Feds slap local energy company
Tom Fowler
Houston Chronicle
Aug. 26, 2005
In one of largest such orders, Kinder Morgan unit must change how it operates
Kinder Morgan Energy Partners' 3,900-mile-long Pacific Operations system, which supplies six Western states with gasoline, diesel fuel and jet fuel, has been hit by a rash of accidents in the past two years, including:
• May 28: Gasoline leaks close to a highway in the Fort Bliss Military Reservation near El Paso. The company concluded the cause was defective pipe.
• April 1: Gasoline and diesel fuel leak into Summit Creek that flows into Donner Lake near a ski resort outside of Truckee, Calif. Company had no additional information.
• Nov. 22, 2004: About 96,000 gallons of gasoline spray the air near San Bernardino, Calif., polluting a portion of the Mojave Desert and shutting down Interstate 15 for hours. Company concluded the line had been damaged by a third party.
• Nov. 9, 20 04: In Walnut Creek, Calif. five contractors were killed when a backhoe used to lay a water main hit a pipeline, sparking a blast.
• April 27, 2004: Corroded pipe leads to about 105,000 gallons of diesel fuel fouling the Suisun Marsh near Fairfield, Calif., killing wildlife.
Source: Company and Transportation Department
Federal pipeline regulators have ordered Houston-based Kinder Morgan Energy Partners to change how it operates more than 3,900 miles of pipelines in six Western states following a recent string of accidents.
In what is being called one of the largest regulatory actions undertaken by the U.S. Department of Transportation's Pipeline and Hazardous Materials Safety Administration, the company must restructure its internal inspection program, get an independent review of its operations and analyze recent incidents, including one that killed five people.
The order didn't come as a surprise to the company — a spokesman said it had been working with regulators on the issues for months and has fixed some already. But it is unusual in its breadth, affecting more than 40 different pipeline segments that carry gasoline, diesel and jet fuel throughout the West.
Most of the recent incidents were due to third parties, such as construction backhoes digging nearby, striking the pipelines. But in its letter to the company, regulators said the recent accidents "indicate a widespread failure to adequately detect and address the effect of outside force damage and corrosion. This failure has systematically affected the integrity of the Pacific Operations unit."
The Kinder Morgan companies operate more than 25,000 miles of pipelines in the nation, carrying crude oil, natural gas and refined products.
While the company has invested in new construction, much of its growth has come through acquisitions. Most of the pipeline system in question came to the company in 1998 when it acquired Santa Fe Pacific Pipeline.
Kinder Morgan said it would spend more than $900 million this year maintaining and operating its pipelines and other assets.
"We share the PHMSA's priorities to operate our pipelines as safely as possible and to protect the public, employees and the environment," company spokesman Larry Pierce said. "These are top priorities at Kinder Morgan."
About 60 percent of accidents along pipelines under Kinder Morgan's Pacific Operations were caused by what is called outside force damage, namely another company or individual damaging the pipeline with equipment, according to the Transportation Department.
One of the worst accidents occurred Nov. 9, 2004, in Walnut Creek, Calif., near San Francisco. Contractors laying a water main are thought to have struck a pipeline with a backhoe, sparking a blast that killed five workers.
But some incidents are due to age and wear and tear. An April 27, 2004, release of 105,000 gallons of diesel into a marsh near Fairfield, Calif., was due to a patch of corrosion almost 14 feet long. The firm paid more than $5 million in fines, penalties and restitution in that case.
Damon Hill, a spokesman with the PHMSA, said the broad scope of the order is due to the large number of incidents in the company's Pacific operations: 44 since Jan. 1, with 14 resulting in the release of more than five barrels of refined petroleum.
"We didn't find any clear-cut violations of integrity management rules, but we did see some weaknesses in the use of their tools to interpret data," said Hill.
For example, the order notes that in some instances Kinder Morgan used internal pipe inspection tools that aren't sufficient to identify certain defects.
The company's organizational structure also expects workers in different departments to identify specific pipeline safety threats, but it does not allow workers from one department easy access to data from another department, the order says.
Kinder Morgan has 120 days to submit a revised integrity management plan to regulators. The company must also provide a list of outside experts it may use to do the independent evaluation within 30 days.
"It's possible, we may choose to appeal certain elements in the order, but we've been working with them on these issues for months," Pierce said.
Copyright 2005 Houston Chronicle