Fairbanks Daily News Miner
April 5, 2006


Analyst: Alyeska falsified reports

By SAM BISHOP News-Miner Washington Bureau

WASHINGTON--A senior financial analyst at Alyeska Pipeline Service Co. has filed a complaint with federal labor officials alleging that he was asked to leave the company in retaliation for cooperating with criminal investigators from the Environmental Protection Agency in December.

Glen Plumlee of
Anchorage, who will take an early retirement from Alyeska next week, said he told the federal investigators about his concerns with Alyeska's effort to build new pump stations and automate operations. He also said he was pressured to boost estimates of how much Alyeska was spending to fight corrosion on the trans-Alaska oil pipeline, which the company operates.

Plumlee, a senior analyst in the chief financial officer's department at Alyeska, said the investigators came to him.

"I did not seek them out, and they made it very plain to me that lying to them was a felony," he said in an interview Monday.

His bosses learned of his cooperation because shortly after the first interview with investigators he refused to write up a report on corrosion spending. His bosses wanted to him to inflate the numbers, he said.

"I'm not going to be Alyeska's designated felon on this," he said of his decision.

Alyeska spokesman Mike Heatwole said it was difficult to comment on the allegations because many of the details aren't in Plumlee's letter to the Labor Department. However, the company already has looked into some of the issues and feels it acted properly, he said.

"We have been aware of a lot of internal discussions around the issues that are in that letter," he said. "We've had a couple internal investigations. ... So far we don't see anything that concerns us."

Heatwole said the company was not aware of any criminal investigation.

Plumlee said he most recently met with an investigator at his home for two hours about two weeks ago.

Plumlee, 51, said he has "received regular commendations, bonuses and salary increases" in his job.

Alyeska President Kevin Hostler had even offered him a post-retirement consulting contract in December, he said, before he met with investigators the first time. The two haven't spoken since Hostler learned of the meeting with investigators.

"On March 11, 2006, another senior Alyeska executive, Vice President Lee Monthei, advised me that I should contact an employment agency and just 'move on,'" Plumlee wrote in his letter to the Labor Department.

Plumlee said the request to change the corrosion spending numbers in December wasn't the first time he had encountered such pressure. On
Sept. 19, 2005, an Alyeska executive asked him to pull together the numbers on corrosion spending for Steve Marshall, BP Exploration (Alaska) Inc.'s president.

It was the Monday after The Wall Street Journal published a Saturday article about a list of 101 risks to the pipeline's integrity that Alyeska's soon-to-resign Chief Operating Officer Dan Hisey had written in August. One of the risks was corrosion.

Marshall was flying to London to talk with BP's CEO John Browne about the issues, Plumlee said.

Plumlee said his Alyeska bosses wanted him to inflate the amount spent on corrosion in 2004. He believes the proper number should be about $28 million. Instead,
Marshall was given a figure of $46 million, citing an e-mail in his possession.

"They were false," he said of the numbers
Marshall received. "I didn't falsify them. That's what they wanted me to do and they got someone else to do it."

BP Alaska spokesman Daren Beaudo said Monday he was not aware of the exchange and had no comment.

Plumlee said Alyeska increases or decreases its corrosion spending number depending on the expected audience by including more or fewer categories of work.

"I think we should use the number in our financial statements," which is closer to $28 million, Plumlee said.

Heatwole said he wasn't aware of the Sept. 19 exchange, either. However, he said, it is reasonable to expect that corrosion spending estimates could change based on what work is included. The effort to combat corrosion could include programs across the company--not only specific integrity investigations, but also maintenance and engineering work.

"It's a very, very comprehensive approach," he said.

Heatwole said he didn't have a total spending figure immediately available. In at least one place on Alyeska's Web site, an employee estimates anti-corrosion spending at "between $20 million to $40 million a year."

This isn't Plumlee's first run-in with Alyeska. He first went to work there in 1989. A few years later, he was working as an inspector and identified some "technical problems" on the pipeline in a report. He said he was fired, which led to testimony before a congressional committee in 1993.

