Enbridge’s Michigan cleanup costs now exceed JRP pipeline conditions for Gateway, SEC filing shows

NTSB staff examine ruptured pipe
US National Transportation Safety Board staff examine a ruptured pipe from the Enbridge oil spill in August, 2010. The photo was released by the NTSB May 21, 2012. (NTSB)

The costs for Enbridge to clean up the 2010 Marshall, Michigan oil spill now far exceeds the maximum estimate that the Joint Review Panel gave for a major spill on the Northern Gateway Pipeline and also exceeds the amount of money the JRP ordered Enbridge to set aside to deal with a spill. Enbridge’s cleanup costs have also now edged past the higher liability amount requested by the Haisla Nation.

According to the US firm Enbridge Energy Partners’ filing with the United States Securities and Exchange Commission, as of September 30, 2013, the cost of cleanup was $1.035 billion US, not including possible additional fines and penalties that might be imposed by US authorities in the future.

In its decision, the Joint Review Panel estimated the cost a major oil spill from the Northern Gateway project would be about $693 million.  As part of the 209 conditions, the JRP ordered Enbridge to set aside “financial assurances” totaling $950 million.

Note all costs in this article are for a pipeline breach. The Joint Review Panel had different estimates for a tanker spill and the liability rules for marine traffic are different from pipelines.

In its filing for the third quarter of 2013, with the SEC, Enbridge Energy Partners say that the cost up until September 2013 had “exceed[ed] the limits of our insurance coverage.” The same filing says that Enbridge is in a legal dispute with one its insurers.

In its SEC filing, Enbridge says:

Lakehead Line 6B Crude Oil Release
We continue to perform necessary remediation, restoration and monitoring of the areas affected by the Line 6B crude oil release. All the initiatives we are undertaking in the monitoring and restoration phase are intended to restore the crude oil release area to the satisfaction of the appropriate regulatory authorities.
As of September 30, 2013, our total cost estimate for the Line 6B crude oil release is $1,035.0 million, which is an increase of $215.0 million as compared to December 31, 2012. This total estimate is before insurance recoveries and excluding additional fines and penalties which may be imposed by federal, state and local governmental agencies, other than the Pipeline and Hazardous Materials Safety Administration, or PHMSA, civil penalty of $3.7 million, we paid during the third quarter of 2012. On March 14, 2013, we received an order from the EPA, or the Environmental Protection Agency, which we refer to as the Order, that defined the scope which requires additional containment and active recovery of submerged oil relating to the Line 6B crude oil release. We submitted our initial proposed work plan required by the EPA on April 4, 2013, and we resubmitted the workplan on April 23, 2013. The EPA approved the Submerged Oil Recovery and Assessment workplan, or SORA, with modifications on May 8, 2013. We incorporated the modification and submitted an approved SORA on May 13, 2013. The Order states that the work must be completed by December 31, 2013.

The $175.0 million increase in the total cost estimate during the three month period ending March 31, 2013, was attributable to additional work required by the Order. The $40.0 million increase during the three month period ending June 30, 2013 was attributable to further refinement and definition of the additional dredging scope per the Order and associated environmental, permitting, waste removal and other related costs. The actual costs incurred may differ from the foregoing estimate as we complete the work plan with the EPA related to the Order and work with other regulatory agencies to assure that our work plan complies with their requirements. Any such incremental costs will not be recovered under our insurance policies as our costs for the incident at September 30, 2013 exceeded the limits of our insurance coverage.

According to the SEC filing, the breakdown of costs include $2.6 million paid to owners of homes adversely impacted by the spill.

