Report says safety culture at Valdez Marine Terminal presents ‘unacceptable’ risk

The safety culture at the marine terminal in Valdez, where Alaska North Slope crude oil is loaded into oceangoing ships, has eroded and presents an “unacceptable safety risk” that could lead to a serious incident in the near future, according to a scathing report released on Monday by a Congressionally mandated oil spill prevention group.

The 180-page review, commissioned by the Prince William Sound Regional Citizens’ Advisory Council, says that budget constraints and flawed leadership in recent years have contributed to a host of problems, including poor maintenance and aging equipment, turnover and fear of retaliation, a disregard for safety violations by leadership, as well as inadequate training and failure to learn from past mistakes, among other issues.

“It appears that the key element of safety culture -- a commitment to safety as the overriding priority -- has been replaced with a business focus on budget, which has strained resources and compliance,” the report says. “As one CI (concerned individual) said, ‘We are as safe as the budget allows.’ ”

It also questions whether regulatory oversight by state and federal agencies is adequate.

The report was initiated after Alyeska Pipeline Service Company failed to clear large amounts of snow from oil tanks last spring before it damaged equipment on the tanks and allowed petroleum vapors to be released into the air.

[Earlier coverage: Citing ‘serious’ worker risks, watchdog group calls on Alyeska to stop snow removal work at Valdez oil terminal]

The terminal is operated by Alyeska, owned by Alaska’s major oil companies that help produce close to 500,000 barrels of oil daily, roughly 5% of U.S. oil production.

Alyeska is reviewing the report and addressing the issues raised, said Michelle Egan, a spokeswoman with Alyeska. She said the operator on April 10 hired John Kurz as its president, replacing interim president Betsy Haines.

“While we do not agree with everything in the report, we take the input and observations as an opportunity to improve,” she said in an email.

Egan said the report covers a range of topics, and Alyeska Pipeline disagrees with a number of its conclusions.

“We put safety first,” she said. “Our employees are committed to safely operating (the trans-Alaska pipeline), and we are committed to ensuring our processes and systems keep them safe. We know the cornerstone of safety is an open work environment. We know our employees value an open work environment -- in the 2022 assessment, more than 94% of TAPS workers surveyed stated they were committed to (an open work environment). That means accepting input from employees, contractors and yes, even our partner PWSRCAC.”

Citing the report, the citizen council, created by Congress in the wake of the 1989 Exxon Valdez oil spill, called on Alaska’s congressional delegation in a seven-page letter earlier this month to request that the Government Accountability Office audit the operations at the terminal.

Republican Sens. Dan Sullivan and Lisa Murkowski, and Democratic Rep. Mary Peltola, did not immediately provide a response on Tuesday.

The review was conducted over the past year by Billie Pirner Garde, a consultant in corporate safety culture. For about a dozen years starting in the mid-1990s, Garde worked with Alyeska on issues involving safety culture, training and investigating employee concerns, she says in the report. She also did work for BP Alaska starting in 2003 and later became deputy ombudsman for BP America, working primarily on Alaska issues and investigating hundreds of employee concerns through 2016.

Garde’s report is based in part on anonymous interviews with current and former Alyeska employees, data from surveys of Alyeska Pipeline employees, as well as what it describes as concerned individuals.

The report says its findings that Alyeska is not managing the terminal in accordance with best industry practices is supported in part by past concerns raised by the Alaska Department of Occupational Safety and Health.

Garde says in the report that the information she gathered supports a well-founded concern that there’s “a real risk of a serious accident or incident in the near future” and that a “significant percentage of the (Alyeska) workforce believes that a serious incident is imminent.”

“It is my conclusion, given the insights from this assessment, that there currently is no reasonable assurance that the VMT (Valdez Marine Terminal) is properly maintained or operated safely and in compliance with applicable regulatory requirements,” Garde writes.

Read the report:

The report includes several examples of problems, including safety alarms that have been disarmed, failure to require that fuel-truck drivers receive the proper safety training, a lack of properly installed electrical equipment, and a lack of properly functioning emergency exits. It says limited budgets underlie all issues, including last year’s snow removal problems.

