ExxonMobil intends to restart the southern portion of its Pegasus oil pipeline on July 1, ending a 15-month shutdown that began when the pipeline ruptured and flooded a residential street in Arkansas with crude.
The move is a disappointment to Texans like Barbara Lawrence, who said the 1950s-era southern leg of the Pegasus runs under the Richland-Chambers Reservoir, where she lives on the shore. She and others worry about potential oil spills in reservoirs and other waterways, and have questioned the safety of reopening any part of the Pegasus line without extensive testing.
"I think that's too bad, and I really think it's short-sighted," Lawrence said of the pipeline restart. Noting that the Richard-Chambers Reservoir is a source of drinking water, she added, "You'd think that other people, particularly in a drought situation, would want to protect the water supply."
Exxon did not return a call seeking comment, and has previously declined to say when it would reopen the southern part of the Pegasus. In January, the company sought permission to restart that portion of the pipeline, and the Pipeline and Hazardous Materials Safety Administration (PHMSA) approved Exxon's restart plans at the end of March.
The restart date of July 1 was confirmed by separate federal regulatory filings by Sunoco Logistics and an ExxonMobil pipeline subsidiary. ExxonMobil's paperwork set prices beginning July 1 for customers shipping crude oil through the Pegasus southern segment, a pipe that runs about 210-miles from Corsicana, Texas to Nederland, Texas.
Exxon's restart plan has not been publicly released for the southern segment. But in other documents made public, the company said it wanted to "initiate restart activities" by March 28, and that it planned to operate the line at reduced pressure and to conduct a standard leak test before reopening the Pegasus southern leg. The company said it would conduct a series of internal inspections on the running pipeline this summer as part of a PHMSA-approved remedial work plan.
The federal filing for the Pegasus doesn't say what types of crude oil will flow through the reopened segment, but Exxon and Sunoco filed paperwork that offered customers a flat rate for shipping West Texas Intermediate and West Texas Sour oil through a combination of their pipelines to Nederland.
Shippers will pay about $1.56 for use of the Pegasus southern leg, according to Exxon's federal filing. The pipeline's minimum delivery is 50,000, so Exxon stands to collect at least $78,000 per day on the reopened line. At full capacity, the southern leg could bring in $148,200 or more per day. The sum is small for Exxon, but it will help slow the company's losses on the Pegasus that have been mounting since the spill.
The Pegasus start up in Texas comes amid a rush of new pipeline capacity, much of it aimed at carrying crude oil to the Texas Gulf Coast, according to Andy Lipow, an industry consultant and former oil trader.
Restarting the southern leg of the Pegasus pipeline may be important for Exxon, Lipow said, "but for the industry as a whole, it's just another one of many."
In April 2013, the Pegasus burst open in Mayflower, Ark., sickening neighborhood residents and sending heavy Canadian diluted bitumen into a nearby cove. The pipe split along its seams, which were formed in 1947 or 1948 using low frequency electric resistance weld (LF-ERW) technology—a method that can leave behind potentially dangerous defects and cracks.
The spill led to the shutdown of the entire 858-mile Pegasus, a pipeline that can carry up 95,000 barrels of oil per day from Patoka, Ill. to Nederland, Texas. Shortly afterward, Exxon tried to get permission to reopen the southern leg of the pipeline, arguing that it did not carry the same inherent risks because that pipe was manufactured by a different company using a different seam fusing method called electric flash weld.
In May 2013, PHMSA turned down Exxon's request, noting that there was "uncertainty as to the current seam integrity on the entire Pegasus Pipeline." The regulator added that "the characteristics of the pipe used in the Southern section, while different from the pre-1970 ERW pipe used in the Northern Section, present a similar integrity concern. Flash welded pipe of that vintage is known to be susceptible to seam failure, even if to a lesser extent than low frequency ERW pipe."
Since there have not yet been any new internal tests conducted on the line, it is unclear what convinced the agency that the southern leg's seams no longer presented a "similar integrity concern."
The northern segment remains closed. That part of the Pegasus runs 648 miles from Patoka, Ill. and through Missouri and Arkansas, to Corsicana.
A metallurgical report following the Arkansas spill found that 65-year-old manufacturing flaws set the stage for the rupture, but it's still unclear what caused small hook-cracks to grow until the pipe split open along its seam in a 22-foot-long gash.
Exxon said it plans to reopen the Pegasus northern section. First, though, it will conduct a series of hydrostatic tests on the entire closed segment to gauge the strength of its seams and rid the pipe of cracks that could cause the pipeline to split—a process it said would take more than a year.