Tuesday, August 31, 2010

El Paso opens Pandora’s Box in deal with environmental groups

VERNAL, Utah - Uintah County is the latest government unit to join in opposing a $20 million agreement between energy company El Paso Corp. and two conservation groups.
“There’s nothing secret about it, it’s an agreement between two private parties,” said Jon Marvel, executive director of Western Watersheds Project conservation group.
The other group, the Oregon Natural Desert Association, is aligned with Marvel’s group in the effort to preserve wildlife habitat along the pipeline corridor.
Marvel told the Vernal Express that the partnership evolved from El Paso’s 680-mile Ruby Pipeline Project, which is building the Ruby natural gas pipeline from Wyoming to Oregon.
Uintah County has joined with a dozen counties from Wyoming, Utah, Nevada and Oregon in opposition to the conservation agreement. The group calls themselves the Multi-County Pipeline Coalition and commissioners question the wisdom of paying-off conservation groups in order to do business on federal lands.
“We oppose the precedent of paying private groups not to sue,” said Uintah County Commissioner Mike McKee, “not the pipeline itself.”
“The money will be used by the Sagebrush Habitat Conservation Fund to mitigate the negative effects of construction on 14,000 acres of federal land,” said Marvel.
But, county commissioners allege that the agreement is really a concerted effort to eliminate livestock grazing on public lands.
At issue is the voluntary relinquishment of grazing permits by stockmen to develop wildlife conservation easements in the path of the pipeline.
“It’s not a buyout to get rid of grazing on public land, but, if it was - it wouldn’t be a bad thing,” Marvel said.
His comments quickly raise the ire of stockmen who use public lands.
Opponents of the agreement, who met in Salt Lake City on Aug. 9, dispute Marvel’s comments, saying the agreement presents a bad precedent.
“We’re against converting livestock grazing units to wildlife (conservation easements),” said McKee.

Monday, August 30, 2010

API belatedly decides to make many of its safety standards public

WASHINGTON - The American Petroleum Institute (API) announced on Aug. 23 that it is making publicly available online for the first time more than 160 safety standards.
API has been criticized for controlling distribution of the standards. The standards were not easily accessible to the public, with copies available at the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) and API in Washington, but were not available online where an interested citizen could access them.
The move comes as PHMSA regulators are being criticized for adopting as federal regulations many standards written by the industry.
API has admitted that all or part of 27 standards on pipeline safety that were later adopted by the Pipeline and Hazardous Materials Safety Administration (PHMSA) and its predecessors were in fact written by industry panels.
The now-defunct Minerals Management Service was also dependent on the oil and natural gas industry for developing standards.
In a statement announcing that the standards would be made available online, API President Jack Gerard said: “As API standards have been referenced in the federal register in rulemaking procedures, having copies available for public review in only a few locations did not meet our industry's goal of transparency. The industry's standards represent our commitment to
safe and successful operations and practices. Wider access through
online viewing platforms is part of our public commitment.”
The 160 standards that will be posted online - about one-third of the
total body of standards written by API - will include all regulations that
have been adopted by reference in federal regulations and all standards that relate to safety, API says.

Friday, August 27, 2010

U.S. energy consumption declined in 2009

The estimated U.S. energy use in 2009 equaled 94.6 quadrillion BTUs ("quads"), down from 99.2 quadrillion BTUs in 2008.
A BTU or British Thermal Unit is a unit of measurement for energy, and is equivalent to about 1.055 kilojoules, or about the amount of energy needed to raise the temperature of one pound of water by one degree Fahrenheit.
For comparison, one kilowatt-hour (kWh) equals about 3,400 BTUs, with a typical American household consuming some 11,000 kWh per year, according to the U.S. Department of Energy.
Energy use in the residential, commercial, industrial and transportation arenas all declined by 0.22, 0.09, 2.16 and 0.88 quads, respectively.
Wind power increased dramatically in 2009 to 0.70 quads of primary energy compared with 0.51 in 2008. Most of the wind energy is tied directly to electricity generation and thus helps decrease the use of coal for electricity production.

