‘Main Driver Was to Save Money': PG&E Engineer Says Finance Trumped Safety

A longtime PG&E engineer testified Thursday that he chided his colleagues about having embraced a largely ineffective pipeline inspection method “for financial, not technical reasons.”

“The main driver was to save money,” 32-year company veteran Frank Dauby testified about the company’s shift away from its promised use of automated in-line inspection tools – known as pigs – toward an ostensibly cheaper above ground method, known as external corrosion direct assessment (ECDA).

Prosecutors will no doubt seek to rely on the insider testimony of supervising gas engineer Dauby to support their contention that the utility valued profits above safety in the years before the San Bruno gas explosion in 2010.

On Thursday, Dauby recalled how he had to assume the role of crusader for what he considered a more effective method to vouch for the company’s pipelines, known as in-line inspection, or ILI. That method required pipes be retrofitted to accept the sophisticated torpedo shaped devices that would collect data from inside the line.

“I felt at times it needed a proponent,” Dauby said. “I felt at times I fulfilled that role.”

In 2008, Dauby went so far as to point out that the company’s favored external corrosion method was only cheaper because it simply failed to work, noting that it “has rarely found significant corrosion.” He told the jury that the method had a limited role of predicting where lines might be vulnerable to future damage.

The in-line method, he said, only cost more because it actually found corrosion and the higher cost reflected those repairs. He told his fellow engineers at the time that PG&E “simply can’t afford to miss existing corrosion, the consequences of failure are too severe.”

Nonetheless, before a 2010 state regulatory audit, Dauby was instructed to justify decisions to use the very method he knew was inferior instead of more effective in-line inspection tools in 2007, 2008 and 2009.

“I did that, but I wasn’t very happy about it,” he told the jury.

In fact, at the time, he scolded his colleagues that they all knew the decision had been made for “financial, not technical reasons.”

The company inspection costs dropped at the time, from $23 million to $17 million in 2009, according to one document shown to the jury.

Todd Hogenson, the company’s manager of pipeline engineering, testified that he led a cost cutting brain storming session.

Spending on inspections dropped from $23 million in 2008 to $17 million in 2009 and was expected to remain unchanged in 2010, the document said.

“We were asked to look for opportunities to reduce spending,” said Todd Hogenson, discussing an October 2009 memo to his colleagues about cost cutting which proclaimed “there are no sacred cows.” He later stressed, when asked by the defense, that he wasn’t talking about sacrificing safety.

The jury was later shown evidence indicating that at least PG&E official resorted to backstabbing Dauby related to his effort to push for what he considered more effective inspection efforts.

Dauby was shown emails sent to and from the chief champion of the external corrosion method, Bob Fassett, from 2008. At the time, Dauby was pushing to use in-line automated method on the very line that later exploded in San Bruno.

He told Fassett that he had the backing of a then top official in integrity management, Glen Carter. But when Fassett secretly emailed Carter, responded by saying he did not remember that and he was more likely to support the cheaper external corrosion method.

“Isn’t it amazing how names get dropped to get work done?” Fassett emailed Carter back.

On the stand, Dauby bristled at Fassett’s email.

“He’s basically saying I made it up,” Dauby said, saying that he would never start the in-line process without authorization. “So I did not make it up.”

Prosecutors asked Dauby about the effort after to find records that reflected that sections of the San Bruno line had been tested with high pressure water. No records could be found.

In court filings lodged early Thursday, federal prosecutors sought the right to confront Dauby – but later chose not to -- about his email after Line 132 exploded in September 2010 urging colleagues “to not write or forward any messages regarding L-132 incident unless necessary.”

Dauby further insisted that any communications be sent to the company’s attorneys with the proviso that they were therefore protected the attorney-client privilege.

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