Spills and explosions reveal lax regulation of powerful industry
By Jeff Nesmith and Ralph K.M.
Haurwitz
American-Statesman staff
Sunday, July 22, 2001
WASHINGTON -- Out of sight and unnoticed, America's sprawling oil and natural gas pipelines are leaking on the scale of a ruptured supertanker.
They are fouling the environment and causing fires and explosions that have killed more than 200 people and injured more than 1,000 in the past decade.
And the numbers are increasing steadily -- from 161 serious incidents in 1989 to 222 in 1999.
Yet the federal government relies on a small, underfunded and understaffed agency to police a powerful and wealthy industry. Together, the largest pipeline companies in America each year earn more than enough to run the agency that regulates them for a century.
The Office of Pipeline Safety has 55 inspectors and is budgeted for 107 full-time employees. But the agency has jurisdiction over more than 2 million miles of interstate, intrastate and local pipelines -- enough to reach around the Earth 88 times.
It rarely imposes fines, even when a pipeline explosion leads to death.
For decades, the agency hasn't known the precise whereabouts of thousands of miles of pipelines under its jurisdiction.
"There is almost an absence of regulation," said Jim Hall, until recently chairman of the National Transportation Safety Board, the independent federal agency that investigates airliner crashes, train wrecks and other transportation disasters.
Speaking at a pipeline safety conference convened last year by Texas Land Commissioner David Dewhurst, Hall said: "There is no justification for the federal government or state governments permitting something that is potentially hazardous from operating in basically an environment that has . . . no real effective oversight."
The lack of oversight comes at a critical juncture: The Bush administration's call for increased energy production promises to put additional pressure on an aging pipeline infrastructure and an overwhelmed regulatory agency.
An OPS database shows that 67 million gallons of crude oil, gasoline and other petroleum products dripped and poured from holes in the nation's pipelines during the 1990s.
But there is consensus -- among the industry, its regulators and its critics -- that the database underrepresents the quantity of oil products that escapes from pipelines. Responding to a written question, OPS officials said they believe their database "covers the majority of true pipeline spill volume."
A single undetected, or "ghost," leak can spill several hundred thousand gallons of petroleum liquid in a year. Some spill volumes are understated in the government statistics, and other spills are not reported at all. The actual pollution load is much greater than the annual reported average of 6.7 million gallons, possibly twice that much -- the equivalent of the 11 million-gallon Exxon Valdez spill.
But unlike the huge tanker spill, which shocked the nation 12 years ago with images of oil-soaked seabirds and miles of fouled Alaskan beaches, many pipeline oil spills are underground and dispersed, unseen and unnoticed.
At the same time, enormous quantities of natural gas escape from a separate pipeline system plagued by pinhole leaks, any one of which could give way to a neighborhood-leveling explosion at any moment.
Sections of some natural gas lines are so corroded that experts have a slang term for it: Swiss cheese.
To some critics, it looks as though the industry weighs the expense of fixing a problem against the risk of an accident.
"If they suspect they have a problem, they can say, `Well, gee, should we shut down the pipeline and go in and fix that thing, or just keep running it until it breaks?' " said Frank King, whose 10-year-old son, Wade, was burned to death in a 1999 gasoline pipeline explosion in Bellingham, Wash. "Maybe it won't break and they'll never have to fix it."
The federal government gives pipeline companies broad authority to inspect their own lines and decide when they should be repaired or taken out of service. But a yearlong examination found this system of loose regulation subjects the public and the environment to increased risk.
Among the findings:
* Companies have continued operating lines known to be damaged. After test results showed there were "anomalies" in the pipeline that ran through Bellingham, Olympic Pipe Line Co. failed to excavate the section of pipe, according to an interim report by the NTSB. The following year, Wade King, a 10-year-old playmate and an 18-year-old man died when 277,000 gallons of gasoline burst through that section of line and ignited.
* Many pipeline spills never get reported to the federal government. The Austin American-Statesman found dozens of unreported spills in the past few years, including nine in the Big Cypress National Preserve in Florida that were large enough to have been included in the OPS database on spills.
