A Well-Designed Disaster: The Untold Story of the Exxon Valdez

Greg Palast

On March 24, 1989, the Exxon Valdez broke open and covered twelve hundred miles of Alaska’s shoreline with oily sludge. The official story remains “Drunken Skipper Hits Reef.” Don’t believe it.

In fact, when the ship hit, Captain Joe Hazelwood was nowhere near the wheel, but below decks, sleeping off his bender. The man left at the helm, the third mate, would never have hit Bligh Reef had he simply looked at his Raycas radar. But he could not, because the radar was not turned on. The complex Raycas system costs a lot to operate, so frugal Exxon management left it broken and useless for the entire year before the grounding.

The land Exxon smeared and destroyed belongs to the Chugach natives of the Prince William Sound. Within days of the spill, the Chugach tribal corporation asked me and my partner Lenora Stewart to investigate allegations of fraud by Exxon and the little-known “Alyeska” consortium. In three years’ digging, we followed a twenty-year train of doctored safety records, illicit deals between oil company chiefs, and programmatic harassment of witnesses. And we documented the oil majors’ brilliant success in that old American sport, cheating the natives. Our summary of evidence ran to four volumes. Virtually none of it was reported: The media had turned off its radar. Here’s a bit of the story you’ve never been told:

  • We discovered an internal memo describing a closed, top-level meeting of oil company executives in Arizona held just ten months before the spill. It was a meeting of the “Alyeska Owners Committee,” the six-company combine that owns the Alaska pipeline and most of the state’s oil In that meeting, say the notes, the chief of their Valdez operations, Theo Polasek, warned executives that containing an oil spill “at the mid-point of Prince William Sound not possible with present equipment”—exactly where the Exxon Valdez grounded. Polasek needed millions of dollars for spill containment equipment. The law required it, the companies promised it to regulators, then at the meeting, the proposed spending was voted down. The oil company combine had a cheaper plan to contain any spill—don’t bother. According to an internal memorandum, they’d just drop some dispersants and walk away. That’s exactly what happened. “At the owners committee meeting in Phoenix, it was decided that Alyeska would provide immediate response to oil spills in Valdez Arm and Valdez Narrows only”—not the Prince William Sound.
  • Smaller spills before the Exxon disaster would have alerted government watchdogs that the port’s oil-spill-containment system was not up to scratch. But the oil group’s lab technician, Erlene Blake, told us that management routinely ordered her to change test results to eliminate “oil-in-water” readings. The procedure was simple, says Blake. She was told to dump out oily water and refill test tubes from a bucket of cleansed sea water, which they called “the Miracle Barrel.”
  • A confidential letter dated April 1984, fully four years before the big spill, written by Captain James Woodle, then the oil group’s Valdez Port commander, warns management that “Due to a reduction in manning, age of equipment, limited training and lack of personnel, serious doubt exists that [we] would be able to contain and clean up effectively a medium or large size oil spill.” Woodle told us there was a spill at Valdez before the Exxon Valdez collision, though not nearly as large. When he prepared to report it to the government, his supervisor forced him to take back the notice, with the Orwellian command, “You made a mistake. This was not an oil spill.”

Slimey Limeys

The canard of the alcoholic captain has provided effective camouflage for a party with arguably more culpability than Exxon: British Petroleum, the company that in 2001 painted itself green (literally: all its gas stations and propaganda pamphlets now sport a seasick green hue). Alaska’s oil is BP oil. The company owns and controls a near majority (46 percent) of the Alaska pipeline system. Exxon (now ExxonMobil) is a junior partner, and four other oil companies are just along for the ride. Captain Woodle, Technician Blake, Vice President Polasek, all worked for BP’s Alyeska.

Quite naturally, British Petroleum has never rushed to have its name associated with Alyeska’s recklessness. But BP’s London headquarters, I discovered, knew of the alleged falsification of reports to the U.S. government nine years before the spill. In September 1984, independent oil shipper Charles Hamel of Washington, DC, shaken by evidence he received from Alyeska employees, told me he took the first available Concorde, at his own expense, to warn BP executives in London about scandalous goings-on in Valdez. Furthermore, Captain Woodle swears he personally delivered his list of missing equipment and “phantom” personnel directly into the hands of BP’s Alaska chief, George Nelson.

BP has never been eager for Woodle’s letter, Hamel’s London trip and many other warnings of the deteriorating containment system to see the light of day. When Alyeska got wind of Woodle’s complaints, they responded by showing Woodle a file of his marital infidelities (all bogus), then offered him payouts on condition that he leave the state within days, promising never to return.

As to Hamel, the oil shipping broker, BP in London thanked him. Then a secret campaign was launched to hound him out of the industry. A CIA expert was hired who wiretapped Hamel’s phone lines. They smuggled microphones into his home, intercepted his mail and tried to entrap him with young women. The industrial espionage assault was personally ordered and controlled by BP executive James Hermiller, president of Alyeska. On this caper, they were caught. A U.S. federal judge told Alyeska this conduct was “reminiscent of Nazi Germany.”

Cheaper Than Manhattan

BP’s inglorious role in the Alaskan oil game began in 1969 when the oil group bought the most valuable real estate in all Alaska, the Valdez oil terminal land, from the Chugach natives. BP and the Alyeska group paid the natives one dollar.

