Friday, July 30, 2010

Ruby Pipeline strikes deal with environmental groups

BEND, Ore. - The company behind a major natural gas pipeline to be built in Oregon says it will contribute a total of $22 million to two environmental conservation funds. In return, the two groups say they'll drop their opposition to the project.
The Ruby Pipeline will span 680 miles between Opal, Wyo., and Malin, Ore., and will cost $3 billion. But environmental groups say the hidden cost will be to the sagebrush habitat.
Under the agreement, El Paso Corp., Ruby's parent company, will pay $15 million into a new non-profit fund set up by the Western Watersheds Project.
Another $7 million will go into a fund set up by Bend-based Oregon Natural Desert Association.
Jon Marvel, executive director of Western Watersheds Project, said both funds will be used to purchase grazing permits from ranchers willing to sell. Marvel says the land stands to benefit.
Jon Marvel said, "In addition, Ruby Pipeline benefits by not having a potential litigant challenging its pipeline."
El Paso is waiting for final federal approval. A spokesman for the company says construction could get underway within days.

Thursday, July 29, 2010

U.S. Department of Energy questions Keystone XL pipeline ‘facts’

WASHINGTON – The U.S. Department of Energy (DOE) on July 26 posted its comments on the State Department Draft Environmental Impact Statement (DEIS) on the Keystone XL pipeline.
The TransCanada Keystone XL Pipeline would carry up to 900,000 b/d of bitumen in a high-pressure pipe from Alberta, Canada, to the U.S. Gulf Coast.
Earlier, the U.S. Environmental Protection Agency posted its reservations about Keystone XL.
DOE, in a series of pointed questions, has asked State to “clarify or qualify” numerous statements made in support of the pipeline
• DOE questions that global and domestic oil supplies are unlikely to decrease substantially over the next 30 years, pointing out that the reports of the EIA (which is a branch of the DOE), upon which that statement is based, are not forecasts but reference cases that assume that technology, demographic trends and other factors - under current laws and regulations - do not change. “Outlooks produced by the EIA are not forecasts and do not imply a probabilistic assessment of the future,” DOE states.
• DOE states that suppliers of crude oil from Canada already have access to two existing pipelines and that “in addition, the recently approved Alberta Clipper and Keystone pipelines will ensure that there is enough pipeline capacity from Canada to the U.S. for some years.” DOE says: “Recognizing that Canadian producers have four pipelines available for exporting WCSB to the U.S., it would be helpful to clarify or qualify the following two statements” that (a) without Keystone XL, there is no ready conduit for this oil, and (b) that the U.S. would remain dependent on unstable sources of oil from “the Mideast, Africa, Mexico, and South America.”
• DOE states that the pipeline will not shield the U.S. from global price shocks, stating “The Keystone XL pipeline would also not eliminate U.S. demand in the international market or its exposure to price shocks propagating through that market, which affect the prices charged for supply from Alberta producers as well.” DOE continues: “When the world experienced an oil price shock in 2008, Canada sold crude to the U.S. at a price linked to a global market price, not at below market rates.” I.e. the pipeline would not reduce the volatility or price of oil overall, nor would it regulate the price of the oil coming through the pipeline itself. DOE asks State to clarify its statements that (a) Keystone XL will lower crude oil prices and price volatility to the Gulf coast refineries and that (b) without Keystone XL, crude oil prices will increase.
• DOE states that arguments that crude oil will go to Asia if Keystone XL is not built are not accurate because building a West Coast pipeline is not mutually exclusive with building Keystone XL. DOE says “it seems that issuance of a Presidential Permit for the Keystone XL pipeline will not foreclose an option others may be pursuing to establish a pipeline to the West” and asks for State to clarify its statement that if the pipeline is not built, much of the oil will be “exported to Japan, China and India.”

Wednesday, July 28, 2010

Former EPA official says Corexit, widely used in Gulf spill, kills dolphins, humans

EPA whistleblower Hugh Kaufman recently spoke on Democracy Now about BP’s claims regarding Corexit and the effects it is having on the Gulf of Mexico and the life forms that it comes in contact with.
He alleges that the U.S. Environmental Protection Agency is covering up the toxic effects that will result from using nearly two million gallons of the chemical dispersant since the start of the catastrophic oil spill in the U.S. Gulf.
Hugh Kaufman is a former U.S. Air Force captain. He joined the EPA in
1971. He helped write the laws that are on the federal books regarding the disposal, storage, handling and treatment of solid and hazardous waste. Though the EPA has approved the use of Corexit as an oil dispersant, Kaufman alleges that it is extremely toxic, dangerous and shows proof that the chemical was linked to many health problems when used in the Exxon Valdez oil spill.
Kaufman also believes that BP used the chemical dispersant to dissolve as much oil as possible to prevent the public from ever truly knowing how vast the spill actually is.
Kaufman also alleges that people who are currently coming in contact with Corexit are suffering internal bleeding and hemorrhaging.
In a video clip, Kaufman says "...Consequently, we have people, wildlife… we have dolphins that are hemorrhaging. People who work near it are hemorrhaging internally. And that's what dispersants are supposed to do. EPA now is taking the position that they really don't know how dangerous it is, even though if you read the label, it tells you how dangerous it is. And, for example, in the Exxon Valdez case, people who worked with dispersants, most of them are dead now. The average death age is around fifty. It's very dangerous, and it's an… economic protector of BP, not an environmental protector of the public."