* Some of the information that does get reported is of questionable accuracy. Damage from a 1989 Calnev Pipeline Co. explosion in California that killed two people and destroyed 11 homes and 21 vehicles appears as "0" in the OPS database. In another case, two Koch Industries officials declined to answer when asked under oath in a civil lawsuit whether their company intentionally understated spill volumes, citing their Fifth Amendment right to avoid self-incrimination.
* The OPS is on friendly terms with the companies it regulates. Only eight of 218 enforcement actions in 1998 resulted in fines. Companies are warned when government inspectors are coming. The agency even agreed to an industry plan that will allow pipeline operators to avoid spending billions of dollars to protect drinking water sources, wildlife habitats and other sensitive resources from spills.
* Thousands of miles of "gathering lines" are not regulated at all in rural areas, and many of them are known to be leaking. Nationally, there are more than 200,000 miles of these lines, which carry natural gas and crude oil from wellheads to collection points. Texas has 43,000 miles of gathering lines.
* Maintenance expenditures by pipeline operators have remained nearly flat, even while the volume flowing through pipelines has increased dramatically. Five companies with income totaling more than $775 million last year reported spending less on maintenance in 1999 than they had in 1995. Together those five companies reported spilling 7.9 million gallons of crude oil, gasoline and other hazardous liquids from their pipelines in the 1990s.
OPS officials refused to submit to an on-the-record interview, saying they would respond to written questions only.
"We recognize the need to improve our regulations and enforcement activities," the agency said in response to one question, adding that "we have proposed $8 million in fines since 2000, signifying our intent to make more full use of all of our enforcement tools."
Representatives of the oil pipeline industry say they are concerned about the degree to which pipelines are leaking and rupturing, but that the record is improving.
"We definitely have not been happy with the record," said Michele Joy, general counsel of the Association of Oil Pipe Lines, a Washington-based trade group. "Yes, there have been a lot of spills, but I think that overall they are going down, both in terms of number and volume."
Pipeline companies are required to report all spills of at least 2,100 gallons, as well as incidents that cause injury, death or property damage exceeding $50,000. Releases exceeding 210 gallons a day of highly volatile liquids -- substances that can produce explosive vapor clouds -- also must be reported.
Joy said a review of the data reported to OPS indicates that although "there has been an unacceptable level of spills, the largest volume is usually attributable to one or two or three incidents."
She said the industry is constantly working to improve its performance and wants "to see a continually declining level down to zero, or as close as we can get it."
The Association of Oil Pipe Lines declares on its Web site that pipelines are "extremely safe" and that, statistically, for every barrel of oil that moves 1,000 miles, less than one teaspoon spills.
'Time is running out' as lines deteriorate
Even critics concede that underground pipes are safer than tanker trucks or rail cars for transporting hazardous material. But they also warn that pipelines have hidden dangers and are exposing the public to increasing risks.
More than just underground tunnels through which natural gas and oil flow, pipelines are components of huge, cross-country machines. They are attached to pumps, compressors, storage tanks and other equipment that is constantly being powered up and powered down, 24 hours a day.
These ever-changing cycles of heat and pressure can have unpredictable and at times catastrophic results. Yet many pipeline operators have never pressure-tested their lines or examined them with internal inspection devices.
"We're talking about that piece of pipe being in the ground, operating at high pressure, transporting a volatile liquid in the ground for 50 years without any type of internal inspection of that particular section of pipe," Hall told officials at the meeting on pipeline safety in Austin. "So that is why we feel so strongly that time is running out for us in many of these areas, that we may begin to see an increased frequency of these types of accidents."
The Office of Pipeline Safety is one of the smallest units within the U.S. Department of Transportation, with an operating budget of about $23 million. Although the agency oversees 2.2 million miles of pipeline in America, it delegates inspection and regulation to state and local authorities for much of that infrastructure.
The 800-mile trans-Alaska pipeline and its tanker port at Valdez are regulated under a special law by the Joint Pipeline Office, a consortium of state and federal agencies, including the OPS. The consortium also oversees other pipelines in Alaska.
The nation has essentially two pipeline systems. About 157,000 miles of hazardous liquid pipelines carry crude oil to refineries and refined products such as gasoline, diesel fuel and petrochemical feedstocks to market. More than 550 billion gallons of crude and petroleum products move through these pipelines annually.
