Tuesday, June 30, 2009

Enterprise acquiring Teppco in $3.3 billion deal

HOUSTON - Enterprise Products Partners said on June 29 that it is acquiring Teppco Partners in an all-stock deal valued at $3.3 billion, forming what they said would be the largest publicly traded energy partnership.
The move unites the two closely linked pipeline operators, which are controlled by a general partnership company owned by the Houston billionaire Dan Duncan.
Under the terms of the deal, Teppco unit holders would receive 1.24 Enterprise units, valued at $31.36, for each of their Teppco units. That represents a 9.3 percent premium over Teppco’s closing price on June 26.
The deal is valued at about $500 million more than the $2.8 billion cash-and-stock deal Enterprise first put on the table in March. That offer was later rejected by Teppco’s management as being too low.
Teppco and Enterprise are both master limited partnerships.
The deal brings Teppco officially into the Enterprise family, allowing the company to benefit from Enterprise’s stronger balance sheet and more stable yield payout. Enterprise gains by acquiring a more diverse mix of products and shipping routes via Teppco’s extensive oil products network.
The combined partnership will control a significant amount of midstream energy assets including 48,000 miles of pipelines; 200 million barrels of natural gas liquid, refined product and crude oil storage capacity; 27 billion cubic feet of natural gas storage capacity; 60 product terminals and the largest inland tank barge companies in the United States.

Monday, June 29, 2009

Defective pipe slows Boardwalk operations

HOUSTON – A few defective pipe joints are reportedly slowing operation of the Boardwalk pipeline system.
Boardwalk is reportedly engaged in the ongoing replacement of several sections of pipe in new projects that were determined to have anomalies following hydrostatic tests.
The problem of slight expansions of the pipe occurred in less than one percent of Boardwalk's new pipe joints, but was spread throughout the new projects.
The anomalies made necessary reduction in operating pressure and also shutting down sections for temporary intervals to replace affected segments.
As a result, revenues and cash flows are considerably lower than anticipated. Boardwalk has been working with the Pipeline and Hazardous Materials Safety Administration (PHMSA) and expects to obtain permission to increase pressure to the normal operating level of 72 percent of SMYS in each project following the replacement of the defective sections. PHMSA will then decide about granting Boardwalk a waiver to operate at the increased 80 percent operating pressure as originally planned.

Friday, June 26, 2009

Chesapeake’s McClendon defends pay package in Fort Worth Rotary speech

FORT WORTH, Texas - Aubrey McClendon, president and CEO of Chesapeake Energy, defended his $112 pay package before the Fort Worth Rotary Club.
McClendon got his board to approve the package even though Chesapeake’s stock price dropped 59 percent in 2008, and profits fell by half.
McClendon was a big backer of Republican politics, helping to underwrite the Swift Boat campaign against John Kerry in 2004. He now says that he’s independent, no longer contributing to so-called 527 advocacy groups, and that he voted for Barack Obama for president.
In the Barnett Shale of Texas, Chesapeake has been a pioneer in urban drilling in Fort Worth. In his home town of Oklahoma City, McClendon is widely celebrated for creating jobs and wealth and for luring an NBA franchise.
At least four pension funds have filed lawsuits against Chesapeake in connection with the pay plan and falling stock price. They’ve called his pay "a bailout," because it came after McClendon lost 94 percent of his company stock, once worth more than $2 billion. McClendon kept buying shares in 2008, borrowing
against his stake. When natural gas prices tumbled, Chesapeake’s stock dropped, too, and McClendon’s gamble went bad. He had to sell nearly everything to meet the margin call.
Glass, Lewis, & Co., a proxy-rating service that advises shareholders, gave Chesapeake an F on its measure of pay for performance ¬ after giving the company a D in 2007 and 2008. "Overall, the company pays significantly more
than its peers," Glass Lewis wrote, "but performed about the same as its peers."
(Source: Mitchell Schnurman, Fort Worth Star-Telegram)

Thursday, June 25, 2009

Ruby pipeline gets draft EIS from FERC, clearing hurdle

WASHINGTON - The U.S. Federal Energy Regulatory Commission (FERC) has issued a draft environmental impact statement for the proposed Ruby Pipeline project - a significant step in expanding Wyoming's natural gas export capacity to the West Coast.
Ruby Pipeline, owned by El Paso Corp., is competing against several other pipeline companies for a multi-billion-dollar connection from western Wyoming to southern Oregon. Ruby still needs to receive FERC approval on shipping rates and terms of service.
In issuing the draft EIS, FERC noted that the pipeline would result in adverse environmental impacts, but said most of the impacts could be mitigated.