Thursday, August 26, 2010

Enbridge announces next Bakken Pipeline expansion program

HOUSTON, Texas, and CALGARY, Alta. - Enbridge Energy Partners L.P. (EEP) and Enbridge Income Fund (ENF) announced on Aug. 24 that they are proceeding with a joint project to further expand crude oil pipeline capacity to accommodate growing production from the Bakken and Three Forks formations located in Montana, North Dakota, Manitoba and Saskatchewan. EEP and ENF are affiliates of Enbridge Inc.
The Bakken Expansion Program will increase takeaway capacity from the Bakken play by 145,000 b/d, which can be readily expanded to 325,000 b/d at low cost.
"This latest in a series of expansions will provide shippers with favorable tolls, diverse market alternatives and batch quality maintenance for this high quality light sweet crude. Further, the Bakken and Three Forks formations represent an area of tremendous opportunity for both Enbridge Energy Partners and Enbridge Income Fund," said Stephen J. Wuori, executive vice president, liquids pipelines, Enbridge Inc. "We anticipate substantial further production growth based on discussions with producers, and our own regional supply analysis. We are well positioned to provide shippers with attractive transportation options based on our extensive existing operations in the region."
Enbridge's Bakken Expansion Program will involve U.S. projects that will be undertaken by EEP at a cost of approximately US$370 million; and Canadian projects which will be undertaken by ENF at a cost of approximately Cdn$190 million.

Wednesday, August 25, 2010

Koch could be spoiler in sale of Colonial stock to Korea

ALPHARETTA, Ga. – If you believe the media coverage, Chevron’s sale of its 23.44 percent interest in Colonial Pipeline Co. for $847 million to the National Pension Service, South Korea’s biggest investor, is a done deal.
The Korea Economic Daily reported on Aug. 23. that the pension fund was picked as a preferred bidder to buy Chevron Corp.’s 23.44 percent interest in Colonial Pipeline Co. for about one trillion won.
What the coverage did not note is that existing stockholders have right of first refusal in any sale of Colonial stock.
According to its Web site, Colonial is currently owned as follows:
23.44% - Chevron Midstream Investments
16.55% - ConocoPhillips Pipe Line Co.
15.80% - IFM(US) Colonial Pipeline 2
28.09% - Koch Capital Investments Co., LLC
16.12% - Shell Pipeline Co. LP
Before Chevron could sell its interest to National Pension Service, the other stockholders would have to waive their right of first refusal.
Of the existing stockholders, the one with the most to gain by exercising its right would be Koch Capital Investments, a subsidiary of Koch Industries. By adding 23.44 percent to its existing 28.09 percent interest, Koch would end up with a 51.53 percent controlling interest in Colonial.
Koch Industries already owns Atlanta-based Georgia-Pacific.

Tuesday, August 24, 2010

Korean pension fund offers $847 million for 23.44 percent of Colonial

SEOUL, Korea - National Pension Service, South Korea’s biggest investor, said it’s in talks to buy into a U.S. oil pipeline to diversify its portfolio.
The Korea Economic Daily reported that the pension fund was picked as a preferred bidder to buy Chevron Corp.’s 23.44 percent interest in Colonial Pipeline Co. for about 1 trillion won ($847 million).
National Pension denied the company was picked as the preferred bidder. Colonial’s other stockholders have rights of first refusal whenever a block of stock is on the market. Colonial stockholders would be polled one by one to ask if they wished to buy the block. If none of the other stockholders was interested, Chevron could sell the block to National Pension Service.
South Korea has said pension and sovereign wealth funds may invest in overseas energy assets as Asia’s fourth-largest crude importer competes for natural resources with China and India.
Chevron Midstream Investments holds Chevron's 23.44 percent stake in Colonial, which transports fuels from refineries in Texas, Louisiana, Mississippi and Alabama to marketing terminals, according to Colonial’s website.
National Pension, which had 295 trillion won in assets as of June, is investing in overseas stocks and real-estate from Australia to the U.K. to diversify from domestic fixed-income holdings. The fund plans to boost its overseas investments to at least 20 percent of assets by 2015, from about 11 percent now.