Virtually all of America's natural gas is transported through a second system consisting of about 333,000 miles of cross-country transmission lines and 1.7 million miles of local gas company distribution lines.
Both systems contain aging infrastructure. Several thousand miles of hazardous liquid pipe are more than 80 years old. Most of the remainder was laid in the 1950s and 1960s. Last year, a dozen liquid pipelines more than 70 years old failed in America. One-fourth of the country's natural gas pipe is more than 50 years old.
Company officials list corrosion in a 50-year-old natural gas line as the cause of a leak that triggered a series of explosions last August in an isolated spot in New Mexico. Twelve people, including five children, died.
The pipeline, owned by El Paso Natural Gas Co. of Houston, was inspected by an Office of Pipeline Safety official who wrote in his report less than a month before the explosion: "No out-of-compliance deficiencies."
Many of the nation's aging pipelines were built in remote areas but are now surrounded by homes, schools and shopping centers. The controversial Longhorn Partners pipeline in South Austin is a case in point. It was surrounded by empty fields and woods when it was built a half-century ago to carry crude oil but now runs beneath back yards and driveways in more than a dozen subdivisions from Onion Creek Forest to the Village at Western Oaks. The population growth and prosperity in America's cities and suburbs stimulated energy demand, putting more stress on existing pipelines and forcing the development of new lines. This residential and commercial expansion has resulted in one of the leading causes of pipeline breaks: outside forces, such as excavation.
In September, a bulldozer operator was digging a trench for a water line in a field near Abilene when his machine snagged an underground pipeline operated by ExxonMobil Pipeline Co. Butane, propane and ethane leaked from the broken pipeline, then exploded.
Abilene police Detective Jay Hatcher was killed by the explosion, which destroyed a home and melted the aluminum wheels of a sport-utility vehicle. The home's owner avoided death by jumping into her backyard lap pool.
On April 1, a Dome Pipeline Corp. pipe carrying gasoline ruptured and burst into flames a few miles west of Bottineau, N.D. The company estimated that more than 1.1 million gallons of gasoline burned before the pipeline could be shut down. It attributed the break to damage by an "outside force."
In this case, the outside force was frost, according to Bottineau County Sheriff Steven Watson. He said it appears the frost melted at uneven rates, twisting and breaking the pipeline.
And in some places, pipelines have even begun to endanger other pipelines.
An 8-inch Rio Grande Pipeline Co. pipe carrying a mix of butane and propane ruptured and caught fire near the West Texas town of Salt Flat in November 1999, according to reports filed with the Office of Pipeline Safety.
Wind pushed the flames over an above-ground Chevron crude oil pipeline nearby. When the Chevron line got hot, it began to leak. Then it, too, erupted in flames, losing about 430,000 gallons of crude oil. Explosions injured two truckers and barely missed two busloads of children.
A third pipeline, operated by Navajo Refining Co. of Artesia, N.M., was then overheated by the Chevron fire but, according to Navajo's report to the pipeline safety office, was not damaged. Chevron reported the cause of its spill as "outside force" -- another pipeline.
Undetected spills mar land, infiltrate water
Sometimes, the stresses endured by a pipeline lead to silent, chronic leaks that go undetected for months, even years.
Crews drilling a test hole to anchor a radio tower at the King Ranch in South Texas encountered underground water contaminated with oil. Nearly three years later, no one has been able to figure out which of three buried pipelines crossing the ranch is the source of the leak, said Doug Beveridge, vice president of minerals for the ranch.
"We think there is an enormous amount of this going on out there," Beveridge said. "It just doesn't come to the surface. We'll be finding underground plumes for years. If you have pipelines, you'll have leaks. Steel eventually corrodes."
Another silent leak, this one in a pipe owned by Atlanta-based Colonial Pipeline Co., was discovered in 1997. A partnership of 10 multinational oil companies, Colonial operates a 36-inch fuel artery from Pasadena to the suburbs of New York City, with branches along the way.
Enormous batches of fuel, each several miles long, rush through the pipeline from Houston's refineries to New York's consumers.