Despite the efforts we have made to ensure the reasonableness of our estimates, changes to the recorded amounts associated with this release are possible as more reliable information becomes available. We continue to have the potential of incurring additional costs in connection with this crude oil release due to variations in any or all of the categories described above, including modified or revised requirements from regulatory agencies in addition to fines and penalties as well as expenditures associated with litigation and settlement of claims.
The material components underlying our total estimated loss for the cleanup, remediation and restoration associated with the Line 6B crude oil release include the following:
(in millions)

Response Personnel & Equipment  $454

Environmental Consultants  $193

Professional, regulatory and other $388

Total $ 1,035

For the nine month periods ended September 30, 2013 and 2012, we made payments of $62.3 million and $120.9 million, respectively, for costs associated with the Line 6B crude oil release. For the nine month period ended September 30, 2013, we recognized a $2.6 million impairment for homes purchased due to the Line 6B crude oil release which is included in the “Environmental costs, net of recoveries” on our consolidated statements of income. As of September 30, 2013 and December 31, 2012, we had a remaining estimated liability of $265.9 million and $115.8 million, respectively.

As for insurance, Enbridge Energy Partners say:

The claims for the crude oil release for Line 6B are covered by the insurance policy that expired on April 30, 2011, which had an aggregate limit of $650.0 million for pollution liability. Based on our remediation spending through September 30, 2013, we have exceeded the limits of coverage under this insurance policy. During the third quarter 2013, we received $42.0 million of insurance recoveries for a claim we filed in connection with the Line 6B crude oil release and recognized as a reduction to environmental cost in the second quarter of 2013. We recognized $170.0 million of insurance recoveries as reductions to “Environmental costs, net of recoveries” in our consolidated statements of income for the three and nine month periods ended September 30, 2012 for the Line 6B crude oil release. As of September 30, 2013, we have recorded total insurance recoveries of $547.0 million for the Line 6B crude oil release, out of the $650.0 million aggregate limit. We expect to record receivables for additional amounts we claim for recovery pursuant to our insurance policies during the period that we deem realization of the claim for recovery to be probable.

In March 2013, we and Enbridge filed a lawsuit against the insurers of our remaining $145.0 million coverage, as one particular insurer is disputing our recovery eligibility for costs related to our claim on the Line 6B crude oil release and the other remaining insurers assert that their payment is predicated on the outcome of our recovery with that insurer. We received a partial recovery payment of $42.0 million from the other remaining insurers and have since amended our lawsuit, such that it now includes only one insurer. While we believe that our claims for the remaining $103.0 million are covered under the policy, there can be no assurance that we will prevail in this lawsuit.


The Joint Review, Enbridge and Michigan

The Joint Review Panel based its finding on the Marshall, Michigan spill on the figure of $767 million from the summer of 2012 –again showing the limitations of the JRP’s evidentiary deadlines since the costs are now much higher.

The JRP quoted Enbridge as saying:

Northern Gateway considered the high costs of the Marshall, Michigan spill, which were at least $252,000 per cubic metre ($40,000 per barrel), to be an outlier or a rare event because the spill occurred in a densely populated area, because the pipeline’s response time was abnormally long, and because there was the prospect of potentially lengthy legal proceedings.

Enbridge assured the JRP that the corporate culture and management changes and equipment upgrades since the Marshall, Michigan spill lowered that chances of a similar event.

The company based its models for the JRP on much smaller spills, including one spill at Lake Wabamun, Alberta from a train not a pipeline (Vol. 2 p 357)

Enbridge’s risk assessment did not “generate an estimate of economic losses caused
by a spill.”

The JRP says Northern Gateway relied on its analysis of literature, and spill events experienced by Enbridge and other liquid hydrocarbon carriers in Alberta and British Columbia. After assessing all of this information, Northern Gateway regarded the high costs of a cleanup as “conservative”–meaning the company expects costs to be lower than its estimates in evidence before the JRP.

In Northern Gateway’s view the most costly pipeline spill incident would be a full-bore oil pipeline rupture, with an estimated cost of $200 million, and an extremely low probability of occurrence.

Haisla evidence

In their evidence, the Haisla (and other First Nations and intervenors) were doubtful about Northern Gateway’s assurances. The Haisla asked that Enbridge have a minimum of $1 billion in liability, an amount Enbridge has now exceeded in Michigan.

