on the youngster’s worn but sturdy black day pack bore this logo, stitched in neat white letters on the outermost pocket: “Alyeska Pipeline Service Co. 25th Anniversary, 1977–2002.” Alyeska—the group of oil companies that built and operate the Trans-Alaska Pipeline System (TAPS)—is big on anniversaries. To commemorate the pipeline’s twentieth anniversary in 1997, Alyeska threw parties, published an over-sized coffee table book with spectacular pictures of Alaska (and, of course, the pipeline) and subsidized an exhibition at the Smithsonian Institution praising the pipeline. A different set of uncelebrated June and July anniversaries might be more useful for understanding the economic and environmental aspects of North Slope oil development. June 1985 – TAPS Settlement Agreement By chance, I noticed the Alyeska day pack in the Fairbanks airport on June 28—twenty years to the day after the state and the pipeline owners signed the TAPS tariff settlement agreement and submitted it to the Federal Energy Regulatory Commission (FERC) for formal approval. That agreement had far-reaching consequences, allowing the TAPS owners to walk away from most of the refunds due on pipeline shipping overcharges during the first eight years of operation and to charge excessive tariffs in subsequent years. Regulatory Commission of Alaska documents indicate that the 1985 settlement enabled the pipeline owners to secure more than $2.5 billion in excessive cash returns on TAPS, at state expense. To explain the complicated settlement, the state of Alaska and the US Justice Department submitted an explanatory statement with the settlement nearly 100 pages long. That document, also dated June 28, 1985, is still the roadmap for understanding the complicated settlement. Today, after spending nearly two decades stubbornly defending their bad pipeline bargain, state officials are finally trying to figure out how to extricate themselves from the misguided deal they struck with the industry on June 28, 1985. I’d be surprised if the state of Alaska didn’t pay for approximately 20 percent of the embroidery costs – if not the entire anniversary day pack. June 1975 – Galbraith Lake Oil Spill As the snow and ice melted from the scenic northern entrance to the pipeline’s planned Brooks Range crossing thirty years ago this June, the stream bank at the edge of the Galbraith Lake construction camp began emitting the sharp scent of petroleum fumes and a rainbow sheen of oil appeared on the stream. To keep the oil out of Galbraith Lake, described by the TAPS environmental atlas as a “key scenic lake within the central Brooks Range,” the pipeline builders began a massive cleanup. Alyeska personnel quickly realized the source was a leaking fuel line buried in the camp’s gravel pad. In mid-winter, they had estimated that leak at “about 100 gallons” and reported a successful cleanup. Although Alyeska proclaimed that it was reporting literally every drop of oil it spilled, the June 1975 episode was not reported to the press until nine days after the massive cleanup effort began. Moreover, the company’s carefully worded June 20, 1975 press advisory obscured the spill’s size, stating that “more of the heating fuel may have leaked” than the 100 gallons estimated five months earlier. In fact, camp fuel records indicated that an estimated 60,000 to 100,000 gallons of heating oil had been lost. The governor and his chief pipeline officer visited Galbraith during the nine-day hiatus, but they were not told that cleanup of a spill nearly ten times larger than any other reported during the first year of construction was in progress. When this reporter broke the story of the size and extent of the spill on June 25 and followed with additional stories (including prominent mention of the $500,000 Alyeska had already spent on cleanup), Alyeska’s response was to attack the press. Two decades later, Alyeska was still cleaning up the Galbraith Lake and other construction-era spills. July 1995 – Endicott and the Doyon Driller In July 1995, then-Senator Frank Murkowski invited Doyon Drilling President Randy Reudrich to testify in Washington on the environmentally benign drilling practices at Endicott, a small, man-made island northeast of Prudhoe Bay. He also went to Endicott with Senator Daniel Akaka (D-Hawaii) to tout development at Endicott as an example of the industry’s new, smaller footprint. Their Endicott visit was featured in a video later distributed to each member of the US Senate with a letter from Murkowski and Senator Ted Stevens urging support for drilling in the Arctic National Wildlife Refuge. That summer, a lifelong Alaskan working at Endicott reported that hazardous wastes were being pumped under the permafrost for permanent disposal in violation of federal law. In September—the month the Alaska senators sent the video praising environmental measures at Endicott to their colleagues—the whistleblower left the North Slope under duress. For their illegal practices at Endicott, BP and Doyon Drilling, eventually paid $25 million in civil penalties, criminal fines and restitution. The Doyon Driller never worked on the North Slope again. Today the North Slope producers are once again being fined for failure to report spills and other pollution incidents fully and promptly.
Richard A. Fineberg is an independent economic and environmental consultant who focuses on North Slope production and Trans-Alaska Pipeline System issues.
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