JUNEAU -- Gov. Sarah Palin wants to scrap a pipeline corrosion oversight office created after last year's Prudhoe Bay spills and replace it with a less expensive, leaner mechanism for monitoring oil field practices.
Details of the oversight program are still being hashed out, but the Palin administration stressed that cutting back on costs would not mean reducing the effectiveness of how the state monitors oil field pipelines.
"Bottom line is we are looking for stricter oversight on pipeline corrosion," said Meghan Stapleton, a spokeswoman for Palin. "The previous administration's plan was a nebulous concept that was hastily put together. We think we can do better."
Then-Gov. Frank Murkowski in October said he was muscling up state oversight of North Slope oil fields by adding more inspectors and regulators to "look over the shoulder" of the oil and gas industry.
Murkowski's move came after two major incidents at Prudhoe Bay, the nation's largest oil field.
In March workers for oil company BP discovered a corroded pipeline had caused the largest oil spill ever on the Slope. In August, a smaller leak and a report outlining extensive corrosion among pipes at the nearly 30-year-old oil field prompted BP to shut down half of Prudhoe temporarily. Taxes and other oil company payments from Prudhoe is a significant source of state revenue.
Murkowski created a pipeline monitoring program called the Lease Monitoring and Engineering Integrity Coordinator's Office, or LMEICO. The office was to operate out of the Department of Natural Resources' Division of Oil and Gas.
Palin's administration said LMEICO was created without a thorough analysis of where the state was in terms of monitoring the condition and maintenance of oil field pipelines. Murkowski responded to the oil spills and pipeline shut downs with a $4.5 million plan that created unnecessary layers of expensive bureaucracy, Stapleton said.
"The pressure was there to do something, but what they did isn't in the best interest of the state," Stapleton said. "It's unclear to us how the plan was put together and how they figured the dollar amounts needed. We are trying to not to create management with high costs."
One industry observer said the state was in desperate need of creating some kind of pipeline monitoring system, and welcomed Palin's intentions as a marked improvement from Alaska's failed history in scrutinizing pipeline maintenance records.
"Right now, there is no real oversight of the pipelines except from state employees in Juneau and Anchorage or Fairbanks, while Prudhoe Bay is miles away," said Chuck Hamel, an advocate for oil workers in the North Slope. "The state has failed miserably." Poor state oversight of Prudhoe Bay pipelines has been occurring for years, he said.
Officials from the Department of Natural Resources said in a House Resources Committee session this week that the Palin proposal was likely to use less staff than the Murkowski plan. The Division of Oil and Gas would appoint staffers who would use other state and federal agencies as support in monitoring the pipelines, according to Nico Bus of the Department of Natural Resources.
Murkowski's former chief of staff, Jim Clark, referred any comments to Michael Menge, former state resources commissioner or Kurt Fredriksson, former state environmental commissioner, saying they were the main architects behind LMEICO. Neither Menge nor Fredriksson could be reached for comment.
Palin is expected to announce her plan as the Petroleum Systems Integrity Office, or PSIO, at the beginning of next month, when she introduces her budget plan to the Legislature. Costs for the PSIO and how many, if any, new positions will be created are being developed," Stapleton said.
"LMEICO was like the creation of Homeland Security -- a response to a crisis," said Rep. Carl Gatto, R-Palmer, the co-chair of the House Resources Committee. "PSIO sounds more like a straightforward way of doing things, an overhaul of LMEICO."
In addition, "we can now get the energy companies involved and say we've got a procedure in a place that's going to help us avoid -- with 99.9 percent certainty -- another crisis happening," he said.
Daily News reporter Sabra Ayres can be reached at sayres@adn.com or 907-586-1531.