Wednesday, June 24, 2009

Colonial meets with retirees to explain termination of medical plan funding

ATLANTA, Ga. – Colonial Pipeline Co. on June 23 held the first of three meetings with retirees to explain the terms under which it is terminating supplemental medical plan coverage to some 600 retirees and their spouses at the end of 2009.
The afternoon meeting, attended by more than 100 retirees and spouses, was held at the Roswell Country Club in Roswell, Ga.
Since 2003, when Colonial stopped including retirees in its self-insured medical plan for active employees, the company has been providing a nontaxable supplemental payment to help retirees and their spouses pay a part of their annual premiums for AARP medical and drug insurance that supplements Medicare coverage. The AARP supplemental coverage, which costs about $4,900 per year for a retiree and spouse over 65, covers the 20 percent of medical bills not covered by Medicare.
Colonial’s medical and drug plans are self-insured. Until 2003, active employees, retirees and their spouses were all part of the same self-insured pool.
In 2003, when Dave Lemmon was serving as Colonial president and CEO, a human resources manager who was with the company for less than a year administered a split in which Colonial employees 55 and under entered one pool, while active employees 55 and over and retired employees entered another pool.
While a few employees from Colonial’s Human Resources Department were present at the Roswell meeting on June 23, the meeting was facilitated by employees of The Ayco Co., LP, a division of Goldman Sachs.
Colonial President and CEO Tim Felt and other executives were conspicuously absent from the meeting.
Retirees at the meeting asked a number of questions, most relating to the fact that lump sum payments are taxable. Until now, the supplemental payments provided by Colonial have been nontaxable. The fact that up to 40 percent of lump sum payments will be withheld for various taxes has rankled many retirees.
As one retiree at the meeting put it during a break in the program, “I know they’re screwing me, I just haven’t figured out how.”
Colonial Human Resources employees present at the meeting said they were unable to figure out a way to make the payments nontaxable.
Colonial is referring questions of a legal nature to the Atlanta law firm of Mazursky Constantine, which was involved in an initial Colonial attempt in 2003 to limit medical benefits to retirees and their spouses.
Colonial Human Resources executives present at the Atlanta meeting did not respond to a question raised about the ethicality of cutting off supplemental medical plan payments to retirees, most of whom during their active careers were exposed to a wide variety of known and suspect carcinogens, including tetraethyl lead, methyl tertiary butyl ether, tertiary butyl alcohol, benzene, toluene and polycyclic aromatic hydrocarbons.
Two more meetings are scheduled with Colonial retirees and their spouses at Charlotte, N.C., on June 24, and Richmond, Va., on June 26.
The deadline for Colonial retirees and their spouses to return signed release forms to the company’s administrator is July 31. Retirees and spouses who do not return the signed releases have been told they will be cut off from all medical and drug plan benefits if they refuse to sign.

Tuesday, June 23, 2009

TransCanada, Denali leaders says gas line is needed despite glut

JUNEAU, Alaska - Low natural gas prices don't pose a threat to the Alaska natural gas pipeline, a top official with TransCanada Corp. said on June 18.
"That's the nature of the gas business - the price goes up and the price goes down," said Tony Palmer, vice president for Alaska development with the Alberta-based company, in a meeting with the Juneau Empire's editorial staff.
TransCanada knew when it began the process that natural gas prices fluctuate, Palmer said.
Industry sources have speculated that Alaska gas is not needed, given new means of producing gas in deep shales in the Lower 48. A top executive at Enbridge Inc. recently expressed doubts publicly that there is enough demand for Alaska gas, given the pipeline's cost.
TransCanada is working together with Exxon Mobil Corp., one of the state's three big natural gas lease holders, on its pipeline, developed under the Alaska Gasline Inducement Act.
A competing pipeline, Denali, is being developed by BP PLC and ConocoPhillips Co., the other two big leaseholders.
Denali spokesman Dave MacDowell said despite today's low natural gas prices, his company also expects a pipeline to be viable.

