OIL AND GAS:

Industry consultants in, spill consequences out for oil sands crude inquiry

Three industry-linked consultants -- including the veteran pipeline operator BP PLC chose to monitor its compliance with last year's multimillion-dollar Alaska leak settlement -- are set to join the panel of 12 experts assembled for a high-stakes government inquiry into the safety of Canadian oil sands crude pipelines.

The National Academy of Sciences (NAS) took public comments through Monday on the makeup of its panel, formed in the wake of a bipartisan pipeline safety law that gave federal regulators 18 months to report to Congress on whether heavy Canadian crude -- which would run through the controversial Keystone XL project -- poses unique corrosion risks beyond those of conventional fuel lines. The NAS group's final report could resolve bitter battles between industry and greens over the shipment of so-called diluted bitumen that acquired new momentum after 2010's spill of the crude in Marshall, Mich.

One of the three industry veterans on the NAS panel, Orville Harris, earned praise from safety advocates who said his two-decade stint at the company running the Trans-Alaska Pipeline, later bought by BP, would not compromise his ability to serve effectively.

Richard Kuprewicz, a pipeline engineering expert who has worked with both Keystone XL sponsor TransCanada Corp. and its environmentalist critics, served with Harris as an adviser to the Pipeline and Hazardous Materials Safety Administration, the agency that commissioned NAS to investigate the science behind shipping Canadian crude.

He acknowledged that Harris, whose firm is the BP-paid third-party monitor of its deal resolving violations from the 2006 pipeline leaks in Prudhoe Bay, could be "kind of on defense" given his ties to industry.

But "the only way you can overcome that issue is [by] asking the right questions," said Kuprewicz, who often testifies on pipeline safety challenges as head of his own firm, AccuFacts. "Are you allowing facts to take you to a conclusion? Or are you using a conclusion to misrepresent the facts?" Harris, he added, is capable of the former.

Transcripts of a federal safety advisory panel in 2000, the year PHMSA released integrity management rules for pipeline operators, show Harris raising concerns about the government's move to first regulate firms with more than 500 miles of fuel lines.

"[W]hat it implies is that there's going to be a different process if a pipeline's under 500 miles. ... It implies something that's just potentially less stringent, which can make some companies do some funny things in trying to be under 500 miles if it's to their economic advantage," Harris told fellow panel members then.

PHMSA expanded its integrity management rules to operators with pipelines under 500 miles in 2002.

Two other members of the NAS panel have maintained industry ties: Richard Rabinow, who previously led the Association of Oil Pipe Lines and rose in the ranks at Exxon Mobil Corp. to lead its pipelines division, and George Tenley, who left the government's top safety regulatory spot in 1995 and later led the Pipeline Research Council International, a consortium funded by pipeline operators that benefit from its findings.

"Richard was head of AOPL, and George was head of pipeline safety for the federal government at a time when industry and government were very close and government was very hands-off," said Lois Epstein, Arctic program director of the Alaska regional office of the Wilderness Society and also an outside safety adviser to the government.

"Since then, the federal government's role in pipeline safety has been enhanced, because of Congress and because of some good, federal leadership in pipeline safety," Epstein added via email. "The downward trends in incidents all occurred following their involvement in national pipeline safety efforts."

Carl Weimer, executive director of the nonprofit Pipeline Safety Trust, said he was "surprised" to see the industry-linked names on NAS's panel but described their presence as legitimate "as long as they're not a majority."

Thomas Menzies, a senior program officer with the NAS's Transportation Research Board arm, pointed to a line drawn by the academy between bias and conflicts of interest when choosing experts for its closely watched panels. To police the latter cases, those chosen for the Canadian crude panel must complete a 10-page conflict-of-interest form designed to weed out "somebody who could actually financially benefit from this study," he said.

"For us, biases are not disqualifying -- in fact, it's hard to have a committee that's not biased" given that experts in any energy field have varying backgrounds, Menzies added. "It's important to us to have a balance, so you don't have a set of biases that are dominant."

What's at stake?

Like previous NAS studies on EPA's formaldehyde assessment in 2011 and on climate change in 2010, the Canadian crude panel could exert significant sway over U.S. policy concerning imports of more emissions-heavy fuels from the oil sands region.

Environmentalists already are calling for the Obama administration to hold off on its final permit decision for Keystone XL until the experts complete their work, and PHMSA opened the door for overhauling its safety rules based on their findings. If the NAS members "determine that increased risk exists" for a leak from an oil sands crude pipe, "it will complete a comprehensive review of federal hazardous liquid pipeline facility regulations," PHMSA wrote in the scope of work it provided to the panel.

At the heart of the debate are the disparate chemical properties of types of oil sands crude, including diluted bitumen, or "dilbit," and "syncrude," made from running dilbit through a pre-refining "upgrade." Canadian crude must flow through pipes at a higher temperature than its conventional cousin, which critics of the fuel say leads to greater danger of corrosion and rupture (Greenwire, Aug. 23, 2011).

Weimer and Epstein had urged NAS to consider the unique challenges of cleaning up the heavier oil sands crude during a spill, cited by many officials and activists in the wake of 2010's Michigan leak from a pipeline run by Enbridge Energy Partners LP.

But how to prepare for sopping up Canadian fuel is not part of the panel's scope of work, Menzies said. "[PHMSA] asked us to do a technical study on specific issues. ... It's not really the academy's call," he said.

Kuprewicz affirmed the academy's reasoning behind considering the behavior of Keystone XL's signature fuel only within the pipeline, not during an accidental leak.

Yet "if you release dilbit, the oil spill response plan has got to be a different animal," he added. "I'd hate to see the committee go through all this and, not picking sides on any player, find the right question wasn't asked."

The NAS panel's first meeting, including a closed-door session to discuss bias and conflict-of-interest issues, is set for July 23-24. The academy expects to hold at least three subsequent meetings to hear from other concerned parties, Menzies said, before ruling in April on whether the problem requires further study and a longer regulatory analysis that would become public in October.

Click here to read the complete biographies of all members of the NAS Canadian oil sands crude panel.