Exxon Mobil estimates Mont. spill will cost $42M
Tuesday, August 23, 2011
BILLINGS, Mont. (AP) — Cleaning up tens of thousands of gallons of crude oil that spilled from a pipeline and fouled a stretch of Montana’s renowned Yellowstone River is expected to cost Exxon Mobil Corp. an estimated $42.6 million, according to documents obtained Monday by The Associated Press.
About 42,000 gallons, or 1,000 barrels, of crude leaked into the waterway upstream of Billings, the state’s most populous city, when the pipeline buried under the scenic river broke on July 1. If the cost figure holds, the accident will cost Exxon more than $1,000 for every gallon spilled.
Exxon Mobil’s cost estimate includes $40 million for emergency response work and $2.5 million for damage to public and private property. The company valued the lost oil at $100,000, according to documents submitted to federal pipeline regulators and obtained by The AP through a public information request.
The documents also revealed that officials from the Pipeline and Hazardous Material Safety Administration relied on information from Exxon Mobil to reassure local officials that the 20-year-old pipeline would be able to hold up as the river flooded in late May and early June. The pipeline failure occurred during a second round of flooding a month later.
Despite reports of erosion along the riverbank where the company’s Silvertip pipeline crossed the Yellowstone, a federal safety official said on June 1 that surveys by Exxon Mobil showed the line was buried at least five feet beneath the riverbed.
“The Yellowstone River crossing depth was surveyed last fall and is quite deep and should be adequate as long as the riverbank does not substantially erode and cause flooding in Riverside Park near Laurel,” PHMSA’s Thomas Finch wrote in an email to Kurt Markegard, director of public works for the city of Laurel.
An investigation into what caused the spill has been stalled because PHMSA inspectors have been unable to reach the section of failed pipeline beneath the river. The pipeline agency said it could not provide a time estimate for when it might be able to safely access the site.
After initially aiming to complete its cleanup work by Sept. 9, Exxon Mobil said last week those efforts may continue for several months. About 1,000 people are now involved in mopping up the spill, which fouled dozens of miles of riverbank.
It was unclear if the longer cleanup time was anticipated in the company’s cost estimate, submitted in a report to pipeline safety regulators dated July 29.
“We have not updated this estimate because our focus remains on the cleanup efforts in Montana,” Exxon Mobil spokeswoman Rachael Moore told the AP in an email. “As we have said from the beginning of this incident, Exxon Mobil Pipeline Co. takes full responsibility for the incident and the cleanup.”
Federal officials said they had approved Exxon Mobil’s plans to re-activate a 21-mile stretch of the pipeline downstream of where the accident occurred.
The pipeline was the main source of crude oil for an Exxon Mobil refinery in Billings, and the company has struggled to find replacements. The portion of the undamaged pipeline is linked to another line owned by another company that Exxon Mobil would use to temporarily restore deliveries to its refinery.
Permits are pending for the construction of a replacement crossing for the pipeline across the Yellowstone.
Federal pipeline safety officials last Thursday approved Exxon Mobil’s plans to replace the failed section of pipe by drilling a new line more than 25 feet deep beneath the riverbed.
PHMSA officials said in a statement that its engineers had completed an evaluation of Exxon Mobil’s construction plan to ensure the newly constructed pipeline can operate safely.
An inspector will be present during the construction of the pipeline replacement, the agency said.
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