Monday, June 22, 2009

Shell extends force majeure on Nigerian oil exports

PORT HARCOURT - Royal Dutch Shell on June 17 extended force majeure on its Nigerian Forcados oil shipments for the rest of June and all of July, a spokesman said.
Shell's joint venture with state-run Nigerian National Petroleum Corp. (NNPC) imposed the force majeure, which frees the company from contractual obligations, in March following an attack on its trans-Escravos pipeline.
"The joint venture declared force majeure on Forcados offtake program for the remainder of June and for July effective 1800 hours June 16," a Shell spokesman said. The company said investigations were ongoing and that it was taking steps to repair the damaged Forcados pipeline and resume production.

Friday, June 19, 2009

Exxon modifies Pegasus Pipeline to transport oilsands crude

IRVING, Texas - Exxon Mobil Corp. has boosted its capacity to transport Canadian oil sands crude from Patoka, Ill., to refineries in Texas and Louisiana.
Exxon Mobil has modified and expanded the capacity of its 1,381-kilometer Pegasus Pipeline by 50 percent to about 96,000 b/d, the company said in a June 17 news release.
The expansion followed a 2006 reversal of the direction of flow in the pipe, most of which had been idle for four years.
Pegasus runs from Patoka, Ill., where several Midwest and Texas pipelines converge, to Nederland, Texas, near Houston.

Thursday, June 18, 2009

TransCanada to acquire ConocoPhillips' interest in Keystone Pipeline

CALGARY, Alta. - TransCanada Corp. on June 16 announced an agreement to acquire Keystone Pipeline System through the acquisition of ConocoPhillips' remaining interest in the project for approximately US$550 million plus the assumption of approximately US$200 million of short-term debt. As a result, TransCanada will become the sole owner of Keystone Pipeline System.
The purchase price reflects ConocoPhillips' capital contributions and includes an allowance for funds used during construction.
TransCanada will also assume responsibility for ConocoPhillips' share of the capital investment required to complete the project of approximately US$1.7 billion through the end of 2012. The transaction is expected to close in the third quarter 2009.
Keystone will be one of the largest oil delivery systems in North America, with capacity to deliver 1.1 million b/d.
The deal, slated to be closed in the third quarter, follows TransCanada's acquisition of 20.1 percent of Keystone from ConocoPhillips last year.

Tommie Murphy celebrates 90th birthday

Congratulations to Dorothea E. “Tommie” Murphy, who on June 16, 2009, celebrated her 90th birthday. Tommie, a WAF pilot who flew and ferried warplanes during World War II, was the administrative assistant to a number of Colonial Pipeline presidents from Tom Chilton through Don Brinkley and, briefly, Dave Lemmon. Friends are hoping she gets 90 birthday cards at 4075 Lakeshore Drive, Mount Dora, FL 32757-5219

Wednesday, June 17, 2009

Natural gas producers cut back production in depressed market

HOUSTON – Faced by record-high inventories and depressed prices, natural gas producers have been idling rigs in an effort to reduce output and boost prices.
They have reduced by 56 percent the number of rigs drilling for natural gas, to 700 from the September 2008 peak of more than 1,600.
But natural gas prices have largely remained below $4 per million British thermal units since March, after falling 78 percent from a high of more than $13 last summer.
A recession-fueled fall in demand followed rapid supply growth last year due to a boom in gas produced from shale rock. Inventories continue to rise even as producers reduce production. Natural gas in storage reached 2.443 trillion cubic feet for the week ending June 5, the U.S. Energy Information Administration reported on June 11, up from 2.337 trillion a week earlier and 1.875 trillion in early June 2008.
EIA projected in its monthly short-term outlook that total natural gas consumption is projected to fall by 2.2 percent this year and then increase slightly in 2010.

Tuesday, June 16, 2009

Crosstex Energy to sell some pipeline assets for $220 million

DALLAS, Texas - Crosstex Energy LP has signed a deal to sell pipeline assets in Mississippi, Alabama and South Texas to Southcross Energy LLC for $220 million.
Crosstex Energy LP, a partnership partly owned by Crosstex Energy Inc., said on June 10 that the money will allow it to satisfy debt reduction targets set by amendments to its debt facilities. The pipeline systems generated gross margin in the first quarter of $12 million, and cost $4 million to operate, the company said.
“These are perfect assets to provide the foundation of our new company,” said David Biegler, chairman and chief executive officer of Dallas-based Southcross Energy.
The Mississippi and Alabama systems being acquired consist of approximately 780 miles of intrastate gathering and transmission pipelines with throughput capacity of about 185,000 million British thermal units per day (MMBtu/d). The South Texas system consists of approximately 1,400 miles of intrastate gathering and transmission pipelines with throughput capacity of about 600,000 MMBtu/d and two processing facilities with a total processing capacity of approximately 195,000 MMBtu/d.