Monday, August 23, 2010

Enbridge hydrostatically testing six sections of failed pipeline

MARSHALL, Mich. - Enbridge Executive Vice President Steve Wuori said on Aug. 19 that the company was preparing to hydrostatically test six sections of the oil pipeline that failed in Marshall in July.
The ruptured spilled up to one million gallons of oil into the Kalamazoo River watershed.
Wuori said that U.S. government regulators haven't said when oil can resume flowing in the pipeline, which runs from Griffith, Ind., to Sarnia, Ontario.
He says the Canadian company will conduct high-pressure hydrostatic tests in six sections that inspections have shown might have similar weaknesses to the segment that failed in July.
Preparations for the hydrostatic testing were expected to extend through the Aug. 20 weekend.
Preparations include excavating around spots on the 190,000 b/d pipeline that were shown in previous tests to have anomalies similar to the rupture location near Marshall, Mich.
In hydrostatic testing, water is pumped into a section of the line about a dozen miles long. The water is then pressured up and the pressure held for a set period of time to test the integrity of the section. The pipe passes the test if no further blowouts occur. The downside is that the hydrotest can weaken the pipe, making it vulnerable to future accidents.

Friday, August 20, 2010

EPA plays ‘environmental justice’ card against Keystone XL

HOUSTON, Texas - A proposed pipeline that would ferry Canadian crude oil to Texas refineries has run afoul of the recharged federal push to protect minorities and the poor from an overburden of pollution.
The U.S. Environmental Protection Agency says the plan for construction of the Keystone XL Pipeline doesn't evaluate the potential health impacts on Port Arthur, Texas, where one fork of the pipeline will end.
The criticism reflects new priorities at the EPA under administrator Lisa Jackson, who has intensified its quest for “environmental justice,” a movement rooted in the idea that minorities and the poor bear an unfair share of society's most toxic institutions.

TransCanada tells Nebraska landowners to sign or face condemnation

LINCOLN, Neb. - TransCanada has sent letters to Nebraska landowners along the proposed route of the Keystone XL petroleum pipeline urging them to sign easements in the next 30 days or face land condemnation proceedings.
A spokesman for TransCanada acknowledged on Aug. 13 that the company has sent letters to Nebraska landowners along the proposed route of the Keystone XL petroleum pipeline urging them to sign easements in the next 30 days or face land condemnation proceedings.
Jeff Rauh said the letters went out at a time when the pipeline builder is trying to position itself to proceed quickly with the $7 billion construction phase as soon as the federal permitting process is complete.
"It's important to be able to start to get those land rights," Rauh said, "so that we're able to move forward in a timely manner once project approval is given."
U.S. Sen. Mike Johanns raised concerns about TransCanada's tactics last week.
"Landowners tell me that TransCanada has set arbitrary deadlines for acceptance of payment offers," Johanns said in a prepared statement, "and threatened the use of eminent domain without so much as an approved permit to move forward with the project."
He called on TransCanada to "immediately lift any deadlines imposed on Nebraska landowners and to negotiate in good faith."

Thursday, August 19, 2010

Enbridge sees Michigan oil spill exposure at $51.4 million or below

CALGARY, Alta. – Enbridge Energy Partners LP says it might have to pay as much as $400 million in costs related to its pipeline rupture and dilbit (diluted bitumen) spill near Marshall, Mich.
The estimated costs cover the emergency response, pipeline fixes and environmental remediation, the company said, but not any fines associated with the spill.
However, Enbridge Partners disclosed on Aug. 17 that its costs would be only $35 to $45 million after its insurance claims are paid.
Parent Enbridge Inc., which owns 27 percent of Enbridge Energy Partners, said it expects its share of the costs of the pipeline rupture and oil spill to be only about $6.4 million after insurance claims are paid. The figures were released on Aug. 18 by Gina Jordan, an Enbridge Inc. spokeswoman in Calgary.
That would put the combined exposure of Enbridge Partners and Enbridge Inc. in the neighborhood of $41.4 to $51.4 million.
Enbridge Partners was still waiting on Aug. 19 for U.S. regulators to respond to its reworked plan to restart Line 6B, which has been repaired, Jordan said.
Neither the Enbridge Inc. nor Enbridge Energy Partners LP estimates of exposure include possible civil or criminal fines which are usually excluded from insurance coverage. Under the U.S. Clean Water Act, if negligence is proved, Enbridge could be fined up to $4,300 per barrel spilled. Given the 19,500 barrels estimated to have been spilled in the incident, that alone could add up to an additional $83.9 million.