Colonial's engineers have realized in recent years that when the pipeline was built in the early 1960s some sections of pipe were improperly loaded onto rail cars to be delivered. As a result, the sections jostled and developed microscopic cracks, a phenomenon now known as "railroad fatigue."
Years of pressure changes as pumps are turned on and off have caused the cracks to grow. Occasionally the pipes rupture, and sometimes they are found to have been leaking for unknown periods of time.
In December 1997, Colonial maintenance workers were running a "smart pig" through a section of pipeline in Louisiana's St. Helena Parish. Smart pigs, which are inspection tools, grunt their way along the inside of pipelines, using magnetic fields to find cracks, leaks, corrosion and other anomalies that cause a pipe to fail.
The Colonial examination revealed a leak that turned out to amount to more than 420,000 gallons, said Colonial spokesman Sam Whitehead.
He acknowledged that without the smart-pig inspection, the company would not have known of the leak for months.
"To be honest, what we call slow leaks are a big concern of the industry," said Joy, the Association of Oil Pipe Lines counsel. "And that's one of the reasons smart-pig funding was developed in the first place."
Even if widely dispersed in a 157,000-mile liquid pipeline system, slow leaks can run up huge, undetected spill volumes. A hole one-fourth of an inch in diameter will leak 337,000 gallons of liquid from a pipeline in one year, according to calculations by pipeline expert Dagmar Etkin of Winchester, Mass.
Congress in 1992 directed the Office of Pipeline Safety to set up regulations no later than 1994 that would require pipeline operators to periodically "pig" segments of their lines in search of defects.
However, the OPS did not put the rule into effect until early this year, and the Bush administration delayed it for review until May. It applies only in highly populated areas, along commercially navigable waterways and in the most environmentally sensitive areas, which works out to a quarter of the hazardous liquid pipeline mileage. The agency says it plans to issue a rule for natural gas lines later. Meanwhile, agency officials acknowledged to the inspector general of the Department of Transportation last year that none of their safety investigators knows how to evaluate reports produced by the devices.
Responding to a written question, OPS officials said a contract to train an agency employee in how to read the "pig" reports has been signed.
"We consider it (the contract) a pilot test and are using it as a basis for more extensive training this fall (13 OPS employees)," the agency said.
In November at a National Transportation Safety Board hearing in Washington on pipeline safety, OPS officials estimated that about 37 percent of U.S. pipeline operators use smart pigs to inspect their pipes from the inside.
Crude measurements obscure scope of leaks
Despite a spotty record of finding and dealing with leaks, the pipeline industry has kept maintenance expenditures nearly flat during recent years.
Eighteen of the largest hazardous liquid pipeline operators in the country had income that totaled slightly more than $2 billion in 1999, according to reports the companies are required to file annually with the Federal Energy Regulatory Commission. In 1995, the same companies had income totaling about $1.7 billion.
In contrast to that $300 million, or nearly 18 percent, increase in income, the companies reported that maintenance expenditures increased from $352 million in 1995 to $382 million in 1999, or about 8.5 percent.
Some of the large liquid pipeline operators actually decreased maintenance expenditures during that period. Exxon Pipeline Co. cut about $8 million from its upkeep costs, down to $48 million in 1999 from $56 million in 1995. Santa Fe Pacific Pipeline, a subsidiary of the Kinder Morgan petroleum partnership in Houston, more than doubled its income, from about $42 million in 1995 to $114 million in 1999, but reduced pipeline maintenance from $13 million to $7 million. Others reporting reduced maintenance costs during the last half of the 1990s include Chevron Pipe Line Co., Lakehead Pipe Line Co. in Duluth, Minn., and Buckeye Pipe Line in Allentown, Pa.
Spokesmen for Exxon and Lakehead said heavy spending on new pipeline construction between 1995 and 1999 enabled the companies to reduce maintenance costs. A Buckeye Pipe Line spokesman said his company had become more efficient, primarily through automation. A Kinder Morgan spokesman did not respond to questions. Records show Chevron drastically reduced pipeline mileage between 1995 and 1999.
In the same Federal Energy Regulatory Commission reports, pipeline companies have consistently revealed a vague perception of how much material flows through their lines. In fact, the margin of error in measuring liquid pipeline flow is so great that many companies routinely report that they have delivered more oil product in a year than they received.