Tuesday, July 27, 2010

Enbridge Partners involved in massive 19,500 bbl. crude spill in Michigan

MARSHALL, Mich. - Enbridge Energy Partners LP (NYSE: EEP) said about 19,500 barrels of crude oil may have leaked from a pipeline near its pump station in Marshall, Mich.
The exact time of the spill had not yet been determined on July 27, but the Battle Creek Enquirer quoted a Battle Creek resident who said he smelled oil at around 9 p.m. on July 25.
Residents of the Battle Creek area were being warned to stay away from the Kalamazoo River because of the oil spill. The Kalamazoo River empties into Lake Michigan at Saugatuck, Mich.
After Enbridge learned of the spill, perhaps half a day after it occurred, the pipeline was shut down and isolation valves were closed, stopping the flow of oil.
Enbridge crews were on scene on July 26 with oil skimmers and booms on the creek and river, a press release from the company said. However, efforts to contain the spill were complicated by high water levels that made access to the flooding creek and river difficult to impossible.
Enbridge Liquids Pipelines general manager Tom Fridel said the leak was caused by a pipeline malfunction, but the cause is still being investigated, according to the Enquirer.
No one was immediately injured in the spill.
Area media were reporting that odor from the spill hung heavy over Battle Creek.
"It is unknown at this time how far the spill has traveled and exactly what areas have been affected. It is assumed due to the current level of the Kalamazoo River and the speed of the current that the entire Emmett Township area and beyond has been affected," according to an advisory issued today by the Emmett Township Public Safety Department.
Wayne Hoepner, a meteorologist for the National Weather Service in Grand Rapids, said oil from the spill could reach Lake Michigan as early as Aug. 1, although numerous variables could affect the flow rate.
A message on an Enbridge hotline set up for the spill said "we regret any inconvenience this has caused to the community."
The oil leaked from a 30-inch pipeline that carries about eight million gallons of oil per day from Griffith, Ind., to Sarnia, Ontario.
The oil spilled into Talmadge Creek, which flows northwest into the Kalamazoo River. The site is in Calhoun County's Marshall Township, about 60 miles southeast of Grand Rapids.
Authorities evacuated two homes near the leak.
According to the Battle Creek Enquirer, an impromptu animal rescue of wildlife affected by the Marshall-area oil spill was to begin immediately.
Organizers said in a posting on Facebook that volunteers should gather at Squaw Creek, scene of the spill.
Sen. Carl Levin, D-Mich., issued a statement indicating he is “deeply concerned about the effects of the oil spill near Marshall, including the environmental impact and the disruption to residents and businesses. It is also deeply worrisome that the oil from the spill has made its way into the Kalamazoo River.”

Monday, July 26, 2010

China blames desulphurizing chemical for oil pipeline blast

BEIJING - Chinese authorities on July 23 blamed a chemical used to remove sulphur from crude oil for a blast at a storage facility that caused a massive spill on the country's northeast coast.
An investigation has found that a desulphurizing chemical was mistakenly pumped into pipelines after a tanker had stopped unloading crude at the port city of Dalian on July 16, triggering the explosion, the State Administration of Work Safety said.
Authorities lifted a partial ban on maritime traffic at Dalien on July 20, four days after explosions hit the two crude oil pipelines.
The Maritime Affairs Administration of Liaoning Province reported that the ports in Dalian City had fully re-opened to traffic as of 5 p.m. on the 20th. Waterways affected by the oil slick had been basically cleared for the resumption of shipping.
About 1,500 tons of oil were spilled into the Yellow Sea off Liaoning province, officials said earlier. That compares to BP’s well spewed as much as 8,220 tons daily (60,000 b/d) spewing from BP’s Macondo well following its April 20 rig explosion until it was capped July 15.