Plumlee subsequently settled a complaint against Alyeska out of court and moved to the Lower 48 to attend law school. Alyeska called him in the mid-1990s and asked him to return, which he did. The company paid for his master's degree in business administration.

Until recently, he said, he believed the company was working hard to correct past troubles.

"I was a pretty loyal employee. I really did believe they were trying to do the right thing," he said.

That changed last spring when he said he thought top company officials ignored troubles with "strategic reconfiguration," the company's effort to simplify pipeline operations. That includes a plan to run four pipeline pump stations on electricity and use smaller, automated modular units at the others.

Plumlee's complaint letter to the Labor Department was given to the News-Miner by Chuck Hamel, a
Virginia resident and former oil shipping broker with a long history of conflict with Alaska's petroleum industry.

Hamel also wrote a letter Monday to Rep. John Dingell, D-Mich., to make him aware of Plumlee's complaint.

Dingell led the hearing at which Plumlee testified in 1993, Hamel said.

 

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Anchorage Daily News
April 8, 2006

Alyeska lab tech falsified water test data
SENTENCED: Pressures of work blamed; man lost job, receives probation.

By WESLEY LOY

A federal judge Friday sentenced a former laboratory technician for Alyeska Pipeline Service Co. to three years on probation for falsifying wastewater test data filed with environmental regulators.

Thomas R. Austin, who worked from April 2001 to August 2003 in the lab at Alyeska's oil tanker terminal at
Valdez, had pleaded guilty Jan. 25 to making false statements under the federal Clean Water Act.

In addition to probation, U.S. District Judge Ralph Beistline ordered
Austin to pay a $1,000 fine.

Austin in 2002 "manually modified the analysis performed on a laboratory sample," making it look like the sample had passed quality-control criteria when, in fact, it failed, according to a Friday news release from the U.S. Attorney's Office in Anchorage. The falsified data ultimately reached the Environmental Protection Agency, which regulates Alyeska wastewater discharges at
Valdez.

Austin, 44, of Valdez, lost his job as a result of his actions, prosecutors said.

Neither Austin nor his attorney, Herbert Viergutz, could be reached for comment Friday evening.

However, in a written statement filed with the court prior to sentencing,
Austin admitted he unlawfully manipulated data. Austin wrote that he did it not to deceive the EPA, but "to avoid conflicts and problems with management" at Alyeska.

"The expectations of the laboratory manager ... were that no mistakes were allowed,"
Austin wrote.

Austin added that he'd tried to do what is right and ethical in his life, but he let concerns about a large salary, a new wife, his declining health due to cerebral palsy, and a desire not to have to move again "overcome my common sense."

Federal court documents available late Friday make no suggestion that Alyeska as a company or its managers did anything wrong.

Alyeska is an Anchorage-based consortium that runs the 800-mile trans-Alaska oil pipeline and the
Valdez tanker dock on behalf of five owner energy companies including BP, Exxon Mobil, Conoco Phillips, Chevron and Koch.

Alyeska spokesman Mike Heatwole said Friday that company management suspected something was wrong in the lab and conducted an internal investigation that turned up the falsified data.

He said Alyeska took its findings to the EPA and "cooperated fully" with federal officials.

Meantime,
Austin was fired, Heatwole said.

The news release from the U.S. Attorney's Office said the investigation found that
Austin has falsified and changed 102 data samples.

The release added that Alyeska changed lab procedures, and "there was no evidence that the manipulations by
Austin impacted the operation of the wastewater plant or resulted in environmental damage."

Heatwole said
Austin worked in a complex system in which ballast water drained off tankers arriving in Valdez is cleaned up in a treatment plant, tested and then discharged into the sea. Alyeska has a federal permit for the discharges.

After reading
Austin's court statement Friday night, Heatwole said he was unable to provide an immediate response.

However, he said he was unaware of any other disciplinary measures within the company associated with the
Austin case.

According the prosecutors, the maximum sentence
Austin could have received was two years in prison and a $250,000 fine.