Wednesday, August 18, 2010

Montana PSC grants Keystone XL qualified eminent domain powers

HELENA, Mont. - State regulators have granted condemnation powers to the proposed Keystone XL oil pipeline across eastern Montana, but not until its developer agreed Montana has power to regulate local oil producers' access to the line.
Now, eastern Montana oil producers who want to use the pipeline to ship their product are comfortable that the state can regulate the terms of "interconnecting" with the pipeline, one of their attorneys said on Aug. 10.
Continental Resources Inc. "believes that the Keystone Pipeline has recognized its obligation to comply with state law, including matters of interconnection," said John Alke, a Helena attorney representing Continental, one of the largest oil producers in the state.
If the pipeline is built, oil producers in eastern Montana and North Dakota plan to negotiate with Keystone and its owner, Canadian energy giant TransCanada, to ship their oil at interconnection sites near their wells.
Montana Gov. Brian Schweitzer and Gov. John Hoeven of North Dakota have said local producers currently must sell crude oil to refiners at a discounted price, because of a lack of pipeline capacity in the production area along the Montana-North Dakota border.
If negotiations on interconnection break down, producers say Montana law gives the state Public Service Commission authority to regulate interconnection terms for pipelines that cross the state.

Monday, August 16, 2010

Corrpro gets $5.3 million for TransCanada cathodic protection work

ST. LOUIS, Mo. - Insituform Technologies, Inc. on Aug. 5 announced that its subsidiary, Corrpro Canada, Inc. has received work orders with a combined value of US$5.3 million from TransCanada Corp. as part of its three-year term contract for cathodic protection.
Corrpro will supply and install cathodic protection systems for existing TransCanada pipelines across Canada. The majority of the materials will be manufactured in Corrpro's production facility located in Edmonton, Alta,. It is expected that local crews from the nine Corrpro offices across Canada will be utilized for geographic efficiency.
Corrpro's business relationships and work programs with TransCanada have been ongoing for over 10 years with an estimated combined value of approximately $25 million.
Cathodic protection mitigates the adverse effects due to soil side external corrosion.
Corrpro expects to complete the work by November 2010.

Friday, August 13, 2010

Oklahoma woman accused of using Gulf oil spill to defraud investors

DUNCAN, Okla. - A Duncan woman has been accused of used investors' money for personal expenses, including gambling, a state agency claims in documents filed in Oklahoma County District Court.
The woman is accused of defrauding investors into buying unregistered stock in a company she falsely claims has contracts to clean up Gulf Coast oil spills, according to the Oklahoma Securities Department.
"We absolutely deny that any investor money was used for any gambling purposes,” counters Miller's attorney, Bob Wyatt. "It's being used for office and business expenses and the promotion of the business... routine office expenses.”
Miller, 49, as president and chief executive officer of MBS Inspection Corp. in Duncan, collected money from investors under the pretense the company had contracts to clean up oil spills and inspect pipelines, the Securities Department alleges.
"As far as it appears to me now, it looks like $200,000,” said Irving Faught, administrator of the Oklahoma Securities Department. "There's no way to know that until you get in and develop the facts in court.”
Miller promised 10 investors stock certificates and claimed the stock would be publicly traded in the future. Miller never delivered the stock certificates and instead used the money for personal expenses, such as gambling, Faught said.