Exxon, TransCanada pact may involve little more than engineering

ANCHORAGE - TransCanada on June 11 announced that it has an
agreement with Exxon Mobil Corp. for the two to work together on a natural
gas pipeline from Alaska to the Lower 48. But that agreement may amount to little more than Exxon doing some of the engineering for TransCanada.
"We are pleased that TransCanada and ExxonMobil have reached
agreement on initial project terms to progress this exciting initiative," Hal Kvisle, TransCanada president and chief executive officer, said in a written news release about the partnering.
The news release contained no details, but the companies teleconferenced with reporters later in the day to discuss the agreement. In the teleconference, the two companies said Exxon will participate in all aspects of TransCanada's project: technical, commercial, regulatory and financial. TransCanada will retain the lead in its project and be majority owner.
Some Alaska state legislators were briefed by TransCanada earlier in the day,
and at least one emerged highly skeptical about the importance of the
development. "My take is what's going on here is a completely overblown media
circus," said Anchorage Rep. Mike Hawker, whose wife works for Conoco in its Cook Inlet operations.
Hawker said that the companies will announce the formation of an "integrated project team."
"The way it's been explained to me is that all this project team is, is they've hired Exxon Mobil Corp to do the front end development work on the gas treatment plant which is something TransCanada doesn't do. That's oil industry technology, that's not pipeline technology," he said.
He said TransCanada is basically hiring Exxon as a subcontractor. "Exxon will pass its expenses back to TransCanada, TransCanada will bill half of them back to the state of Alaska," he said.
That the state will reimburse Exxon for its gas pipeline costs is raising eyebrows. But that repayment can't be avoided under the gas line inducement law.
"Yeah, nobody likes Exxon, and how they treated the Exxon Valdez plaintiffs even recently bothers me terribly, and maybe this means we will give them a little bit more scrutiny," said Beth Kerttula, House minority leader.
Under the terms of the Alaska Gasline Inducement Act, the state has agreed to reimburse TransCanada for up to $500 million in costs.
Hawker said that he understands the idea is for the companies to do more together in the future, but at this point there are no commitments other the gas conditioning plant work.
Commenting to Matt Lauer on the “Today” show, Alaska Gov. Sarah Palin said Hawker supported the Alaska Gas Line Inducement Act. “He still supports it. It’s politics. Matt, coming up here on an election year, I think a lot of the folks are positioning themselves for future runs and things, so they have to say some things like that.”
"Exxon is the driver. They have the largest interest, the deepest pockets," said Fadel Gheit, a senior energy analyst with Oppenheimer & Co. "Exxon is the tie-breaker. If Exxon takes a side, this is the winning side." But, Gheit cautioned, Exxon isn't likely to make a firm commitment to one project over the other unless the company secures a favorable fiscal commitment from the state.

Friday, June 12, 2009

Exxon elects to support TransCanada over Denali gas pipeline plan

IRVING, Texas - Exxon Mobil said on June 11 that it will work with Canadian pipeline operator TransCanada to build a natural gas pipeline to provide natural gas from Alaska’s North Slope to the lower-48 states.
Exxon holds the largest natural gas reserves on Alaska’s North Slope. Its decision deals a blow to the rival Denali project being developed by BP and ConocoPhillips.
The competition to build a gas pipeline was set up by Gov. Sarah Palin, who had been critical of the slow pace at which oil companies, including Exxon, were moving.
TransCanada said it would retain a majority interest in the project. Both it and Exxon invited BP and Conoco to abandon their rival effort, saying they would be welcome to join the TransCanada plan.
“It has always been our position that the project will require the support of all the North Slope producers, the state of Alaska and TransCanada, and we will need to work with them,” Marty Massey, a senior executive with the Exxon Mobil Production Company, said during a conference call.
Alaska’s estimated 35 trillion cubic feet of gas reserves are now being reinjected into oil fields or left in the ground because there is no way to get it to consumers.
With Exxon and TransCanada on one side, and BP and Conoco on the other, there are two contenders for what would be the biggest civil engineering project in North America.
BP and Conoco responded to the Exxon announcement by saying their joint pipeline project, dubbed Denali, was going forward. But both said they would be open to alternative plans.
TransCanada has estimated that the project will cost $30 billion. It would stretch roughly 1,700 miles from the North Slope of Alaska through Yukon and northeastern British Columbia to the Alberta border near Boundary Lake. From there, it would connect to Alberta’s existing gas infrastructure, which is linked to the United States.