Haisla Nation estimated the cost of damage to ecosystem services because of a terrestrial oil spill from Northern Gateway’s pipeline would be in the range of $12,000 to $610 million for a 30-year period.

The Haisla’s cost estimates were based on values for environmental goods and services and probabilities of spills that were independent of Northern Gateway’s parameters for estimating oil spill costs. In contrast to Northern Gateway’s estimated spill frequency and costs, the Haisla predicted that spills would occur more often and placed a higher value on damages to environmental goods and services.

Haisla Nation argued that Northern Gateway overestimated its ability to detect and respond to a spill. In the Haisla’s view this resulted in the cost of a spill and the requisite financial assurances being understated. Haisla cited several factors, including: remote location, limited access, challenging terrain, seasonal conditions, and river flow conditions that would cause the cost of cleaning up a spill in the Kitimat River valley to be significantly greater than the costs associated with Enbridge’s Marshall, Michigan spill.

For these reasons, Haisla proposed that Northern Gateway should be required to obtain a minimum of $1 billion of liability coverage through insurance and financial assurances. Haisla said that Northern Gateway should file annually the report from an independent third party assessing the financial assurances plan. (Vol 2 p359)

In response Northern Gateway said:

Northern Gateway said that Haisla’s findings were based on a number of fundamental methodological flaws and a lack of probability analysis to support the high frequency of occurrence of oil spill events. Northern Gateway argued that Haisla’s estimates of ecosystem service values were inflated because they were based on values from unrelated studies. In Northern Gateway’s view, Haisla relied on high passive use values that were not justified.

JRP ruling

As it has in most of its decision, the JRP accepted Northern Gateway’s evidence, including its explanation of the Marshall, Michigan spill and then went on to base its spill cost estimates not on a pipeline breach but on the 2005 railway spill at Lake Wabumum, near White Sands, Alberta.

The Panel accepts that the cleanup costs for the Marshall, Michigan spill were orders of magnitude higher because of the extended response time. In this application, the Panel accepts Northern Gateway’s commitment to complete the shutdown in no more than 13 minutes after detection. For this reason the Panel did not use the Marshall spill costs in its calculations. The spill volume and the resulting costs are directly dependent on the Northern Gateway’s control room staff and the pipeline control system fully closing the adjacent block valves no longer than 13 minutes from the detection of an alarm event, as well as the amount of oil which would drain out of the pipeline after valve closure due to elevation differences.

The Panel decided on a total unit cost of $138,376 per cubic metre ($22,000 per barrel). This is midway between the unit cost of $88,058 per cubic metre ($14,000) per barrel proposed by Northern Gateway and the unit cost of $188,694 per cubic metre ($30,000 per barrel) for the Lake Wabamun spill. It is about one-half of the Marshall spill’s unit cost. Giving weight to the Lake Wabamun costs recognizes actual costs experienced in a Canadian spill and the greater costs of spills in high consequence areas. In these areas, individuals, populations, property, and the environment would have a high sensitivity to hydrocarbon spills. The deleterious effects of the spill would increase with the spill volume, the extent of the spill, and the difficulty in accessing the spill area for cleanup and remediation.

Using these spill volume and unit cost values in the calculation below, the Panel estimated the total cost of a large spill could be $700 million. Total cost of a spill = 31,500 barrels x $22,000 per barrel = $693 million, or $700 million when rounded up.


The Panel based the financial assurances requirements for Northern Gateway on a spill with a total estimated cost of $700 million and directs Northern Gateway to develop a financial assurances plan with a total coverage of $950 million that would include the following components:
i. Ready cash of $100 million to cover the initial costs of a spill;
ii. Core coverage of $600 million that is made up of stand-alone, third party liability insurance and other appropriate financial assurance instruments, and
iii. Financial backstopping via parental, other third party guarantees, or no fault insurance of at least $250 million to cover costs that exceed the payout of components i. and ii.
The financial backstopping would be available to fill the gap if the spill volumes or unit costs were under-estimated or if the payout from the core coverage would be less than 100 per cent.