Friday, July 23, 2010

EPA slams State Department DEIS for Keystone XL, recommends delay in approval

WASHINGTON – In a politically astute move that was widely anticipated, the Environmental Protection Agency in a July 6 letter took the U.S. State Department off the hook by recommending a delay in approval of construction of TransCanada’s proposed Keystone XL crude oil pipeline.
If the State Department accepts the recommendation, it can delay a decision on the controversial pipeline until after fall elections.
In recommending a delay in approval, the Environmental Protection Agency said the draft environmental impact study for TransCanada Corp.'s proposed oil pipeline from Canada to the Gulf of Mexico is inadequate and should be revised.
Keystone XL would move bitumen from Alberta, Canada, down through Montana, South Dakota and Nebraska in the upper Great Plains. It would then merge with the Keystone pipeline under construction in Kansas before splitting off again to pass through Oklahoma to end at the largest U.S. refining complex in Texas and the Gulf of Mexico.
Environmental groups have raised concerns that the pipeline could pollute air and water supplies and harm migratory birds and other wildlife. They have also speculated about what they consider inadequate pipeline safety and emergency spill response.
In a letter to the State Department, EPA's assistant administrator for enforcement and compliance assurance, Cynthia Giles, said the draft environmental impact statement failed to adequately address those concerns.
The impact from "air emissions from refineries and the potential contamination of drinking water supplies from an oil spill have not been fully evaluated," Giles said in the letter.
She also said the study also does not "evaluate the environmental justice issues associated with potential impacts to communities in Port Arthur, Texas, where numerous industrial facilities, including chemical plants and a hazardous waste incinerator, are contributing to the residents' overall exposure to contaminants."
The agency said the State Department should revise the study and open it up for more public comment.
TransCanada spokesman Terry Cunha said the company disagrees and that the State Department "did a thorough and complete job in preparing the Draft EIS."
He said TransCanada looked "forward to the environmental review process continuing through DOS's review of comments and preparation of the Final EIS."
The EPA sent its report to the State Department, which has to approve the pipeline because it crosses an international border.
The State Department is reviewing comments from eight agencies on the draft environmental report. The public comment period on the current draft document ended July 2.
"The State Department seriously considers all public comments received as part of the public comment process. However, we will not have a detailed response until we complete the review process," State Department spokeswoman Jill W. Dietrich said in an e-mail.
Keystone XL will move diluted bitumen from Alberta, Canada, down through Montana, South Dakota, Nebraska in the upper Great Plains, and then from Oklahoma to Texas and into the Gulf of Mexico. Under its planned route, the pipeline would cross several rivers and aquifers, including the Ogallala aquifer which supplies water to several Midwestern states.
TransCanada has said the pipeline would provide a reliable source of oil to the U.S. from a stable trading partner and would not adversely affect the environment.
Cunha has said construction of Keystone XL should provide more than $20 billion in new spending to the U.S. economy and more than $585 million in state and local taxes in states along the pipeline route.
Susan Casey-Lefkowitz, director of international programs for the National Resources Defense Council, said the environmental advocacy group was "happy to see how seriously EPA was taking the environmental and public health concerns around the pipeline," and said other pipelines have not undergone such scrutiny.
Keystone has already won approval for pipelines that move oil from Canada through the Dakotas, Nebraska and Missouri to Illinois, as well as for the section being built in Kansas.
"But of course... the first Keystone was under the Bush administration, and the goal of the Bush administration was to push it through as quickly as possible," she said.
She said NRDC has asked the State Department to release correspondence from other federal agencies that have responded to the Keystone XL proposal but had not seen any of those.
EPA gave the State Department’s draft EIS its lowest possible rating. EPA recommended that the State Department provide new analysis and information in a revised draft environmental impact statement that will circulate for public review. This means additional time for analysis and reflection. EPA also says that the proposal is a potential candidate for referral to the White House Council on Environmental Quality - the office responsible for developing recommendations when there are disagreements among agencies.

Thursday, July 22, 2010

Poet/Magellan ethanol pipeline project gets boost from DOE study

OMAHA, Nebr. - A proposed pipeline to send ethanol from the Midwest to markets in the East received a boost on July 19 when the U.S. Department of Energy released the findings of a feasibility study.
The study found that a dedicated ethanol pipeline would be feasible under certain conditions, particularly if U.S. markets were opened to fuel blends containing more than 10 percent ethanol or if use of E85 - a motor fuel with up to 85 percent ethanol - were expanded.
Rep. Lee Terry, R-Neb., said the report is good news for the project. Terry and Rep. Leonard Boswell, D-Iowa, recently introduced a bill that would provide federal loan guarantees for the $3.5 billion, 1,800-mile pipeline.
Terry cited lower fuel costs as a reason that U.S. policy is advancing to the higher use of ethanol, with the U.S. Environmental Protection Agency signaling interest in mandating fuel blends of at least 15 percent ethanol.
Terry said the findings should help lead to a vote before year’s end.
The bill by Boswell and Terry would extend to ethanol pipelines the same types of federal loan guarantees available to oil and gas pipeline projects. Backers say those guarantees are critical to making the project a reality.
Magellan Midstream Partners, a Tulsa, Okla., pipeline company, and Poet Ethanol Products, a major ethanol producer based in Sioux Falls, S.D., are working on the proposed pipeline, which would extend from Mitchell, S.D., to shipping terminals in New York. They hope to have it operational by 2015.