For example, more than 721 million barrels of petroleum products flowed through Colonial's system in 1999. However, in a report to the Federal Energy Regulatory Commission, which sets the fees pipeline operators may charge, Colonial reported that it received 718 million barrels from its shipper clients -- 3 million barrels, or 126 million gallons, less than it delivered.
Other pipeline companies show discrepancies in reporting quantities that pass through their pipelines as well.
Pipeline consultant Richard Kuprewicz of Redmond, Wash., said flow meters used for most pipelines are accurate to only about one-half of 1 percent. Pipeline operators and shippers work under the assumption that, year in and year out, the errors balance out, he said.
Colonial's Whitehead confirmed that the company's metering system is a gross balancing effort that "would not detect the smallest leaks."
Even a small hole in a pipeline can lead to catastrophe.
Three elderly people were killed on Jan. 14, 2000, when natural gas accumulated beneath a house in Garland, near Dallas, and exploded. A report by the Texas Railroad Commission, which oversees some of the pipelines in the state, said the gas migrated from a crack in the area where two sections of 4-inch-wide plastic pipe were fused under a nearby alley.
A relative of the three victims had called the local utility, TXU Inc., four days earlier to report that the alarm on the home's carbon monoxide detector was going off, the Railroad Commission's report said. No telltale odor of natural gas was reported, and the TXU emergency operator advised the caller to contact a plumber, according to the commission. It is unknown whether a plumber was contacted, the agency's report said.
People working in a commercial building in San Juan, Puerto Rico, in 1996 complained repeatedly of nausea from the smell of propane, which continued to leak into the building from an Enron-owned gas line for a week. The gas eventually exploded, killing 33 people.
After an investigation, NTSB said inadequately trained gas company employees had searched for the leak but did not know how to find it. The safety board said the explosion might have been prevented had the OPS monitored Puerto Rico's pipeline safety program effectively.
Until an oil spill was discovered in the John Heinz National Wildlife Refuge near Philadelphia International Airport in February 2000, OPS inspectors had never visited the 50-year-old pipeline from which the oil was pouring.
After a hiker smelled oil and notified refuge officials, an investigation revealed that a short Sun Oil Co. pipeline had ruptured. Before the pumps could be turned off, 191,000 gallons of crude oil escaped into a rare urban wilderness.
When a reporter requested copies of previous OPS inspection reports on the pipeline, the request was denied on the grounds that the documents did not exist.
"I'm not sure we even knew that pipeline was there," said OPS official Linda Daugherty.
Haphazard reporting skews spill data
Pipeline industry representatives often point to the OPS database of oil spill reports from all over the country as an indication their industry is safe.
But there is widespread evidence that the database -- made up of information provided by pipeline companies -- is skewed because spills are underreported and cleanups exaggerated.
The OPS, unlike the Coast Guard, which closely monitors efforts to clean up spills from barges, tankers and other vessels, accepts the word of pipeline operators about the volume of spill that is recovered.
The OPS database on hazardous liquid spills even includes a handful of incidents in which pipeline operators are recorded as having recovered more than they spilled.
After the Interior Department and other agencies sued Chevron Products Co. for polluting Hawaii's Pearl Harbor and forcing closure of the USS Arizona National Memorial for several days in 1996, the company signed a consent decree, acknowledging the spill amounted to 39,000 gallons. But the OPS database records it at 25,000 gallons.
Although Colonial Pipeline officials estimated the 1997 leak in Louisiana at 420,000 gallons, the OPS database said it was a 38,000-gallon spill until a reporter asked the company about the discrepancy. The following day, the OPS changed the database.
National Park Service officials say a Colonial spill that sent fuel oil pouring into a cave system beneath Chickamauga battlefield near Chattanooga, Tenn., consisted of "more than 100,000 gallons." The OPS database says it was a 73,500-gallon spill.
Testifying in 1999 in a lawsuit against Koch Industries, Phillip Dubose of Lafayette, La., a former Koch division manager, told of literally covering up pipeline spills.