The Panel noted that:

The evidence indicates that there is some probability that a large oil spill may occur at some time over the life of the project. In these circumstances the Panel must take a careful and precautionary approach because of the high consequences of a large spill. The Panel has decided that Northern Gateway must arrange and maintain sufficient financial assurances to cover potential risks and liabilities related to large oil spills during the operating life of the project.

Northern Gateway committed to investing $500 million in additional facilities and mitigation measures such as thicker wall pipe, more block valves, more in-line inspections, and complementary leak detection systems. This initiative should enhance the safety and reliability of the system and help reduce and mitigate the effects of a spill, but it would not eliminate the risk or costs of spills. This initiative is not a direct substitute for third party liability insurance and does not eliminate the need for liability insurance or any other form of financial assurance to cover the cost of a spill. (p 361)

So the JRP decision comes down to this, if you accept Northern Gateway’s position that pipeline spills are rare and mostly small, then the company has the financial resources to cover the damage. If, however, Northern Gateway is wrong and the costs of a pipeline cleanup exceed the $950 million required by the Joint Review Panel, as has happened in Michigan, then those JRP conditions are already obsolete.

(Northwest Coast Energy News encourages all readers to read the complete JRP report  and SEC filing since space and readability does not permit fully quoting from the report)

EPA Orders Enbridge to Perform Additional Dredging to Remove Oil from Kalamazoo River

The United States Environmental Protection Agency has ordered Enbridge to dredge the Kalamazoo River to remove addition bitumen.

The EPA issued this news release

CHICAGO (March 14, 2013) – The U.S. Environmental Protection Agency today issued an administrative order that requires Enbridge to do additional dredging in Michigan’s Kalamazoo River to clean up oil from the company’s July 2010 pipeline spill. EPA’s order requires dredging in sections of the river above Ceresco Dam, upstream of Battle Creek, and in the Morrow Lake Delta.

EPA has repeatedly documented the presence of recoverable submerged oil in the sections of the river identified in the order and has determined that submerged oil in these areas can be recovered by dredging. The dredging activity required by EPA’s order will prevent submerged oil from migrating to downstream areas where it will be more difficult or impossible to recover.

Enbridge has five days to respond to the order and 15 days to provide EPA with a work plan. Dredging is anticipated to begin this spring and is not expected to result in closures of the river. EPA’s order also requires Enbridge to maintain sediment traps throughout the river to capture oil outside the dredge areas.

On July 26, 2010, Enbridge reported that a 30-inch oil pipeline ruptured near Marshall, Michigan. Heavy rains caused the spilled oil to travel 35 miles downstream before it was contained.


Enbridge faces $68,000 fine for not inspecting pipeline branch in Ohio

Enbridge is facing a new penalty from the US Pipeline and Hazardous Materials Administration for not inspecting a pipeline branch in Ohio and Michigan. The decision by the PHMSA comes just after a couple of days after the agency acknowledged that Enbridge had paid the civil penalty for the Marshall, Michigan oil spill with a wire transfer to the US Treasury of $3,699,200 on August 12. It was the Marshall pipeline breach and spill that led to bitumen entering the Kalamazoo River.

The new proposed penalty is much lower, just $68,000. It relates to the PHMSA inspection of Enbridge’s Toledo pipeline between July 12 and July 15, 2010.

The PHMSA says it found three alleged violations of federal pipeline safety regulations.