Thursday, June 11, 2009

Range blames vandal for causing Marcellus leak in Pennsylvania

WASHINGTON COUNTY, Pa. - State environmental regulators in Pennsylvania are continuing to investigate a pipeline leak of wastewater into a stream from a natural gas well drilled by Range Resources Corp. of Fort Worth in the
southwestern part of the state.
Salamanders, crayfish, insects and at least one fish were killed in the
May 26 spill, The Associated Press reported.
Range said on June 5 that it believes a vandal loosened bolts on the pipe,
with the wastewater leaking into a farm's drainage ditch, which led
to a tributary of Cross Creek Lake in Washington County.
Bolts securing a pipeline coupling could not have loosened by themselves
after the pipe already had passed a pressure test and inspection, Range
spokesman Matt Pitzarella said. The leak was quickly stopped, he added.

Wednesday, June 10, 2009

Shell agrees to pay $15.5 million out of court to settle Nigerian death case

NEW YORK - Royal Dutch Shell agreed on June 8 to pay $15.5 million to settle a case accusing it of taking part in human rights abuses in the Niger Delta in the early 1990s.
The settlement came days before the delayed start of a trial in New York that was expected to reveal extensive details of Shell’s activities in the Niger Delta.
The announcement caps a protracted legal battle that began shortly after the death of the Nigerian activist Ken Saro-Wiwa in 1995. Saro-Wiwa, Shell’s most prominent critic at the time in Nigeria, was hanged by the country’s military regime after protesting the company’s environmental practices in his native Ogoni region.
Despite the settlement, Shell continued to deny any role in the death. It called the settlement a “humanitarian gesture” meant to compensate the plaintiffs, including Saro-Wiwa’s family, for their loss and to cover a portion of their legal fees and costs. Some of the money will go into an educational and social trust fund intended to benefit the Ogoni people.

Tuesday, June 9, 2009

Pipeline rupture shuts Williams gas processing plant in Colorado

IGNACIO, Colo. - The rupture of a natural gas pipeline on June 3
prompted company officials to shut down Williams' natural gas processing plant in Ignacio, Colo.
One of the on-site underground pipelines that feeds the raw natural gas into the plant burst during the night.
No injuries were reported and assistance from emergency responders was not needed.
"Obviously the gas escape could be an issue if it finds an ignition source and works its way back to the plant and surrounding properties,"
said Tom Aurnhammer, deputy chief of Los PiƱos Fire District.
If an incident is severe, La Plata County dispatch can issue a reverse 911 call, which calls all phone numbers within a given perimeter to issue evacuation information, he said.
Williams' Ignacio Plant is a natural gas processing plant. It processes the raw natural gas into its component parts: butane, propane or methane gas.
It is too early to tell how long the plant will be closed while repairs
are completed. The natural gas will be rerouted to other Williams' facilities in the
San Juan Basin for processing, according to company officials.

Monday, June 8, 2009

Federal bill gives incentives for building Alaska gas pipeline

FAIRBANKS, Alaska - U.S. Sen. Lisa Murkowski has announced several provisions benefiting an Alaska gas pipeline that she’s secured in a comprehensive energy bill.
Murkowski is the ranking Republican on the Energy and Natural Resources Committee, chaired by Sen. Jeff Bingaman, D-N.M.
If approved by Congress, the bill would increase a federal loan guarantee for an Alaska gas pipeline project from $18 billion, set in 2004, to $30 billion plus inflation from 2004 values.
In addition, a project could tap into super-low-interest loans from the Federal Financing Bank, a federal corporation, and clarifies 2004 language to specify that the federal loan guarantee will cover a full 80 percent of the total project costs.
“This is a recognition that Alaska’s gas resource is necessary for the country, and that we as a nation will step forward in helping to facilitate such a project,” she said. “The federal government is not nationalizing this. We are not taking it over. But, we are helping to facilitate it.
All provisions are available to either TransCanada, licensed by the state under the Alaska Gasline Inducement Act, or Denali - The Alaska Gas Pipeline, a joint venture between producers BP and ConocoPhillips.