Wednesday, July 21, 2010

Spectra Energy to acquire Bobcat storage assets for $540 million

SAN DIEGO, Calif. - Natural gas pipeline operator Spectra Energy Corp. will spend $540 million to purchase Bobcat Gas Storage properties and a development project from GE Energy Financial Service and Haddington Energy Partners.
Spectra also said it will invest an additional $400 to $450 million to fully develop the facility by the end of 2015, adding that the facility will have a total gas storage capacity of 46 billion cubic feet (bcf).
"This project... is expected to earn returns on capital employed in the 10 to 12 percent range," Spectra CEO Greg Ebel said.
Once Bobcat is fully developed, Spectra's total North American storage capacity will be about 340 bcf, the company said.

Monday, July 19, 2010

Groups lobby State Department for approval of Keystone XL pipeline

WASHINGTON—The Obama administration is grappling with a bid to dramatically increase the flow of carbon-heavy Canadian crude to the U.S.
TransCanada Corp.’s proposed $7-billion Keystone XL pipeline, if approved, will be the single largest conveyor of Alberta bitumen to the U.S. - a 2,700-kilometer, 900,000 b/d line running all the way to the refineries of Houston, with the potential to double stateside consumption of Canadian crude.
The decision on Keystone rests with U.S. Secretary of State Hillary Clinton, whose department must approve transboundary pipelines based on considerations of “national interest.”
Canada has been lobbying on multiple fronts - including a U.S. ad campaign in which the Alberta government extols ongoing efforts to lighten its oil sands footprint. Alberta Premier Ed Stelmach has written to Clinton, stressing what many oil sands supporters view as the Canadian industry’s most persuasive selling point, the fact that Canada is stable, reliable and not the Middle East.
Other lobby groups, including the oil-industry backed Consumer Energy Alliance, are stumping for Keystone, arguing that as many as 13,000 shovel-ready jobs will be created with the stroke of Clinton’s pen. The CEA calls the project a “no-brainer,” pointing to significant union backing led by the United Association of Plumbers and Pipefitters.
Clinton’s State Department is two weeks into a 90-day countdown on the decision - but postponements are likely as other government agencies weigh in.
“There is a cautious optimism that the Keystone pipeline will go through - but perhaps not until after November’s midterm elections,” one consultant familiar with Canadian lobbying efforts in Washington told the Toronto Star.

Friday, July 16, 2010

Atmos accused of violating minimum safety standards again

DALLAS-FORT WORTH, Texas - For the third time this year, Atmos Energy has been cited for allegedly violating minimum safety regulations set out by the government.
The citation follows three house explosions over a three-month period.
A just-released report documents a fatal house explosion in Irving, Texas, last January. In it, the Texas Railroad Commission excoriates Atmos for failing to maintain its equipment as required by law.
The findings in the report are among the main reasons Atmos Energy is about to embark on what may be the largest pipeline removal initiative
in Texas history.
In the explosion early in the morning on Jan. 31, natural gas leaked into an Irving residence and ignited. The resulting explosion seriously injured Peggy Mantheiy, who survived. Her husband Joe died a few days later.
Although Atmos Energy crews spent several days repairing natural gas leaks around the Mantheiy's neighborhood, no official cause of the leak has been reported until now.
According to Texas Railroad Commission investigators, "there was a leak on a... compression coupling nut."
It was a "grade one" leak - so powerful that it can be seen in video from the scene bubbling up through the foundation.
The leaking natural gas compression coupling was just a few feet away from the Mantheiy residence, under the ground, attached to the main gas line which runs east and west.
In the days following the explosion, Atmos crews identified 32 similar leaks all over the neighborhood.
That was enough for state regulators to request "replacement of the service lines and their couplings across the entire Irving distribution system."
The findings in the latest report mirror an explosion report issued April 28. In it, Railroad Commission investigators recommended "replacement of all steel service lines in Mesquite" following the blast that leveled Kristi Samons’ house in November.
In the days following her house explosion, workers discovered not only a leaking compression coupling behind her house, but 61 other leaks in the surrounding neighborhood.
Two weeks earlier, the Texas Railroad Commission released another report documenting an explosion in Lancaster in November 2009. In that case, gas leaking from a pipe connection found its way from under the street into a residence. One person was severely burned when the house exploded.
Again, Atmos was cited for "violations of the minimum safety regulations."