Thursday, August 12, 2010

Enbridge repeatedly restarted Michigan pipeline after it ruptured

TRAVERSE CITY, Mich. - A member of Congress said on Aug. 4 that Enbridge Inc. violated federal regulations by dragging its feet on reporting a pipeline rupture that poured up to a million gallons of oil into a Michigan waterway, although the company alleges it met legal requirements.
Rep. Mark Schauer, a Michigan Democrat, said he was convinced, based on a preliminary NTSB investigation, that the massive leak began the night of July 25, although the Canadian company insists it didn't confirm the spill was occurring until about 11:30 a.m. the next morning.
Schauer said Enbridge began laying boom material to contain the oil, but then took two more hours to file a report with the National Response Center. Federal rules require pipeline operators to report releases of more than five gallons of hazardous liquids to the NRC "at the earliest practicable moment" following their discovery.
The National Transportation Safety Board believes the rupture may have occurred shortly before 6 p.m. on July 25, when Enbridge shut down the pipeline for maintenance, Schauer said. Alarms at Enbridge's control center signaled a drop in pressure then. Within hours, people in the Marshall, Mich., area were reporting strong gas odors to 911, increasing the likelihood the spill actually occurred on July 25, rather than on July 26 as contended by Enbridge.
Enbridge Inc. CEO Patrick Daniel said the company was "well within federal regulations with regard to reporting requirements."
Enbridge restarted the pipeline at 4:26 a.m. on July 26 and repeatedly turned it on and off for the next several hours because of spikes in readings, Schauer said. Each time the line was restarted, more oil would spew from the five-foot-long rupture or “smile” in the compromised pipeline. That would explain the exceptionally large volume spilled.
A company technician visited the site at 9:49 a.m. on July 26 but found nothing amiss, he said. Enbridge confirmed the leak only after being notified by Consumers Energy at 11:16 a.m., Schauer said.

Newsbriefs about energy pipeline profits, dividends and finance

EV Energy Partners, L.P. (NASDAQ: EVEP) on July 27 announced a cash distribution attributable to the second quarter of 2010 of $0.757 per unit for all of its outstanding units. The distribution will be payable on Aug. 13to unit holders of record at the close of business on Aug. 6.
Sempra Energy (NYSE: SRE) on Aug. 3 reported second-quarter 2010 earnings of $222 million, or $0.89 per diluted share, up from earnings of $198 million, or $0.80 per diluted share, in 2009.
Second-quarter 2009 earnings included a charge of $64 million, or $0.26 per diluted share, for an asset write-off at Sempra Pipelines & Storage.
Tortoise Energy Capital Corp. (NYSE: TYY) on Aug. 9 declared the company's third quarter 2010 distribution of $0.40 per share, unchanged from the prior quarter. The distribution will be paid Sept. 1 to stockholders of record on Aug. 23.
Tortoise North American Energy Corp. (NYSE: TYN) on Aug. 9 declared the company's third quarter 2010 distribution of $0.37 per share, which is unchanged from its prior quarter. The distribution will be paid on Sept. 1 to stockholders of record on Aug. 23.

Wednesday, August 11, 2010

Environmental group threatens Enbridge with $100 million lawsuit

Enbridge Inc. could be headed to court over its pipeline oil spill in Michigan and face millions of dollars in fines if it's found to have violated a federal law, warns an environmental group that's threatening to sue.
The Great Lakes Environmental Law Center, a Michigan-based group, has issued a notice of intent to file a citizen suit against the Calgary-based company. The group says it will sue for violations of the U.S. Clean Water Act resulting from the burst pipeline that has spilled as much as a million gallons of dilbit (diluted bitumen) into Talmadge Creek and the Kalamazoo River.
On its blog, the group says the legal action will "help insure that Enbridge is held accountable for their violations of the Clean Water Act."
In a letter to the company on Aug. 2, the group also states that based on
the estimated size of the spill, "Enbridge could face fines of over $26 million."
"And if Enbridge is found to be grossly negligent in its maintenance and operation of the pipeline (especially in light of the numerous warnings issued by federal regulators regarding corrosion of the pipeline), the company could face $100 million in fines," the law center said.
The Clean Water Act requires a formal 60-day notice prior to commencement of a citizen suit.

