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Company should have been warned of pipeline trouble, regulator says

A Tesoro Logistics LP pipeline spilled more than 20,000 barrels of crude oil into a North Dakota wheat field, the biggest leak in the state since it became a major U.S. producer. The six-inch pipeline was carrying crude oil from the Bakken shale play to the Stampede rail facility outside Columbus, North Dakota. The spill was originally discovered on September 29, 2013. Photo by Neal Lauron/Greenpeace

BISMARCK – A federal regulator says preliminary test results showing a problem with the oil pipeline that leaked more than 20,000 barrels of Bakken crude should have been available to the company before the leak was discovered.

“It is completely unacceptable that a company would have a release of this size and not know it. It’s just unconscionable. And the question is, how did that possibly occur?” said Linda Daugherty, deputy associate administrator for the U.S. Pipeline and Hazardous Materials Safety Administration.

Daugherty updated the North Dakota Public Service Commission on Wednesday on the federal investigation into the spill being cleaned up on 7.3 acres in a farm field near Tioga.

She said investigators are “pretty confident” they know what caused the hole in the pipeline, but she couldn’t disclose it publicly because of the ongoing investigation and because lab reports aren’t finished. A state investigator has said the hole may have been caused by exterior corrosion.

“We’re trying now to focus on when this release actually occurred and why the company did not detect it much, much sooner,” Daugherty said.

Tesoro contracted with the oilfield services company Baker Hughes to test the integrity of the pipeline on Sept. 10-11 using an inline tool commonly known as a “smart pig,” PHMSA officials said. Daugherty said most companies will require that the vendor running the test review the initial results as soon as they’re ready and notify the company if there are any areas of immediate concern.

“So those results usually come in within just a week or two,” she said, adding the final results could take months.

In the case of the Tioga spill, Daugherty said the farmer reported smelling something in the field on Sept. 25 – two weeks after the smart pig test – before noticing the oil spill while harvesting wheat on Sept. 29 and reporting it. Tesoro then reached out to the vendor to ask about the test results, “and yes, they did see something in the vicinity of the release,” she said.

Tesoro Logistics spokeswoman Elizabeth Watters said Wednesday that the company was waiting for the results of the analysis of the smart pig inspection when the leak was reported, and that it received the final results on Oct. 14. She said she didn’t immediately have information about the contract with Baker Hughes, and Baker Hughes did not respond to request for comment Wednesday.

Lynn Helms, director of the state Department of Mineral Resources, has said Tesoro used the pipeline while waiting for the results because it also conducted a pressure test that was successful.

Reversed flow

The 20-year-old pipeline was moving Bakken crude north to a rail facility at Columbus near the Canadian border when the leak occurred.

The pipeline formerly ran south to the Tesoro refinery in Mandan. Its direction of flow was reversed from south to north on Aug. 13, which Daugherty said may have affected the performance of the pipeline’s monitoring equipment. PHMSA is investigating whether there was adequate monitoring to detect a leak.

Daugherty said the pipeline operated at less than full capacity, making it difficult to calculate how long it had been leaking and the amount of oil released. PHMSA believes it was running at 350 pounds of pressure -- less than a third of the maximum flow -- at the point of failure, she said.

“So there is no consistent flow rate or flow pressure that you could use to calculate the volume out, or at least we don’t have that in hand yet,” she said.

State oversight

In light of the Tioga spill, commissioners on Wednesday discussed whether the PSC should play a role in monitoring oil pipelines within the state. It already has jurisdiction over the siting of intrastate oil pipelines of more than a mile in length, and it’s had jurisdiction over the intrastate transmission and distribution of natural gas since the early 1970s.

The commission has authority under state law to create an oversight program for oil and other hazardous liquids as it does for natural gas, said Patrick Fahn, director of the PSC’s compliance division. The PSC would have to sign a certification document with the federal government agreeing to meet certain standards for the program and have enough people to run it, Fahn said. Federal funds currently pay for 70 percent to 75 percent of the state’s natural gas oversight program, he said.

PSC Chairman Brian Kalk said the purpose isn’t to impose new regulations, but he suggested a state oversight program – perhaps sharing jurisdiction with the federal agency – could allow for more frequent oil pipeline inspections.

Commissioners plan to hold a work session to further discuss the idea, including the potential cost.

“If it’s reasonably comparable, there may be a lot of value in us having control of the system to make sure that we can give the level of confidence to the people of North Dakota that I think they have in us to be regulators,” Commissioner Randy Christmann said.

Mike Nowatzki, Forum News Service

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