Thursday, July 15, 2010

Williams Partners completes Phase One of Transco expansion

TULSA, Okla. - Williams Partners L.P. said on July 12 that it began operating the first part of a pipeline expansion designed to increase natural gas shipments to the Southeast.
The company said the first phase of its Transco pipeline expansion provides natural gas to a Constellation Energy power plant in Tallapoosa County, Ala. The next phase will send gas to new and existing power plants in North Carolina.
The company estimates the cost of the project at $241 million.

Wednesday, July 14, 2010

UK says it won't rescue BP; U.S. says it won't stop ExxonMobil or Chevron from buying the rogue company

LONDON - BP is negotiating to sell $12 billion worth of holdings, including some in Alaska, mainly to Apache, as it braces for a possible takeover attempt by Exxon Mobil Corp. or Chevron, according to media reports.
A deal with Apache, an independent oil and gas company known for its numerous acquisitions, would go a long way toward securing the money BP has pledged to put toward the cleanup costs. The two companies have struck deals together in the past, including BP’s sale of 18 Gulf of Mexico oil fields to Apache in 2006.
Some analysts have estimated that BP’s total liability may rise to $70 billion.
Among the assets that may be sold is BP’s 26 percent stake in the Prudhoe Bay field in Alaska’s North Slope, the largest oil field in North America.
BP’s chief executive, Tony Hayward, has been traveling around the world to bolster support from major stakeholders.
BP has already said that it will sell about $10 billion worth of assets as part of its financing strategy. It has already suspended its dividend to help conserve about $8 billion in cash, and plans to cut capital spending by several billion dollars. The company has been lining up financing from a group of banks as well, though it has also said it does not plan to issue new equity to potential new investors.
The company is also considering asset sales elsewhere in the world, including Vietnam and Algeria, according to another person briefed on the matter.
The U.S. Department of Justice has already asked BP for advance notice of major asset sales or cash transfers.
Oil-industry sources said the White House gave assurance that it wouldn't block either ExxonMobil or Chevron from trying to take over or merge with BP.
BP said it will use its second-quarter earnings call on July 27 to unveil a plan to amass $40 billion in funds.
Meanwhile, a British official has indicated that oil companies pursuing a deal with BP would not encounter opposition from the government.
"Takeovers and mergers are commercial matters for companies," said a spokesman for the Department for Business, Innovation and Skills.
Anadarko Petroleum has informed BP that it is holding back payments for costs related to the Gulf of Mexico oil spill, said spokesman John Christiansen. But Anadarko, which owns a 25 percent stake in the ruptured well, is in discussions with BP to try to come to an agreement, he added.

Tuesday, July 13, 2010

Magellan Midstream buying pipeline assets from BP for $289 million

Magellan Midstream Partners LP, a refined petroleum products distributor, on July 13 agreed to acquire oil storage and pipeline assets from BP Pipelines Inc., a unit of embattled oil giant BP Plc, for $289 million. As part of the deal, the company will acquire 7.8 million barrels of crude oil storage and more than 100 miles of active petroleum pipelines from BP Pipelines in North America.
Magellan expects the deal to be immediately accretive to the partnership's distributable cash flow per unit, with the potential for additional growth in cash flow from the assets over time.
The acquisition will also provide the company with nearly 40 miles of crude oil pipelines between Houston and Texas City, Texas, varying in size between 24 and 26 inches in diameter.
"This acquisition leverages Magellan's expertise in transporting and storing petroleum products by greatly expanding our crude oil logistics infrastructure and our energy footprint in the attractive Cushing, Okla., and Houston, Texas markets," said Don Wellendorf, chief executive officer of Magellan.
The assets will facilitate Magellan's strategy of developing its existing East Houston terminal into a key distribution point for crude oil to Gulf Coast refineries by improving its connectivity within the Houston market and extending their reach to the Texas City refining region.
Analysts had expected BP to sell some of its assets to raise cash to deal with the Gulf oil spill. According to media reports, the company is in talks to sell $18 billion worth of assets to U.S. oil and gas company Apache Corp.
BP has announced a package of measures, including the creation of a $20 billion fund to fulfill certain obligations arising from its oil and gas spill in the U.S. Gulf. The oil giant so far spent more than $3.5 billion on cleanup and damages.
According to media reports, Magellan and BP were in talks regarding the pipeline sale for several months, well before the April 20 rig explosion responsible for the oil spill.

