Northwest Pipeline GP, a Williams subsidiary, has filed a $20 million lawsuit against a division of Chevron Corp. in federal district court as it seeks to recover the cost of relocating a section of its pipeline away from land shifting above a coal mine near Kemmerer, WY.

Meanwhile, the coal mine at the center of the dispute was sold to another company on Tuesday. Contrary to other media reports, filings with the U.S. Securities and Exchange Commission (SEC) indicate that Chevron is still liable for the damage to the Northwest pipeline.

In a complaint filed Jan. 23 in U.S. District Court for the District of Wyoming, Northwest alleges that Chevron’s activities at the mine caused the earth surrounding two parallel interstate pipelines measuring 26- and 30-inches in diameter to crack and develop deep fissures during the summer of 2011. To remedy the problem, Northwest installed land movement detection equipment, followed by temporary and then permanent pipeline bypasses 400 yards away.

“Williams took these steps to ensure the safety and integrity of its facilities and to prevent disruption of service to its customers,” Michele Swaner, spokesperson for Salt Lake City-based Northwest, told NGI’s Shale Daily on Tuesday, adding that the company “had numerous discussions [with Chevron] about the pipeline and there were [safety] concerns.”

According to the complaint, during one such meeting in July a Chevron geotechnical consultant said Chevron “had not shored or otherwise stabilized the northern wall of the mine,” and later asserted that “the cracks were becoming worse and threatened to cause further earth movement that would damage the pipeline system.” The consultant then advised Northwest to move the pipelines.

Swaner said the bypass was placed in service on Sept 30, 2011. The company had advised customers it was working on the project earlier that month (see Daily GPI, Sept. 28, 2011; Sept. 26, 2011).

Westmoreland Coal Co. completed its acquisition of the Kemmerer mine from Chevron Mining Inc. on Tuesday for $194.5 million. Kevin Paprzycki, spokesman for the Englewood, CO-based company, declined to comment on the sale or Northwest’s litigation against Chevron but confirmed that Westmoreland filed an 8-K report with the SEC on Jan. 17.

According to Article 3.1(d) of the 8-K report, Chevron has indemnified and holds Westmoreland harmless for “any losses arising from or in connection with the alleged damage to or business interruption of the [Northwest pipeline]…prior to the closing, including without limitation any losses arising from or in connection with any relocation of such gas transmission pipeline segment.”

A spokesperson for Chevron, which is based in San Ramon, CA, could not be reached for comment Tuesday.

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