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Pipeline sale, past problems, prompt new questions

Published March 24, 2013 7:28 pm

This is an archived article that was published on sltrib.com in 2013, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Chevron Pipe Line Co. was facing some big challenges even before diesel began leaking from its aging petroleum line near the Bear River Migratory Bird Refuge last week.

First, federal regulators raised concerns last month about rapid "external corrosion" on another segment of the line in Idaho — an example of what the U.S. Transportation Department's Pipeline and Hazardous Materials Safety Administration now describes as a system that "has experienced several failures" spanning more than a decade.

Second, the company was poised to close a $400 million package deal to sell the 760-mile pipeline to another petroleum company, Tesoro Logistics L.C.

It's not clear yet what the letter and the sale might mean for the Houston-based company, whose cleanup of the pipe split at Willard Bay State park is being overseen by the U.S. Environmental Protection Agency and a team of local, state and federal regulators.

For Lynn de Freitas, director of the Friends of the Great Salt Lake, the $233 billion company and the future of its pipeline prompt deeper questions. After all, the lake pumps $1.3 billion into the economy, represents the heart of the state and amounts to life and death for a vast, ecological web that relies on migrating birds.

De Freitas wonders if the Willard Bay spill is the Great Salt Lake's version of the massive BP oil spill in the Gulf of Mexico. Most important, how does society continue the everyday practice of delivering fuel — all the waiting for the next accident — while safeguarding a world-class natural resource that's irreplaceable?

"Someone needs to be paying attention, because its not going to get any better," she said. "It doesn't bode well for the Great Salt Lake or the community."

Chevron has deployed about 90 workers to mop up the estimated 27,000 gallons of diesel that leaked last week into the soil and water between Interstate 15 and the Willard Bay Reservoir, where spring migration is just getting under way. As of Friday night, the company said it already has removed about 21,000 gallons of diesel, which is being shipped back to the Salt Lake City refinery that it came from for reprocessing.

Chevron spokesman Gareth Johnstone declined to say how the latest spill, the third in less than three years in Utah, might affect the pending Northwest Products System sale that includes the 60-year-old pipeline that carries fuel from the Salt Lake Valley's five refineries to points between Spokane and Pocatello.

"We do not comment on commercial matters," he said in an emailed statement.

As for the 924-gallon Idaho leak mentioned by regulators, he noted that the Pipeline and Hazardous Materials Safety Administration's comprehensive review of the Salt Lake City-to-Spokane pipeline "yielded no regulatory violations but cited three areas for improvement."

Although Johnstone correctly notes that federal pipeline regulators regarded the Idaho spill as "not yet reaching the level of a regulatory violation," the regulators chide the company for failing to propose a sure-fire corrosion solution after three years of studying it.

"[I]t is more than 2.5 years after the accident and the final root cause analysis to determine a cause of the corrosion has not been completed," said Chris Hoidal, the pipeline agency's western region director in the letter.

"Therefore, it is not known if the remedial actions taken to date will prevent a repeat of conditions that caused or contributed to the release."

Hoidal's letter explains how "external corrosion" caused the Idaho spill after the corrosion protections outside the pipe failed and let the ground chew away the pipe wall between a March 2007 inspection and the April 2010 leak.

"[T]here was nearly 100% wall loss on the pipe in about three years due to external corrosion," Hoidal wrote.

In a "corrective action order" Hoidal's office issued Friday on the Willard Bay Park leak, the agency once again pointed to the Idaho incident, lumping it together with the spill in Willard Bay as "potential safety concerns."

"The Northwest Products Pipeline System has experienced several failures dating back to 2002," the order said, noting that the cause of the Idaho leak, corrosion, differed from the cause of the Willard Bay leak, a split seam running along the pipe's length.

As for the plan it announced in December to buy the pipeline, Tesoro indicated Friday the deal won't be done by March 31, as originally planned, but probably before July.

The heart of the $400 million transaction is the three-state pipeline. It also includes a separate five-mile jet fuel pipeline to the Salt Lake City International Airport and terminals in Idaho and Washington state.

Officials at Tesoro enthused last month in a conference call with investors that the new additions would generate some $33 million in operating income for them the first year.

"Tesoro continues to work through the transaction process, which is currently undergoing regulatory review," said company spokesman Tina Barbee. "It is too early to assess the impact, if any, of the leak on the transaction [or] to provide additional detail on this incident or the future operations of the pipeline."

The Willard Bay spill discovered Monday is one of 293 Utah pipeline incidents reported to the National Response Center in the past 23 years.

Forty-four of those reports name Chevron or one of its subsidiaries as the company responsible, and 19 — including the Red Butte Creek crude oil spills in 2010 — have been in the Salt Lake, Davis or Box Elder counties, the data show.

So far, only traces of petrochemicals have been detected in the water. And 3,000 feet of absorbent boom has been deployed in an effort to clean up the diesel and keep any contamination out of the nearby Willard Reservoir.

The U.S. Environmental Protection Agency, which is overseeing the cleanup, hopes to have the work done before the spring bird migration heats up in a couple of weeks.

A 29-page report by the nonprofit, national Pipeline Safety Trust concluded last fall that more could be done to prevent accidents in Utah. But Carl Weimer, the trust's executive director and study's author said, in the end, regulating pipelines and safety-inspecting them comes down to money.

"Somebody," he noted, "has to determine if it's worth it."

fahys@sltrib.com

Twitter: @judyfutah —

Pipelines, Chevron and Utah: A history

Nationwide, Chevron has more than 7,100 miles of pipeline. Those lines were blamed for 52 releases of hazardous materials — totaling 1.4 million gallons and $93 million property damage — between 2006-12.

In Utah, Chevron has 657 miles of pipeline, all of it used for hazardous liquids.

Spills in Utah include two at Red Butte Creek in 2010. A dime-sized hole in the crude oil pipeline at Red Butte Garden spilled 33,600 gallons in June. Another 21,000 gallons was released in December after a valve froze and cracked also at Red Butte. Fines, cleanup costs and other expenses amounted to some $43 million.

Source: PHMSA, National Response Center