Friday, June 5, 2009

Atlas Pipeline, Williams Cos. close joint venture

TULSA, Okla. - Williams Cos. says it has closed on a joint-venture agreement with Atlas Pipeline Partners LP that will collect natural gas in the southwestern Pennsylvania portion of the Marcellus Shale rock formation.
The new company, named Laurel Mountain Midstream LLC, owns 1,800 miles of interstate natural gas gathering lines in the region, servicing about 6,900 wells.
Williams says it contributed $100 million and issued a $25.5 million note payable to Laurel Mountain in exchange for a 51 percent ownership interest in the joint venture.
Moon Township, Pa.-based Atlas Pipeline Partners will own 49 percent.
Williams will run the new company on a day-to-day basis.

Wednesday, June 3, 2009

Holly Energy Partners buys new pipeline from Holly Corp.

DALLAS, Texas - Holly Energy Partners LP has acquired a new 16-inch pipeline from Holly Corp. that will connect Holly’s refining facilities in Lovington, N.M., to similar facilities in Artesia, N.M.
Holly Energy Partners paid $34.2 million in an all-cash transaction for the pipeline after financing the acquisition through a revolving credit facility.
In addition to the pipeline itself, Holly Energy has spent $7.9 million for pipeline infrastructure improvements between Holly's Lovington and Artesia refining facilities.

Tuesday, June 2, 2009

New lower-48 natural gas production make arctic pipelines less attractive

ANCHORAGE – A 40-year plan to deliver natural gas from Arctic regions of the U.S. and Canada to the Lower 48 states is under threat from large shale-gas discoveries elsewhere on the continent and slow-moving regulatory processes.
Over the past decade, partnerships involving ExxonMobil, Shell, BP and ConocoPhillips have spent hundreds of millions of dollars on plans to develop Alaska's North Slope and Canada's Mackenzie Delta.
Backers of the 4.5 billion cubic feet a day (cf/d), $30 billion Alaska project and the 1.8 billion cf/d, $13.7 billion Mackenzie Delta venture have tied their hopes to an unshakeable belief that gas prices will again rise well above $10 per 1,000 cf as conventional reserves disappear.
But hopes that these projects will come on stream in the 2010-20 period are fading, because regulators and governments have failed to keep pace with industry timetables for issuing approvals and permits. More importantly, shale-gas discoveries in Texas, Louisiana and Pennsylvania make piping gas from the Arctic look less profitable.
In Alaska, Gov. Sarah Palin’s administration bet $500 million on the Alaska Gasline Inducement Act (AGIA), providing an incentive for construction of a 4.5 billion cubic-foot-per-day natural gas pipeline from Alaska’s North Slope that may never be built.
New discoveries in the Barnett Shale of Texas coupled with new ways to extract gas a mile deep from the Marcellus Shale in Pennsylvania and the Haynesville Shale in Louisiana could supply the total needs of the U.S. for natural gas for the next 100 years, making a $30 billion line from Alaska increasingly unlikely to be profitable.

Monday, June 1, 2009

Australian state to sue Apache over gas blast at Varanus Island

PERTH - The government of the state of West Australia will prosecute U.S. oil and gas producer Apache Energy Ltd for failing to maintain and repair a gas pipeline that exploded in 2008.
Apache says it will vigorously defend itself against the charges.
Mines and Petroleum Minister Norman Moore on May 28 announced the government had started proceedings to prosecute Apache Northwest Pty Ltd and its co-licensees, Kuwait's Kufpec Australia Pty Ltd and Tap Harriet Pty Ltd, over the incident.
The blast in June 2008 at Apache's Varanus Island gas plant, off Western Australia's Pilbara coast, slashed the state's gas supply by one-third.
A charge filed on March 27 in the WA Federal Court alleges the companies had not maintained the pipeline in good condition and repair as required under the Petroleum Pipelines Act, Moore said.
"It is alleged that the 12-inch sales gas pipeline was corroded in the area of the pipeline rupture which occurred at the pipeline beach crossing on Varanus Island on June 3 last year," he said in a statement.