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Offshore Firm Fined for Operating Unsafe Pipe

October 6, 2008
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A California-based oil and natural gas company was fined $450,000 and sentenced to a five-year probationary period after pleading guilty to one felony count of operating a pipeline offshore Southern California that the Interior Department previously determined was unfit for service, federal authorities said last Monday.

U.S. District Court Judge J. Spencer Letts for the Central District of California imposed the sentence on Pacific Operators Offshore Inc. of Santa Barbara, CA, for violating the Outer Continental Shelf Lands Act. The court's action was the culmination of a multi-year investigation by the Interior Department and its Office of Inspector General (OIG).

Pacific Operators Offshore pleaded guilty to using the gas lift line (GLL) after Interior's Minerals Management Service (MMS) ordered it out of service because it posed a risk for release of gas into the environment. The GLL extends from the company's plant in La Conchita, CA, to one of its offshore platforms in the Pacific Ocean.

In February 2000 MMS notified Pacific Operators Offshore that the GLL was not fit for service and ordered it to submit a repair plan to the agency if the company intended to use the GLL in the future, the OIG said. In 2002 the MMS learned that the company still was using the flawed GLL.

The company's legal counsel, Charles Cappel, said Pacific Operators Offshore learned after the fact that two of its employees had "on limited occasions" put low- and medium-pressure natural gas into the pipeline that, although it had originally been engineered to handle a much higher level of pressure, had since been taken out of service, the Associated Press (AP) reported.

"The action was totally against company policy. They didn't tell anyone they were doing it," he said. When the company learned what had happened, Cappel said, it agreed to plead guilty and pay the fine, according to AP.

The MMS referred the matter to the OIG for investigation. It was subsequently forwarded to the environmental crimes division of the Department of Justice for prosecution.

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