Tuesday, August 10, 2010

TransCanada drops plea to operate Keystone XL at higher pressure

CALGARY, Alta. – TransCanada, the Canadian company that wants to build the Keystone XL oil pipeline to transport tar sands bitumen from Canada to the U.S. Gulf of Mexico refinery complex, has dropped its request to run the pipeline at a higher pressure level, and has agreed to follow U.S. safety standards for the project.
"TransCanada has listened to the concerns of the public and various political leaders, and we made a decision to withdraw the special permit application," said Robert Jones, vice president of TransCanada's Keystone pipelines.
In a statement released on Aug. 5, TransCanada officials said, “The company recognizes it needs to take more steps to assure the public and stakeholders that the parameters of the special permit would result in a safer pipeline.”
The U.S. State Department is currently reviewing TransCanada's proposal for the Keystone XL pipeline. Serious questions about Keystone XL have been raised in the wake of the BP Macondo well blowout in the U.S. Gulf, a Chevron pipeline accident in Salt Lake City and a massive Enbridge Energy Partners pipeline spill in Michigan.
In July, the State Department added 90 days to the review process to allow other federal agencies more time to comment – and to delay approval past the November elections.
TransCanada officials withdrew the company's application to the Pipelines and Hazardous Materials Safety Administration (PHMSA) for a special permit on Aug. 5, and said they would operate the Keystone XL pipeline at normal pressure levels as prescribed in U.S. regulations.
The special permit would have allowed TransCanada to operate the pipeline at a pressure of 1,440 pounds per square inch, which Jones said is in line with what Canadian regulators allow. TransCanada will now plan to follow the existing U.S. standard for oil pipeline pressure, which is 1,308 pounds per square inch.

Monday, August 9, 2010

Refiners scramble for crude as ruptured Enbridge line remains down

CALGARY, Alta. - Refineries in the U.S. upper Midwest and southern Canada were scrambling on Aug. 4 to secure alternative crude supplies as Enbridge Inc. was reworking some of its cleanup plans for the company's Line 6B rupture in Michigan.
The pipeline, which is operated by affiliate Enbridge Pipeline Partners, LP, ruptured on July 25, spilling an estimated 19,500 barrels of dilbit (tar sands bitumen plus diluent) into the Kalamazoo River. That cut 190,000 b/d of supply to the refineries. Nine days after the rupture, Enbridge still had no estimate for a restart time.
The U.S. Environmental Protection Agency approved many of Enbridge's work plans for health and safety, pipeline repair and waste treatment and disposal, but rejected its proposed sampling and analysis strategy for a second time.
Susan Hedman, the EPA's regional administrator, gave no specific reasons for send it back, saying there were numerous aspects of the complex plan that required attention.
Line 6B, serves refineries in Ohio, Michigan, Pennsylvania and southern Ontario, which combined process more than 700,000 b/d.
Refinery runs has been hampered only minimally so far, but all have said they had been forced to rearrange their plans to secure feedstock from other sources.

Friday, August 6, 2010

Boardwalk Partners announces 168 percent increase in net income

Boardwalk Pipeline Partners, LP (NYSE: BWP) on July 26 announced its results for the second quarter ended June 30, which included the following items:
- Operating revenues of $256.7 million for the quarter and $557.2 million for the six months ended June 30, 2010, a 27 percent and 31 percent increase from $201.4 million and $424.8 million in the comparable 2009 periods;
- Net income of $54.4 million for the quarter and $144.7 million for the six months ended June 30, 2010, a 168 percent and 100 percent increase from $20.3 million and $72.3 million in the comparable 2009 periods; and
- Earnings before interest, taxes, depreciation and amortization (EBITDA) of $145.7 million for the quarter and $326.6 million for the six months ended June 30, 2010, a 39 percent and 42 percent increase from $104.8 million and $230.0 million in the comparable 2009 periods.
- Distributable cash flow of $109.8 million for the quarter and $243.7 million for the six months ended June 30, a 60 percent and 63 percent increase from $68.7 million and $149.7 million in the comparable 2009 periods.
Operating results for the second quarter and six months were primarily driven by:
- Higher gas transportation revenues from expansion projects, partly offset by lower interruptible and short-term firm transportation revenues due to reduced price spreads between locations on the pipeline systems. The 2009 gas transportation revenues, excluding fuel, from expansion projects were lower than expected due to operating those pipelines at reduced pressures and temporary shutdowns following the discovery and remediation of anomalies in certain joints of pipe;
- Higher operating costs and expenses due to higher depreciation and property taxes resulting from an increase in asset base due to expansion assets being placed into service and higher operations and maintenance expense due to increased maintenance activities; and
- Higher interest expense as a result of increased debt levels in 2010. In addition, interest expense for the six months ended June 30, 2010, was higher due to lower capitalized interest associated with expansion projects being placed into service.