Monday, July 12, 2010

Alyeska CEO Hostler, BP appointee, retiring early under fire

JUNEAU, Alaska - Kevin Hostler, a former BP executive, is retiring in September as head of the Alyeska Pipeline Service Co., which runs the trans-Alaska pipeline.
Hostler's decision comes as two congressional subcommittees investigate Alyeska Pipeline Service Co.'s maintenance and safety records, and amid allegations that employees who expressed safety concerns were ignored or even punished.
Hostler had earlier announced plans to retire from Alyeska by the end of the year but didn't want recent reports about the company to be a distraction, company spokeswoman Michelle Egan said.
His retirement will be effective Sept. 30.
A replacement wasn't immediately named. The pipeline system owners' committee will choose his successor.
BP Pipelines (Alaska) is the largest single owner of the 800-mile TAPS line that carries oil from Alaska's North Slope to Valdez, where tankers pick it up for shipment to refineries in the lower 48. The other pipeline owners include ConocoPhillips Transportation Alaska Inc., ExxonMobil Pipeline Co., Unocal Pipeline Co. Inc. and Koch Alaska Pipeline Co. LLC. The line is independent of BP.
Recent questions have been raised stemming from an internal report that found "widespread" employee dissatisfaction with the pipeline's operation and raised serious concerns with the management culture at Alyeska, U.S. Rep. Bart Stupak said.
Stupak, a Michigan Democrat, sits on the House Energy and Commerce committee. He said staff from his Subcommittee on Oversight and Investigations met with Hostler recently to express concerns.
"Mr. Hostler's early retirement does not come as a surprise and I wish him the best in his retirement," Stupak said.
He said he expects that the group that will choose Hostler's replacement will find someone with "the character and management style to move the company forward."
Dan Lawn, a former Alaska Department of Environmental Conservation employee, has documented years of safety complaints targeted at BP and Alyeska, many of which were not corrected. In addition, he said, at least one senior BP official who came up with a list of concerns was fired a week later.
The federal Pipeline and Hazardous Materials Safety Administration has filed eight enforcement actions against Alyeska over conduct dating to 2004, alleging safety, maintenance and procedural violations, and is seeking more than $1 million in fines. The company is contesting most of the actions.
Richard Fineberg, a senior advisor on oil and gas policy to the Alaska governor in the 1980s and author of several reports on pipeline operations, said "I can also tell you that the repressive atmosphere (inside Alyeska) is as bad as anything I've seen."

Thursday, July 8, 2010

One dead, one hurt in Dixie Pipeline propane explosion in Georgia

THOMSON, Ga. - An accident on the morning of July 5 involving a propane pipeline in the McDuffie County community of Thomson killed a man, and injured his father, a county commissioner.
Commissioner Paul McCorkle was listed in fair condition in Augusta. His son, Jason McCorkle, 23, died.
A preliminary investigation indicates Paul McCorkle was operating a bulldozer on the property near 390 Stagecoach Road and accidentally struck a Dixie Pipeline liquid propane gas line.
Dixie said it was not contacted for a line locate prior to the accident.
It happened shortly before 11 a.m. near the Belle Meade Country Club.
Two homes caught fire in the explosion, which spread over several acres of land through the afternoon. The fire chief in Thomson said the propane-fueled fire was expected to continue burning for at least 24 hours.
Law enforcement officials said the father and son hit the 30-year-old Dixie Pipeline while clearing land, setting off the explosion and fire.
McDuffie Fire Chief Bruce Tanner said the Georgia Bureau of Investigation is launching an inquiry into the explosion. He estimated the McCorkles only had seconds before the liquefied propane gas ignited.
Allen said the explosion and fire destroyed the house of another family member, John McCorkle, and also started fires in nearby woods.