"If you had a spill or a leak, you wanted to get this thing taken care of with the least amount of dollars involved," Dubose testified during a deposition. "And so a lot of times, if it was out in a remote spot where nobody was around, they'd just take a shovel or something -- we're talking about a leak, a pipeline leak, now -- and just take a spade and just kind of spade it over and turn the soil over."
When asked under oath in a separate case if their company failed to report spills or intentionally understated spill volumes to government regulators, two Koch officials invoked the Fifth Amendment. One of the officials invoked the Fifth Amendment 17 times in response to questions about the company's practices.
The officials declined to answer because those matters were being investigated by a grand jury, a company spokesman said.
Neither Koch, which is the main supplier of gasoline to Central Texas, nor any company employee was charged with a crime concerning pipeline operations. Spokesman Marc Palazzo said: "We categorically deny these allegations. There's no evidence that supports any of these claims."
A May 1989 rupture in San Bernardino, Calif., of a 14-inch pipeline operated by Calnev offers a dramatic example of flaws in the spill database. When it broke, the pipeline spewed 300,000 gallons of flaming gasoline into nearby houses. Two people were killed and 31 injured. The flames destroyed 11 homes and 21 vehicles.
But even today, 12 years later, the OPS database indicates that Calnev places a value of "0" on the 11 destroyed homes and 21 cars and estimates the amount of gasoline that escaped from the ruptured, burning line at "0."
Although the record is obviously erroneous, the Office of Pipeline Safety cannot correct its database without written permission from Calnev. A spokesman for Calnev, now a subsidiary of Kinder Morgan Energy Partners in Houston, declined to answer questions about the report.
In response to the Calnev spill, the California Assembly ordered a study of pipeline spills in that state. The resulting audit of pipeline company records from 1981 through 1990 uncovered 317 spills involving estimated property damage of $50,000 or more in each case. During that same period, OPS received only 31 reports of major pipeline spills in California.
Many of the unreported spills may have been from intrastate pipelines, which in California and a few other states are not included in requirements to report leaks and spills to the OPS. A review of state and federal records shows that many spills that meet the OPS reporting criteria never find their way into its database.
Sunniland Pipeline, a now-idle crude oil pipeline that ran from Collier County on Florida's southern Gulf Coast to Miami's Port Everglades, notified the OPS in 1986 that a spill in its line had dumped 5,000 gallons of crude oil onto a sawgrass prairie in the Broward County portion of the Big Cypress National Preserve.
But files of the Florida Department of Environmental Protection describe nine other Sunniland spills in the Big Cypress preserve, none of which appears in the OPS database -- even though each accounted for 2,100 gallons or more, the minimum amount for which pipeline operators are required to report. The company is now defunct, and former officials could not be reached for comment.
No regulation at sources across rural America
Thousands of miles of pipelines are unregulated in America. These are the small gathering lines that carry crude oil and natural gas from wellheads in rural areas to collection points.
The amount of oil that drips into creeks, streams and underground water reservoirs from these lines may never be known because companies are not required to report such leaks to the OPS. But there's ample anecdotal evidence to suggest many of these lines are in bad shape.
The General Accounting Office, Congress' investigative arm, warned of increasing problems from rural gathering lines in a report 23 years ago. Although the report urged regulation, no action was taken.
In 1991, a corroded, 5-year-old Marathon Oil Co. natural gas gathering line near Carlsbad, N.M., leaked more than 2.3 million gallons of salt water and natural gas condensate liquids, enough to fill two Olympic-size swimming pools.
In reports filed with the New Mexico Oil Conservation Division and the federal Bureau of Land Management, which owns the land under which the pipeline broke, the company estimated that the line had been leaking five months when the leak was discovered.
Chris Shuey, environmental health specialist with the Southwest Research and Information Center, an environmental group, said the leak was discovered by accident.
"They didn't even know they were losing this stuff until the ground collapsed and they found it was saturated," he said.
Jeff Nesmith works in the Austin American-Statesman/Cox
Newspapers Washington Bureau. He can be reached at (202) 887-8342 or
jeffn@coxnews.com. Ralph K.M. Haurwitz can be reached at (512) 445-3604 or
rhaurwitz@statesman.com.
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