El Paso, Olympic Face Record Fines for Fatal Pipe Blasts

The Department of Transportation (DOT) last week announced it was seeking a fine of $2.52 million against El Paso Natural Gas for several "probable violations" that potentially contributed to the fatal explosion on its pipeline system in New Mexico last August, which resulted in 12 deaths. It was said to be the "largest civil penalty" ever sought against a pipeline operator for federal safety violations.

A DOT spokeswoman noted it was the highest penalty that the agency could assess against El Paso under current federal law."We have very set guidelines that we are allowed by law on how we can penalize. We can only penalize a certain amount per violation. We can't just go out and say 'Okay, X number of people died, therefore, we will put this penalty against it.'" The agency, as part of its pipeline re-authorization bill, asked Congress last year for the authority to increase the penalties it could for pipe safety violations, she noted, but lawmakers failed to act on it. With this proposed penalty, "our investigation of El Paso is over. This closes the book."

But it's not over for El Paso Corp., parent company of the El Paso pipeline. "We strongly disagree with the fine," said spokeswoman Norma Dunn. Although the explosion last summer was "regrettable" and "unfortunate," El Paso "doesn't agree that there was any violation. We adhere to the highest standards of safety, and will continue to do so," she noted.

The DOT's Office of Pipeline Safety (OPS) has given El Paso 30 days to respond to a "notice of probable violation," which Dunn says the pipeline plans to do. El Paso can request a hearing to challenge the probable violations and penalty amount. From a legal standpoint, the company would want the violations dismissed so they don't provide any fuel or ammunition for the lawsuits that have been brought against El Paso by the families of the dead.

She noted that El Paso pipeline is awaiting the report of the National Transportation Safety Board (NTSB), which has the final say on the cause or causes of the fatal explosion. El Paso has been "working side-by-side" with the NTSB and OPS in their efforts. Dunn said El Paso has not been informed by the NTSB as to when its report will come out.

"Although this investigation [by DOT] has not determined the exact cause of the incident, preliminary findings indicate that internal corrosion likely played a major role in the accident. These findings also indicate that internal corrosion had probably occurred over a long period, where liquids had accumulated in a low point on the pipeline," said R. M. Seeley, director of the Southwest Region of the OPS, in a June 20 "notice of probable violation" to John W. Somerhalder, president of the El Paso Energy Pipeline Group. The NTSB's preliminary investigation of the nearly 50-year-old ruptured line last August also suggested that "significant internal corrosion" may have been a "contributing factor."

The OPS investigation of El Paso, which was conducted between Aug. 19 and mid-December 2000, turned up several "probable violations" of the federal pipeline safety regulations, Seeley said. "In general, these probable violations show weaknesses in El Paso's internal corrosion training, a failure among El Paso's operating elements to follow procedures and to communicate important operating information with one another, and for El Paso to consider how operating information and experience from one pipeline segment could be relevant to other sections of the pipeline system. OPS is concerned that this failure to communicate and integrate vital information played a critical role in the Aug. 19 incident."

Specifically, the probable safety violations included: 1) failure to ensure qualified personnel had performed the required internal corrosion-control procedures; 2) transporting corrosive gas on several occasions without taking the proper preventive and mitigative steps; 3) failure to carry out continuing surveillance of its transportation system, which would have allowed it to control collection of liquid at low points, thus mitigating conditions which led to the explosion; 4) not possessing an accurate elevation map for the lines involved in the rupture, which would have revealed the low points where liquid could accumulate and corrosion could occur: and 5) neglecting to take steps to minimize the possibility of a pipeline failure recurrence following a similar incident in 1996.

Significantly, the 1996 rupture involved El Paso's Line 1300 near Roswell, NM, and the problems cited were eerily similar to those that have been suspected in last August's blast on Line 1103, "internal corrosion due to the presence of water at a low point in a pipeline," noted Seeley. In an Oct. 14, 1996 memo, a member of an El Paso team investigating the Roswell failure recommended that "other possible areas of pipeline deflection should be located and examined by radiographic or ultrasonic techniques to ensure that a similar condition does not exist."