Wednesday, July 7, 2010

Criminal cases filed against BP under federal RICO law

According to a story in the July 5 Bloomberg Businessweek by Paul M. Barrett and Justin Blum, “It’s almost a foregone conclusion… that the federal investigation of the Gulf of Mexico oil spill will produce criminal charges.”
Prosecutors “are very likely to bring criminal charges against BP and other companies involved,” says David M. Uhlmann, a former chief of the Justice Department’s environmental crimes section who now teaches at the University of Michigan Law School, Bloomberg Businessweek reported.
Whether BP or any individuals will face felony charges - or even prison time - is a more complicated question.
In the past, the U.S. Department of Justice has usually based criminal charges in oil spill cases on violation of the Clean Water Act, under which the party responsible for the spill can be fined up to $4,300 per barrel spilled if willful negligence is proved.
However, in the case of the Deepwater Horizon explosion and related Macondo well blowout, Justice may opt to charge BP under the federal RICO statute.
One hint of what a broader indictment might look like comes from private civil-racketeering lawsuits that have been brought on behalf of property and business owners in Alabama, Louisiana, and Florida.
One of the suits, filed on June 12 in federal district court in Pensacola, Fla., accuses BP and Chief Executive Officer Tony Hayward not only of instances of pollution, but also alleges the company engaged in an illegal “enterprise” to mislead regulators over a period of years.
Included in the alleged pattern of wrongdoing was BP’s failure to improve its safety practices in response to past incidents, resulting in criminal fines, the suit says. An explosion in 2005 at BP’s Texas City refinery, which killed 15 workers, and an oil leak in 2006 from a BP pipeline in Alaska are among the past BP criminal actions cited in the suit.
Taken together with the Deepwater Horizon disaster, the Florida suit alleges, these events show that BP engaged in a scheme that violated the civil provisions of the Racketeer Influenced and Corrupt Organizations (RICO) Act.
The RICO law was enacted in 1970 to help prosecutors put Mafiosi behind bars. It has been used more broadly against corporations and high-profile individuals. It allows prosecution of people who operate or oversee an illegal enterprise, even if they did not commit the main criminal acts in question. The maximum prison term is 20 years for each count.
In the right hands, the Pensacola civil suit could evolve into something more: a criminal indictment.
“I would be amazed if the U.S. government didn’t use this as a road map to some sort of criminal case,” says attorney J. Michael Papantonio, whose firm filed the Pensacola suit.
In his suit, Papantonio asserts that filings BP made from 2000 to 2009 with the Interior Department’s Minerals Management Service misrepresented the company’s preparations for a potential deepwater disaster and dishonestly minimized risks.
Contrary to BP’s written assertions that it was capable of remedying a major oil spill, the company and its executives have conceded since the April 20 rig explosion that they weren’t prepared, the suit claims.
A separate civil racketeering suit filed in Louisiana on June 21 makes similar allegations. The one in Alabama is narrower and targets BP’s conduct in responding to damage claims since the spill.
The RICO approach could allow BP’s antagonists - in either a civil or criminal context - to argue that cost-cutting steps in 2010 contributed to the blowout that killed 11 workers and led to the environmental crisis.

Tuesday, July 6, 2010

Enbridge to spend $400 million on Wapisoo line in oil sands

CALGARY, Alta. - Enbridge Inc. said on June 28 that it plans a $400-million expansion of its Waupisoo oil sands pipeline system and is joining a carbon-capture project backed by power producers TransAlta Inc. and Capital Power Corp.
Enbridge, Canada’s No. 2 pipeline company, said producers have committed to ship another 229,000 b/d on Enbridge’s Waupisoo system, requiring a 255,000 b/d expansion of the line, which currently handles up to 350,000 barrels of oil sands crude daily.
Oil companies are again expanding operations in the oil sands region of northern Alberta, the largest oil reserve outside of the Middle East, after investment in the region dried up as commodity prices stagnated during the recession.
Suncor Energy Inc., Total SA, Imperial Oil Ltd. and others are expanding existing operations or launching new projects as oil prices firm.
The expansion of the Waupisoo system, which gathers oil from projects and delivers it to a pipeline hub near Edmonton, Alta., 236 miles south, will be done in two phases. The first 65,000 b/d tranche will be complete in the second half of 2012. Then, a 229,000 b/d expansion will be added in the second half of 2013.
The expansion firms Enbridge’s position as the largest pipeline operator in the oilsands region, gathering the oil to ship on its larger lines to the United States and Canada, and making the company a likely choice for new producers in the region.
Enbridge said increasing the size of the Waupisoo line will start adding to the company’s profits in three years.
"The Waupisoo expansion program will begin to contribute to our growth in earnings per share by 2013, and increasingly thereafter as the volumes increase to the full commitment levels," Pat Daniel, Enbridge’s chief executive, said in a statement.

