Federal regulators fine ExxonMobil for Arkansas oil leak

WASHINGTON – Federal regulators have fined ExxonMobil $2.6 million for spilling 210,000 gallons of oil into an Arkansas subdivision and lake in March, citing a string of safety lapses by the oil giant going back more than a decade.

The penalty levied by the Pipeline and Hazardous Materials Safety Administration last week spotlights the damage caused by a spill at a time when the Obama administration weighs allowing construction of the controversial Keystone XL pipeline from Alberta, Canada, to the Texas Gulf Coast. The fine also comes after a pipeline leak in North Dakota gushed at least 20,600 barrels of oil into a wheat field.

ExxonMobil said it was disappointed with the penalty and had not yet determined its next step. “It does appear that PHMSA’s analysis is flawed and the agency has made some fundamental errors,� said Aaron Stryk, a company spokesman. Stryk said ExxonMobil did safety assessments more often than PHMSA reported.

PHMSA said ExxonMobil could contest the penalties.

On March 29, a section of ExxonMobil’s Pegasus pipeline buried in a residential cul de sac in Mayflower, Ark., ruptured, spewing oil down the street, into a drainage ditch and eventually into a cove of Lake Conway. All 22 families on the street were evacuated. Only five have moved back or plan to. Most took a buyout from ExxonMobil, according to the Arkansas Department of Environmental Quality.

The cleanup and remediation of Lake Conway continues. ExxonMobil has spent more than $70 million so far dealing with the spill.

In its investigation, the pipeline safety regulator found that the Pegasus pipeline, including the section that ran through Mayflower, was built with a type of pre-1970 pipe susceptible to failure. PHMSA said that, despite the pipeline’s vulnerability, ExxonMobil did not assess its integrity every five years as it was required to do.

Moreover, tests the company ran in 2005 and 2006 revealed that the pipeline in Mayflower was at risk of failure. But the company did not take adequate steps to prevent a rupture, which could have included more frequent testing of the line, repairs or replacement, the agency said.

After a 20-year decline in pipeline accidents, there’s been a slight uptick in the last eight or nine years, said Carl Weimer, executive director of the Pipeline Safety Trust, a Bellingham, Wash., watchdog group. New rules aimed at improving pipeline safety were rolled out in 2002 and 2006. But so far, they have not helped reduce the failure rate, Weimer said.

“The really disconcerting thing about the violations listed is how they fly in the face of what the industry keeps saying about their efforts to make pipelines safe,� Weimer said. The kind of pipe ExxonMobil used for Pegasus was known for years to have serious problems, he said. “Exxon did not recognize the risk or prioritize their testing program correctly to protect people or the environment.�

Backers of Keystone XL say that it is unfair to assess its potential for spills by looking at accidents that have happened on other lines. The Pegasus line was more than 60 years old, they note, while the Keystone XL will be a new pipeline with the latest technology.

The Pegasus pipeline carried about 95,000 barrels a day before the rupture, but Keystone XL would carry more than 800,000, making the potential consequences of a spill far greater. Keystone XL’s critics have seized on the Mayflower spill to warn that the results would be catastrophic if oil spilled into major Midwestern rivers along its path, such as the Platte and the Missouri, or into the Ogallala aquifer, the main freshwater source for the Great Plains.

The Pegasus line carried the same synthetic crude oil from Alberta’s tarry oil sands that Keystone XL would. In other spills of oil sands crude, cleanup has proved more difficult and expensive than accidents involving conventional petroleum.

Arkansas officials welcomed the fine. The state attorney general’s office is conducting its own investigation. The U.S. Justice Department is seeking civil penalties under the Clean Water Act.

Some environmentalists said the PHMSA fine is too light to change the behavior of negligent pipeline operators. Congress has limited the size of fines PHMSA can levy, and the agency’s head has said that its efficacy is severely limited.

Glen Hooks of the Sierra Club in Arkansas said, “While I applaud PHMSA for levying a fine against ExxonMobil, the company earns that amount in about 30 minutes. The penalty is far too small to be a serious deterrent to the conduct leading to the Mayflower tar sands spill.�

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