Arthur Goldberg, once a U.S. Supreme Court justice, tried to help the natives on their land claim. But the natives’ own lawyer, the state’s most powerful legislator, advised them against pressing for payment. Later, that lawyer became Alyeska’s lawyer.

The Alaskan natives, the last Americans who lived off what they hunted and caught, did extract written promises from the oil consortium to keep the Prince William Sound safe from oil spills. These wilderness seal hunters and fishermen knew the arctic sea. Eyak Chief-for-Life Agnes Nichols, Tatitlek native leader George Gordaoff and Chenega fisherman Paul Kompkoff demanded that tankers carry state-of -the-art radar and that emergency vessels escort the tankers. The oil companies reluctantly agreed to put all this in their government-approved 1973 Oil Spill Response Plan.

When it comes to oil spills, the name of the game is “containment” because, radar or not, some tanker somewhere is going to hit the rocks. Stopping an oil spill catastrophe is a no-brainer. Tanker radar aside, if a ship does smack a reef, all that’s needed is to surround the ship with a big rubber curtain (“boom”) and suck up the corralled oil. In signed letters to the state government and Coast Guard, BP, ExxonMobil and partners promised that no oil would move unless the equipment was set on the tanker route and the oil-sucker ship (“containment barge”) was close by, in the water and ready to go.

The oil majors fulfilled their promise the cheapest way: They lied. When the Exxon Valdez struck Bligh Reef, the spill equipment, which could have prevented the catastrophe, wasn’t there—see the Arizona meeting notes above. The promised escort ships were not assigned to ride with the tankers until after the spill. And the night the Exxon Valdez grounded, the emergency spill-response barge was sitting in a dry dock in Valdez locked in ice.

When the pipeline opened in 1974, the law required Alyeska to maintain round-the-clock oil-spill-response teams. As part of the come-on to get hold of the Chugach’s Valdez property, Alyeska hired the natives for this emergency work. The natives practiced leaping out of helicopters into icy water, learning to surround leaking boats with rubber barriers. But the natives soon found they were assigned to cover up spills, not clean them up. Their foreman, David Decker, told me he was expected to report one oil spill as two gallons when two thousand gallons had spilled.

Alyeska kept the natives at the terminal for two years—long enough to help Alyeska break the strike of the dock workers’ union—then quietly sacked the entire team. To deflect inquisitive inspectors looking for the spill-response workers, Alyeska created sham emergency teams, listing names of oil terminal employees who had not the foggiest idea how to use spill equipment, which, in any event, was missing, broken or existed only on paper. When the Exxon Valdez grounded, there was no native spill crew, only chaos.

The Fable of the Drunken Skipper has served the oil industry well. It transforms the most destructive oil spill in history into a tale of human frailty, a terrible, but onetime, accident. But broken radar, missing equipment, phantom spill personnel, faked tests—all of it to cut costs and lift bottom lines—made the spill disaster not an accident but an inevitability.

I went back to the Sound just before the tenth anniversary of the spill. On Chenega, they were preparing to spend another summer scrubbing rocks. A decade after the spill, in one season, they pulled twenty tons of sludge off their beaches. At Nanwalek village ten years on, the state again declared the clams inedible, poisoned by “persistent hydrocarbons.” Salmon still carry abscesses and tumors, the herring never returned and the sea lion rookery at Montague Island remains silent and empty.

But despite what my eyes see, I must have it wrong, because right here in an Exxon brochure it says, “The water is clean and plant, animal and sea life are healthy and abundant.” Go to the Sound today, on Chugach land, kick over a rock and you’ll get a whiff of an Exxon gas station.

Everyone’s heard of the big jury verdict against Exxon: a $5 billion award. What you haven’t heard is that ExxonMobil hasn’t paid a dime of it. It’s been a decade since the trial. BP painted itself green and ExxonMobil decided to paint the White House with green: It’s the number-two lifetime donor to George W. Bush’s career (after Enron), with a little splashed the Democrats’ way. The oil industry’s legal stalls, the “tort reform” campaigns and the generous investment in our democratic process has produced a Supreme Court and appeals panels that look more like luncheon clubs of corporate consiglieri than panels of defenders of justice.

In November 2001, following directives of the Supremes, the Ninth Circuit Court of Appeals overturned the jury verdict on grounds the punishment was too dear and severe for poor little ExxonMobil.

The BP-led Alyeska consortium was able to settle all claims for 2 percent of the acknowledged damage, roughly a $50 million payout, fully covered by an insurance fund.

And the natives? While waiting for Exxon to make good on promises of compensation, Chief Agnes and Paul Kompkoff have passed away. As to my four-volume summary of evidence of frauds committed against the natives: In 1991, when herring failed to appear and fishing in the Sound collapsed, the tribal corporation went bankrupt and my files became, effectively, useless.

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3 responses to “A Well-Designed Disaster: The Untold Story of the Exxon Valdez

  1. Why isn’t the author listed on this article?

  2. Yes I had a friend who owned the ship “the daily bread” a fishing boat they have never recived a dime from the settlement. Even thoe they won the law suit.

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