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Exxon: No Plans Yet To Reopen Ruptured Pipeline, and No Answers Why

The company has yet to release results of a sophisticated test of the 65-year-old pipeline's interior, conducted in February.

May 20, 2013
(Page 2 of 2 )
Cleaned area at Exxon pipeline spill in Arkansas

Stryk wouldn't disclose the names of the companies that receive oil from the Pegasus or discuss the financial impacts of the line’s closure.

John Stoody, director of government and public relations for the Association of Oil Pipe Lines, a Washington D.C.-based industry organization, said the closure of any oil pipeline has some kind of effect.

"Every pipeline, every amount of oil transported is accounted for in terms of meeting the energy needs of the country," Stoody said. "So no matter the size of the pipeline delivering oil to the refineries, that oil is part of a pretty precise calculation designed to meet those energy needs."

Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University Cox School of Business in Dallas, said Exxon is financially stable enough that it doesn’t need to rush the Pegasus pipeline back into operation.

"They have the wherewithal to be able to step back and make informed decisions on how best to move forward," Bullock said.

That includes everything from considering the possibility of replacing the pipeline to improving the existing line.

As part of that assessment, Bullock expects Exxon executives to evaluate the demand for Canadian tars oil on the Gulf Coast and consider how massive projects like TransCanada’s Keystone XL pipeline and Enbridge’s pipeline expansion plans might affect business on the Pegasus.

"I think there's going to a lot of wait and see," he said.

Exxon is a major oil sands producer as well as a pipeline operator. At its Cold Lake oil field in Alberta alone, Exxon extracts 123,000 barrels of bitumen a day from 4,000 wells using steam injection, according to the company's 2012 Operating and Financial Review. At another of its Alberta sites, Exxon estimates 4 billion barrels of bitumen is available for extraction.  

The March 29 spill in Arkansas forced the evacuation of 83 people from almost two dozen homes and raised health concerns for those exposed to fumes from the oil. Exxon is maintaining a high profile in the community, replacing damaged landscaping, cleaning pollution from a secluded section of a shoreline and making buy-out offers to affected property owners.

Exxon put the cost of the spill at $16.4 million in an April 26 PHMSA accident report

The northern 648-mile section of the pipeline, which includes the portion that burst, is 65 years old and is buried an average of 24 inches below ground. An examination of the failed section showed a split 22 feet long and 2 inches wide that allowed the oil to spew out under high pressure. The southern section of the line is 59 years old.

Exxon has said it shut down the pipeline within 16 minutes of discovering a pressure drop on the line, but enough oil spilled over the next three hours to affect aquatic animals and wildlife; contaminate the soil, coat vegetation and taint surface water, according to the April 26 accident report.

The report said an estimated 5,000 barrels—210,000 gallons, or enough to fill about a third of an Olympic-sized swimming pool—of heavy crude oil poured from the ruptured pipeline. Of that, 2,000 barrels—84,000 gallons—had been cleaned up by April 26. The report also noted that 2,000 barrels of the oil had fouled drainage ditches and a cove south of Lake Conway, a popular recreation area renowned for its fishing and scenic setting.

InsideClimate News reporter Lisa Song contributed to this report.

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