Thursday, August 5, 2010

NTSB validates Enbridge account of oil spill in Michigan

DETROIT, Mich. - Preliminary investigations by the National Transportation Safety Board into Enbridge Energy Co. Inc.'s response to the rupture of one of its oil pipelines last week corroborate key components of the company's timeline of events.
Since the rupture of the line on either July 25 or July 26, the Calgary-based company has faced accusations that one of its employees was on the scene more than 12 hours before any action was taken. But officials with the NTSB said on Aug. 2 that their investigation showed none of the company's workers were there that evening.
Investigators also have established a preliminary timeline for the events as follows:
• 5:56 p.m. Sunday, July 25 - Enbridge controller at a remote location shuts down the flow in line 6b for regular maintenance to follow.
• 5:58 p.m. July 25 - Enbridge receives a decreased pressure alarm from the pipe, which could have been a natural result of the shutdown – or could have indicated a massive rupture.
• 9:25 p.m. July 25 - The local 911 center serving Marshall, Mich., receives its first complaint about the smell of gas in the spill area and firefighters are dispatched. They are looking for a natural gas leak, but are unable to find the smell's source.
• 11:15 a.m. Monday, July 26 - Enbridge's control center receives its first notification of a potential spill problem. Fifteen minutes later, the company's regional manager notifies workers in the company’s Marshall maintenance office.
• 11:45 a.m. July 26 - Enbridge workers begin deploying boom in an effort to contain the flow of oil at the spill site.
"This information is preliminary ... the best information we have today after six days of interviews," said Matt Nicholson, NTSB's lead investigator.
Enbridge faces the possibility of up to $100 million in penalties from a possible lawsuit.

Wednesday, August 4, 2010

Alyeska completes report on spill causes but says it’s confidential

JUNEAU - Alyeska Pipeline Service Co., the operator of the 800-mile trans-Alaska pipeline system, said on July 28 that an internal company review found that power failure and lack of "situational awareness" contributed to an oil spill in May.
Michelle Egan, a spokeswoman for Alyeska, said the company isn't releasing the report, “wanting to ensure worker privacy and a candid flow of communication.” The report, she said, is intended to be an internal working document, to help identify any shortcomings or areas in which the company can improve.
Egan said that lessons learned, including a need for greater situational awareness, are being put into practice during scheduled maintenance shutdowns of the line this summer.
In late May, the TAPS line was idled for nearly 80 hours, after Alyeska
said a power failure during a planned shutdown caused normally closed
valves to open, leading to an overflow of oil from a storage tank to
a containment area.
Estimates of the oil spill ranged from about 4,500 barrels to around
5,000 barrels.
Egan said the review deemed the power failure the "number one root cause." But she said another big issue was that workers were so focused on restoring power, they "didn't have the situational awareness to anticipate the tank filling and overflowing."
With power down, the operations center in Anchorage couldn't see what was happening at the affected pump station - and provide a needed backup to workers focused on restoring power, she said.

Tuesday, August 3, 2010

PHMSA issues Corrective Action Order to Enbridge in Michigan spill

DETROIT, Mich. - U.S. regulators have ordered Canada's Enbridge (NYSE: ENB) to prepare a safety and repair plan for a failed oil pipeline in Michigan after warning in January the company appeared to be in violation of safety standards because it was not monitoring corrosion in the 41-year-old-pipe.
The order from the U.S. Department of Transportation was sent on July 28 and raises the stakes in an oil spill that sent some 19,500 barrels of crude into a Michigan river.
Separately, the Environmental Protection Agency said on July 29 that the spilled oil did not pose a threat to the Great Lakes since the spill appeared to be contained about 50 miles inland from Lake Michigan by work crews with booms.
In its safety order, regulators told Enbridge that it will have to take a number of precautionary steps before the 286-mile pipeline carrying oil from northern Indiana to Sarnia, Ontario, can be restarted.
Those steps include digging up 100 feet of the failed pipeline in the oil-clogged marshes near Marshall, Mich., submitting a safety plan for its renewed operation and holding pressure to 80 percent of capacity after a restart.
At its capacity, the pipeline flows at a rate of 190,000 b/d.
Enbridge will also have to tell the government regulators how it will monitor and test the pipeline in the future to avoid accidents, and detail every failure along its span for the past two decades.
In January, the Department of Transportation's pipeline regulatory arm had warned Enbridge that it appeared to be in "probable violation" of safety regulations.
It said then that inspectors found that the company had discontinued monitoring corrosion in the pipeline in 2007, and was only in the planning stages of implementing a new method of checking the pipeline using an electrical imaging technology.

