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Chevron Faces $423K Fine for Pipeline Spill

Tuesday, November 2, 2010

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Chevron Pipe Line Co.

The federal government has proposed a $423,600 fine against Chevron Pipe Line Co., citing inadequate corrosion control, pipeline protection and other failures for the release of 800 barrels of crude oil near the University of Utah in June.

The civil penalty follows an investigation by the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) into the June 12 leak, which dumped 33,600 gallons of crude into Red Butte Creek and Canyon in Salt Lake City.

The leak, which stemmed from a one-inch hole on the top of the pipe, continued for more than 10 hours before Chevron knew of it.

 “As a result of the investigation, it appears that you have committed probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations,” PHMSA wrote Nov. 1 in a letter to Chevron president Rebecca B. Roberts.  The letter listed four types of “probable violations.”

Right-of-Way Inspection

Chevron was using aerial patrols to inspect surface conditions around the pipeline’s Right-of-Way, even though the ROW “had areas of excessive overgrowth” and nearby structures that blocked the pipeline from view. Furthermore, a marker for a second pipeline was buried in the bushes, the agency said.

Aerial patrols thus “could not be used to adequately assess the surface conditions on or adjacent to the pipeline right-of-way” and inspections “should have been done by land vehicle or on foot,” the agency said.

This violation carried a fine of $45,400.

Corrosion Protection

Chevron did not follow its own procedures for controlling corrosion and otherwise protecting the pipeline systems against nearby electrical charges. Pipelines at risk of fault currents, lightning, and electrical arcing are required to have grounding devices. Chevron had no measures or devices in place to control corrosion or protect its pipelines, which ran beneath an electrical substation and near high-voltage electric transmission lines.

The investigation determined the failure was probably caused by a discharge of electric current onto the pipeline. The pipeline that failed was not protected or insulated from fault currents that could be imparted from the nearby transfer station. This “resulted in a hole being created in the pipeline due to electrical arcing from the facility fence pole,” the agency concluded.

These violations carried a fine of $316,600.

Leak Detection

Chevron did not have adequate means to detect leaks on the pipeline when it failed, allowing more than 10 hours to elapse before the local fire department noticed the release and notified the company, the agency said. Moreover, Chevron knew that its chosen method of leak detection was inadequate. The company’s own evaluation of the system in 2007 indicated that improvements were needed, but they were never made.

This violation carried a fine of $61,600.

Pipeline Clearance

Finally, the post of the fence that transferred the electrical charge was installed within three inches of the pipeline, despite a requirement that any underground pipe have at least 12 inches of clearance from any other underground structure. Exceptions are allowed if adequate provisions are made for corrosion control, but none were in place here, the agency said.

Chevron was not fined for this violation but was ordered to promptly correct it or face additional penalties.

"PHMSA's pipeline safety inspectors and its state partners are committed to ensuring the safety of America's pipeline transportation system, and will continue to carefully monitor the activities of Chevron Pipe Line Company," said PHMSA Administrator Cynthia L. Quarterman. "PHMSA will pursue enforcement action against operators that do not adhere to pipeline safety regulations."

Compliance Order Issued

In addition to the Notice of Proposed Violation, PHMSA issued a proposed Compliance Order that would require the company to improve its rights-of-way inspections, take measures to protect its system against damage from lightning or stray electrical currents; and improve its leak detection capabilities. Chevron can voluntarily take these actions before the order is finalized.

Pipeline operators are allowed up to 30 days to respond to allegations included in an NOPV. The company had no immediate comment on the PSMSA findings.

Houston-based Chevron Pipe Line Co. is a subsidiary of Chevron. The pipe line company’s network of approximately 10,800 miles of pipe reach nearly 2.2 million barrels and 1.4 billion cubic feet (Bcf) of natural gas on a daily basis, as well as additional volumes through joint ventures with other companies, the company says.

Chevron’s clean-up plan for the Red Butte Canyon spill can be found at


Tagged categories: Corrosion; Pipeline; Pipelines; Violations

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