California pipeline leak to cost at least $257 million, PAA estimates

A crude oil pipeline leak north of Santa Barbara, Calif. (OGJ Online, May 20, 2015), will cost Plains All American Pipeline LP at least $257 million, the Houston midstream transportation company estimated in its latest Form 10Q filing with the US Securities and Exchange Commission.

It said that in addition to claims filed directly at a claims line it established soon after the leak was discovered, six class action lawsuits were filed in US District Court for Central California alleging damages from the release.

PAA also expects to be liable for costs and damages under the 1990 Oil Pollution Act, and possibly could pay additional fines, penalties, and costs under other applicable federal, state, and local laws, statutes, and regulations. “Our assumptions and estimates may turn out to be inaccurate and our total costs could turn out to be higher,” it cautioned.

It also said that in late May, the US Attorney for Central California launched an investigation on the US Environmental Protection Agency’s behalf into whether any federal statutes were violated in connection with the incident, including the Clean Water Act.

PAA said it is cooperating with the inquiry, and is funding any employees’ defense costs. The California Attorney General’s Office and Santa Barbara County District Attorney’s Office also announced investigations, it added.

Elsewhere in the Aug. 7 SEC filing, PAA said that 100 bbl of crude was released on July 10 from the Capwood pipeline at its Pocahontas Pump Station in Illinois some 40 miles from St. Louis, Mo. (OGJ Online, July 15, 2015).

Part of the leaked oil was contained within the facility, but some entered a nearby waterway where it was contained by booms, it noted. PAA estimated that costs associated with this release will be less than $10 million.

Contact Nick Snow at nicks@pennwell.com.

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