Story last updated at 2:56 p.m. Thursday, September 26, 2002

Group's report ruffles oil industry feathers
by Sepp Jannotta
Staff Writer

A Cook Inlet Keeper study released Sept. 17 detailing the performance record of companies operating oil and gas pipelines in the Cook Inlet watershed gave mixed reviews to industry operators, concluding that regulatory reform is needed to ensure the watershed's environmental safety.

The report, in turn, received a dubious response from the companies singled out with the poorest marks.

While officials within the industry dispute the report's conclusions as misleading, the report's author, Lois Epstein, resolutely defended her interpretation of the Alaska Department of Environmental Conservation data for 1997-2001, dismissing claims that the data was deliberately presented to discredit the industry.

Epstein is the senior engineer and oil and gas specialist for Cook Inlet Keeper, a water-quality watchdog group based in Homer. For the report, entitled "Lurking Below: Oil and Gas Pipeline Problems in the Cook Inlet Watershed," she gathered data from DEC.

The report's findings show that the oil and gas industry accounted for an average of at least 50,000 gallons in spills and occurred once a month, on average.

The report also specified that the "onshore pipelines have a disproportionately high spill rate compared to the offshore pipelines."

Many of the largest spills, Epstein said, happened within the Kenai National Wildlife Refuge at Unocal's lines in the Swanson River Field, including the worst in the five-year period, a 228,000-gallon spill of crude oil and produced water -- a mixture of water and petroleum products.

"Until there is better oversight, it's understandable why there is controversy over drilling in the Kenai and Arctic national wildlife refuges. Unocal's dismal track record in the Kenai National Wildlife Refuge shows that the company waited far too long before beginning to address its pipeline problems," said Epstein in a press release issued along with the report.

Unocal is seeking a federal right-of-way permit that would allow it to expand its development of oil and gas resources in the Kenai National Wildlife Refuge. The deadline for public comment on the permit is Oct. 1.

The report states that, between 1997 and 2001, Unocal was responsible for the eight largest pipeline spills in the watershed, and that the company accounted for 99 percent of all spill volume during that time.

By comparison Forest Oil, which also received a grade of "poor" in the report, had relatively small spills.

Epstein, who holds a master's degree in civil engineering from Stanford University, said the report spelled out how the data was being used to formulate the company-by-company performance report card. Based on the frequency of spills in relation to the length of total pipeline in operation, Unocal and Forest Oil received the lowest possible grade. The report stated that the volume of each individual spill was not factored in because the frequency of problems was a better indicator of which companies were the most environmentally hazardous.

But the frequency-before-volume weighting in the report stood out as an unfair twist of the data for Forest Oil Company, said Gary Carlson, senior vice president in charge of Alaska operations.

"The total over the five years was less than half a barrel," Carlson told the Peninsula Clarion, adding that of Forest's 11 spills, all were reported immediately. "Whether it's half a gallon, or three gallons, we report that. We think that's the right thing to do. It's our responsibility."

But Forest Oil was given a poor grade because, according to Epstein, the company accounted for just 1 percent of all pipeline in the watershed while accounting for 12 percent of the spills.

Epstein emphasized that the report went out of its way to indicate that Forest Oil's spills were all small.

"What Keeper did that should be pointed out was we actually distinguished between those companies that were performing poorly from those that were doing a good job in the maintenance and operation of pipelines in Cook Inlet," Epstein said.

Still, Carlson questioned Epstein's motives for writing a report so obviously critical of the oil companies.

"I'm surprised that someone with her credentials put out a report as misleading as that one is," he said.

For its part, Unocal said it works closely with regulatory agencies in order to reduce the likelihood of environmental damage caused by its pipelines.

"Unocal's primary concerns are safety and the environment. We have an active pipeline integrity program with the goal of mitigating the risks of spills," read the one-paragraph statement. "We coordinate our program and work with regulatory agencies, including the U.S. Coast Guard, the U.S. Department of Transportation and the Alaska Department of Environmental Conservation."

Other pipeline companies operating in Cook Inlet fared better in the report. XTO Energy received a grade of "fair," while Tesoro was rated as "good." Those receiving "excellent" grades in the report included Cook Inlet Pipe Line (which is owned, in part, by Forest Oil), Kenai Pipe Line and Signature. Signature operates a fuel line, installed in 1998, that runs between the Port of Anchorage and Ted Stevens Anchorage International Airport.

Epstein and Cook Inlet Keeper Executive Director Bob Shavelson both said the report clearly indicates that regulatory reforms are necessary to protect the Cook Inlet watershed from a disastrous spill.

Epstein said one area of primary concern is the state's variable regulatory designation scheme for different sections of pipeline, which give some a much tougher performance standards than others.

"The data shows that certain regulations seem to result in better performance," Epstein said. "On the flip side, there are certain pipelines that are in rural areas that are not covered by federal guidelines and that, coupled with weak state regulations in those areas, often leads to a higher frequency of spills."

For his part, Shavelson pointed out that Cook Inlet Regional Citizens Advisory Council needs to step up and back the call for more strident regulation of Cook Inlet oil and gas companies.

"One of the most important conclusions of this report is that we don't need to do more studying of this issue," he said. "I've been disappointed in the organization's performance in representing the citizens of the Cook Inlet watershed. I believe the industry is holding too much sway over CIRCAC."

Steve Howell, a spokesman for CIRCAC, said he was surprised to hear Shavelson's assessment of CIRCAC's role.

He added that a similar performance study has been at the top of CIRCAC's wish list, though it was sidetracked after $120,000 appropriated by Alaska lawmakers to help DEC spearhead the new study went missing during the summer's extra session of the state Legislature.

Howell said he has no idea where the funding went.

As for the Cook Inlet Keeper report, Howell said, CIRCAC would evaluated it and the board would then decide how to comment on it.

Sepp Jannotta can be reached at sjannotta@homernews.com.

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