Concerns were raised about “the backlog of deferred maintenance, aged and outdated equipment, obsolete equipment without replacement parts, and the level of safety risk to the VMT from these problems. Further budget cuts are anticipated and (concerned individuals) do not know how a further reduced budget will possibly provide adequate funding for even minimal necessary maintenance, much less the backlog of deferred work and replacements,” the report says.

“Safety is essentially being provided by the actions of employees who know the VMT systems well enough to prevent complete collapse of aging systems and infrastructure, deferred maintenance, obsolescence, defeated/suppressed and unreliable safety systems, and other processes discussed herein,” the report says.

The report points to failings at Alyeska’s leadership levels as one problem, following the “relatively uneventful” decade-long tenure of Tom Barrett that ended with Barrett’s retirement in 2020.

“While some past presidents made strides to increase safety and compliance and ensure adequate resources were available to do so, the leadership of the company over the past several years has eroded Alyeska’s culture in a variety of ways,” the report says. “Without a long-term, stable leader to set expectations for an ethical and compliant culture, insist on an open work environment, demonstrate and expect respectful behaviors towards others, and ensure adequate resources to make safety the overriding priority, there cannot be any sustainable change.”

Brigham McCown replaced Barrett in January 2020, but stepped down two years later. McCown’s tenure was “rocky,” the report says. It says he helped created a fear of retaliation among employees.

“Numerous complaints about McCown’s actions, behaviors, and management style were raised in a variety of venues, surveys, employee complaints, and litigation,” the report says. “These behaviors drove a drop in morale, the departure of many senior Alyeska personnel with decades of experience, and the influx of people with little historical and institutional knowledge of Alyeska or oil and gas experience.”

McCown, reached Tuesday by phone, said he was just hearing of the report. He commented by text, after he said he’d had a chance to read some of it.

“What I can say is that safe operations and the safety of our workforce and communities were central to our operating philosophy and are part of the (trans-Alaska pipeline system) culture,” he said. “This was reinforced by our safety record of zero recordable spills, environmental awards from the U.S. Fish and Wildlife Service and the U.S. Coast Guard, and our compliance record with PHMSA during my tenure.”

“These things speak for themselves which occurred during COVID, a change in ownership, and a complete turnover of the ownership board,” he said. “Most importantly, I’m proud of the commitment of the women and men who go to work each day to move critically needed domestic energy from the North Slope to the Lower 48 and global demand centers.”

Alyeska Pipeline is primarily owned by Hilcorp, through subsidiary Harvest Alaska, at 49%, the report says. Hilcorp, a company known for operating on tight budgets and squeezing more oil out of aging fields, acquired its ownership of Alyeska Pipeline in 2020 through its $5.6 billion acquisition of BP’s assets in Alaska. Affiliated companies of ConocoPhillips and ExxonMobil also own a portion of Alyeska Pipeline, which operates the 800-mile trans-Alaska pipeline and the terminal, built in the 1970s.

The report says that standards for Process Safety Management, which the report says underpin safety operations in high-risk industries, have been “skipped, ignored, or -- apparently -- willfully not complied with.”

“Some of the safety concerns clearly required (Valdez Marine Terminal) management’s prompt intervention, which did not happen in a timely fashion,” the report says. “This led to employee concerns being raised outside the company. Employees who did raise safety concerns reported being the subject of retaliation. Others reported that raising concerns was futile because ‘nothing would happen anyway’ with issues left unresolved, and buried” within the Alyeska corrective action program.

The report also says the capabilities of regulatory agencies overseeing Alyeska is a growing concern.

“There has been a steady, on-going, and continuing deterioration of oversight and enforcement capabilities in Prince William Sound,” the report says. “Research shows current regulatory oversight over Alyeska, in particular at the VMT, by the various state and federal agencies, is inadequate to compensate for the reductions in resources and safety commitments at Alyeska.”

The report makes several recommendations for improvements, including for the audit by the Government Accountability Office, an audit of safety procedures by the federal Occupational Safety and Health Administration, independent audits by Alyeska of its safety management system and deferred maintenance, and improvements to employee training and the protocol for employees reporting concerns.