Monday, August 2, 2010

Enbridge has history of citations for safety violations, oil spills

WASHINGTON – The Enbridge Energy Partners LP subsidiary of Calgary-based Enbridge Inc. involved in a massive crude oil spill in Michigan is among various Enbridge companies with questionable safety records.
Enbridge or its affiliates have been cited for 30 enforcement actions since 2002 by the Pipeline and Hazardous Materials Safety Administration (PHMSA), the U.S. Department of Transportation's regulatory arm.
In a warning letter sent Jan. 21, the agency told the company it may have violated safety codes by improperly monitoring corrosion in the pipeline responsible for the massive Michigan spill on July 25-26 in Talmadge Creek, a waterway in Calhoun County's Marshall Township that flows into the Kalamazoo River.
A May 2010 report by the Polaris Institute, drawing on government and Enbridge data, identified 49 “significant incidents” on the company’s pipelines between 1999 and 2009. The accidents, in total, resulted in three worker deaths, 26,000 barrels (more than one million gallons) of oil and other materials spilled, and more than $30 million in property damage.
Between 1999 and 2008, according to the Polaris Institute, Enbridge recorded 610 spills in the U.S. and Canada that released 132,000 barrels of hydrocarbons into farms, wetlands and waterways on the continent. According to the Polaris Institute, this volume of crude "amounts to approximately half of the oil that spilled from the oil tanker the Exxon Valdez after it struck a rock in Prince William Sound, Alaska in 1988."
Minnesota was the state with the largest number of these incident (18), including a 2002 spill that leaked more than 250,000 gallons of oil into a marsh near the town of Cohasset, previously the company’s largest U.S. spill. Eleven of the 57 significant oil pipeline spills in Minnesota since 2002 were the fault of Enbridge.
Among the most serious accidents, Enbridge was cited when two contractor employees were killed while repairing an Enbridge crude line in Minnesota.
Between 1999 and 2008, Enbridge acknowledges in it own Corporate Responsibility Report, there were 610 spills on the company’s pipeline network, releasing 5.5 million gallons of oil and gas into the environment.
The most recent accident in Michigan involves about a million gallons of crude oil spilled into Michigan’s Kalamazoo River following rupture of the company’s No. 6B mainline from the Chicago area to Sarnia, Ontario.
According to U.S. Department of Transportation data, around 8,000 gross barrels of oil were spilled by Enbridge since 2002. Property damage for all 57 spills statewide surpasses $36 million.
Enbridge Inc. and its subsidiaries have been cited several times in recent years for violations in the Great Lakes region.
Houston-based Enbridge Energy Partners LP and Enbridge (U.S.) Inc. operate Enbridge liquids pipelines in the Great Lakes region. Assets include the Lakehead System, Midcontinent System and North Dakota System. The pipeline involved in the Michigan rupture is part of the Lakehead System. Total deliveries on the Lakehead System, according to the Enbridge Partners Web site, averaged 1.62 million b/d in 2008, meeting approximately 72 percent of Minnesota refinery capacity; 64 percent of the greater Chicago area; and 68 percent of Ontario's refinery demand.
Houston-based Enbridge Energy Partners spilled almost 19,000 gallons of crude oil onto Wisconsin's Nemadji River in 2003. Another 189,000 gallons of oil spilled at the company's terminal two miles from Lake Superior, though most was contained.
In 2007, two spills released about 200,000 gallons of crude in northern Wisconsin as Enbridge was expanding a 320-mile pipeline. The company also was accused of violating Wisconsin permits designed to protect water quality during work in and around wetlands, rivers and streams, the Wisconsin Department of Natural Resources said. The violations came during construction of a 321-mile, $2 billion oil pipeline across that state. Enbridge agreed to pay $1.1 million in 2009.
The Michigan leak came from a 30-inch pipeline, which was built in 1969 and carries about eight million gallons of oil daily from Griffith, Ind., to Sarnia, Ontario.