The entire El Paso investigative team on the Roswell rupture "recommended that cleaning pigs be run and noted that the recovery of any corrosive liquids may signal a need for further measures," said Seeley. "Yet, El Paso failed to follow the accident investigation recommendations. An evaluation would have shown that this section of pipeline was particularly vulnerable to liquid accumulation at the low point at the [Pecos River] crossing --- the lowest point on this pipeline segment," which was the site of last August's explosion.

The El Paso investigation team recognized at the time that "extensive low-point testing" could not be conducted, given the hilly terrain on which El Paso's system is located, Seeley said. "However, given that conditions existed on Line 1103 that made it susceptible to the same failure mechanism that caused the 1996 Roswell accident...testing this segment could not reasonably have been considered extensive testing," he noted. The affected Line 1103 is one of three lines that make up El Paso's South Mainline system that serves the southwestern and California gas markets.

The DOT action comes nearly 10 months after the mid-August rupture on El Paso's South Mainline near Carlsbad, NM, which has been labeled the worst natural gas pipeline disaster in the United States. The 12 dead were members of two local families who had been fishing and camping alongside the Pecos River. They were consumed in the blast and fireball that ripped open an 86-foot long, 20-feet deep trench and left a mass of twisted metal pipeline. The explosion interrupted gas transportation service on the three lines that make up the South Mainline for weeks and months afterward (See NGI, Aug. 28, 2000).

In other developments last week, the Washington State Department of Ecology on Wednesday levied the largest fine ever handed down by a state agency. After two years of investigation, the department fined three companies a total of $7.86 million for the rupture and subsequent explosion of the Olympic product pipeline in June 1999 near Bellingham. The explosion claimed the lives of two 10-year old boys and an 18-year old teenager.

Although the explosion involved a petroleum products line, observers in the natural gas industry followed the events closely because of the fallout they have had on interstate gas pipelines. In the wake of the Bellingham incident, cries by the public for tighter pipeline safety legislation and regulations reached a crescendo level on Capitol Hill (see NGI, May 15, 2000 ).

"On June 10, 1999, at least a quarter-million gallons of gasoline burst out of the Olympic pipeline in Bellingham and destroyed the peace of mind of an entire community," said Tom Fitzsimmons, director of the Department of Ecology. "Three young people died, three miles of creek were charred or contaminated, and three companies had a hand in it."

Fitzsimmons placed responsibility for the broken environmental laws on Renton, WA-based Olympic Pipe Line Co., Equilon Pipeline Co. LLC, a Houston-based joint venture of Shell and Texaco, and IMCO General Construction Inc. of Bellingham. The investigation found that Equilon was the pipeline operator, but Olympic also had significant responsibility in how the pipeline was run. IMCO, a local construction company, while doing excavation work in the area in 1994 scraped and gouged the pipeline in several places. The rupture occurred at one of the gouges.

The investigation concluded that the operators of the pipeline did not monitor or review the excavation work, nor did they take action when the companies discovered gouges in 1996 and 1997.

Washington state law allows for a maximum fine of $20,000 for each day that a spill poses a risk to the environment. The number of days that the water quality in Whatcom and Hanna creeks violated state standards was 393, the department said.

Fitzsimmons also announced that Ecology and the federal Environmental Protection Agency reached a tentative settlement with BP Pipelines North America, which took control of Olympic Pipe Line Co. last year. BP has agreed to pay $10 million in state and federal civil penalties to satisfy its financial obligations to both agencies. Allocation of the monies is still being determined. Some of the $10 million will go toward Olympic's share of the state fine and the remainder to the federal government.

Olympic also was fined a record $3 million by the Department of Transportation (DOT) last year (see NGI, June 12, 2000).

"We are seeking innovative settlements with all three companies that will funnel most of the state's share of the penalty directly into the Bellingham community for environmental and pipeline-safety projects," said Fitzsimmons. "We hope the settlement with Olympic will go forward quickly and will provide benefits to the community sooner than if we had to go through protracted negotiations."

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