Friday, July 2, 2010

Keystone Pipeline starts deliveries from Canada’s oil sands to Illinois

CALGARY, Alta. – TransCanada Corp. on June 30 announced that linefill of the first phase of the US$12 billion Keystone Pipeline has been completed and commercial deliveries of crude oil to U.S. Midwest markets at Wood River and Patoka, Ill., began on June 30.
"This represents a significant milestone in the overall development of the Keystone Pipeline project," says Hal Kvisle, TransCanada president and chief executive officer. "Looking forward, Keystone will play an important role in linking a secure and growing supply of Canadian crude oil with the largest refining markets in the United States, significantly improving North American energy security.
"The pipeline will also continue to have a significant impact on the North American economy through the thousands of manufacturing and construction jobs it is creating and the millions of dollars in tax revenues that will be paid annually to state and local authorities," added Kvisle. "Recently, an independent economic study found that the Keystone Gulf Coast expansion alone would inject more than US$20 billion into the U.S. economy and create 119,000 person-years of employment.
"We take pride in our long-standing reputation as a safe pipeline operator and socially responsible company," added Kvisle. "Construction and operation of the Keystone Pipeline system will continue to meet or exceed world-class safety and environmental standards. We are committed to being a reliable and safe operator that treats all stakeholders with honesty and respect."
In Canada, the first phase of Keystone involved the conversion of approximately 537 miles of existing natural gas pipeline in Saskatchewan and Manitoba to crude oil pipeline service. It also included building 232 miles of new 30-inch diameter pipeline, 16 pump stations and the Keystone Hardisty Terminal.
The U.S. portion of the Keystone Pipeline included laying 1,084 miles of new 30-inch pipeline in North Dakota, South Dakota, Nebraska, Kansas, Missouri and Illinois. It also involved construction of 23 pump stations and delivery facilities at Wood River and Patoka, Ill.
TransCanada has begun construction of the second phase of Keystone. It includes a 298-mile extension from Steele City, Neb., to Cushing, Okla. and 11 new pump stations which will increase the capacity of the pipeline from 435,000 b/d to 591,000 b/d. The second phase of Keystone is expected to be in-service in the first quarter of 2011.
In July 2008, TransCanada announced plans to expand the Keystone crude oil pipeline system and provide additional capacity of 500,000 b/d from Western Canada directly to the U.S. Gulf Coast.
TransCanada received approval in March 2010 from both the National Energy Board in Canada and the South Dakota Public Utility Commission for the proposed Gulf Coast Expansion project. TransCanada expects to begin construction of the Gulf Coast expansion in the first quarter of 2011, pending the receipt of all regulatory approvals.
The Keystone Gulf Coast Expansion project involves construction of a 1,661-mile, 36-inch crude oil pipeline that will begin at Hardisty, Alta., and extend southeast through Saskatchewan, Montana, South Dakota and Nebraska. It would incorporate the portion of the Keystone Pipeline that is currently under construction through Kansas to Cushing, Okla. The pipeline will then continue on through Oklahoma and Texas to a delivery point near existing terminals on the Gulf Coast, to serve the Port Arthur, Texas, marketplace.
When completed, the expansion project will increase the commercial capacity of the Keystone Pipeline system to approximately 1.1 million b/d.
The US$12 billion Keystone Pipeline system is 83 per cent subscribed with long-term, binding contracts that include commitments of 910,000 b/d for an average term of approximately 18 years.

Thursday, July 1, 2010

AGL-owned gas co. in Virginia cited for multiple pipeline violations

RICHMOND, Va. - Virginia Natural Gas has agreed to pay as much as $1.8 million in penalties to settle state regulators' allegations of multiple pipeline safety violations.
In two settlements with the State Corporation Commission covering more than 40 violations, the company didn't admit or deny the allegations. It agreed to make various changes in its practices and spend $15 million for pipeline-replacement projects.
Under the settlement, VNG cannot recoup the cost of the penalties, repairs or operational changes from rate-payers. The company, based in Norfolk, provides natural gas service to about 271,000 customers in Hampton Roads.
The violations cite failures of the company's workers to follow proper procedures while installing, repairing or conducting maintenance on or around its pipelines. Inspectors for the commission's Division of Utility and Railroad Safety found improper welding methods, the installation of a defective service line and a VNG contractor smoking while working in an excavation near the gas system, according to one settlement. It also cited the company's failure to keep required records or manuals.
One settlement focused on VNG's lack of necessary measures to ensure that underwater pipelines are protected against corrosion. The company completed construction last year of an underwater link between its Peninsula and South Hampton Roads systems. In August, according to the settlements, sections of that pipeline floated from their proper position and had to be fixed.
The instances occurred across VNG's system between 2006 and 2009, said Ken Schrad, a commission spokesman.
No one was harmed and no service was affected as a result of the violations, said Tami Gerke, a spokeswoman for AGL Resources Inc., the Atlanta company that owns VNG.
"Our industry records show no major issues with our pipelines," Gerke wrote in an e-mail response to questions. "Due to regular inspections such as the one completed by the VSCC and audits done regularly by VNG, our customers can be assured that any issues are addressed immediately."
Under the settlements, the company will pay $1 million up front. The commission could waive part or all of the remaining $800,000, depending on the company's compliance with the required remediation, Schrad said.
That includes the hiring of an outside consultant to evaluate the corrosion-control measures. The company must complete most changes by Aug. 15, 2011.