As well as the proposed civil penalty of $68,000, Enbridge Toledo is required to submit past records for inspections of subsequent overpressure safety devices and out-of-service tanks
The agency lists the violations as:

1. Failure to adequately inspect the right-of-way at a mainline valve location in Toledo as required by 49 CFR §195.412.
No proposed penalty — Warning Item.
1. Exceeding the maximum interval for inspection of 12 overpressure safety devices as required by 49 CFR §195.428.
Proposed penalty is $39,000 + PCO.
1. Exceeding the maximum interval for API 653 internal inspections of two breakout tanks located at Stockbridge, MI as required by 49 CFR §195.432.
Proposed penalty is $29,600 + PCO.

Enbridge can, if it wishes, challenge the NOPV (Notice of Possible Violation) in court.  In the case of the original Marshall, Michigan, spill NOPV, Enbridge did not challenge the findings of the PHMSA and paid the penalty.

The new document sent to Enbridge by David Barrett, PHMSA Director, Central Region says that the company failed to perform internal inspections or establish a corrosion rate for the bottom plates of its tanks within the 10 year period as required by US regulations. It also says Enbridge failed to demonstrate that they had established a basis for the corrosion rate for the tank bottoms and exceeded the 10 year maximum internal inspection interval for unknown corrosion rates.

Additionally, Enbridge did not have similar service experience, or procedures to apply similar service experience available to make this inspection interval determination.

The PHMSA also says that Enbridge Enbridge failed to inspect its overpressure safety devices at intervals not exceeding 15 months, but at least once each calendar year. The inspection intervals exceeded the maximum 15 month interval by 14-24 days for the overpressure safety devices listed int the order.

The compliance order calls for Enbridge to submit documentation of all inspections performed on
each of the tanks and overpressure devices listed in the PHMSA order from 2010 to present. Enbridge has to internally inspect each of the tanks and to submit to the PHMSA documentation on the “safety improvement costs” needed to comply with the order.

As for the Marshall, Michigan spill, while Enbridge promptly paid the civil penalty, the PHMSA order notes

This Order does not resolve any existing or potential civil or criminal liability that Enbridge may have for any other violations of the federal Pipeline Safety Laws, or any regulations or orders issued thereunder, not specifically enumerated herein. Further, this Order does not resolve any existing or potential civil or criminal liability that Enbridge may have for violations ofany other federal laws arising from or otherwise related to the events or conduct giving rise to this Order or
to the consequences or damages resulting from the Failure.

Link: PHMSA Inspection of Enbridge (Toledo) Pipeline Results in NOPV and Civil Penalty

PHMSA Final Order Marshall Michigan spill PDF

Haisla ask Gateway JRP to force Enbridge to release more Kalamazoo spill information

The Haisla Nation have asked the Northern Gateway Joint Review panel to force Enbridge to reveal more information about the pipeline rupture and oil spill near Kalamazoo, Michigan, in July 2010. The Haisla are also asking for more and better information about the $500 million project upgrades that Enbridge announced last month.

In a notice of motion filed July 30, with the JRP, lawyers representing the Haisla Nation note that they had previously asked Enbridge “a number of questions relating to Enbridge’s spill of 3,785,000 litres of diluted bitumen into the Kalamazoo River at Marshall, Michigan (the ‘Kalamazoo Spill’).”

The notice then notes that “Northern Gateway refused to reply as the matter was under investigation by the United States National Transportation Safety Board… The NTSB’s Accident Report was adopted on July 10, 2012 and has now been released to the public. The basis for Northern Gateway’s refusal to answer the Haisla Nation’s information requests is, therefore, no longer present.”

The Haisla are asking the JRP

that Northern Gateway is required to file evidence relating to the Kalamazoo Spill
which identifies the cause of the pipeline rupture and the extent to which
Enbridge’s pipeline maintenance, monitoring and response approach caused and
contributed to the volume of the spill by a date to be fixed by the Panel;

As for the upgrades, the Haisla notice of motion notes

Northern Gateway has identified additional design features, which it states will “enhance the safety and reliability of the pipelines over and above standard industry practice”. The design features identified in the Reply Evidence include increased wall thickness of the pipeline, additional increases in pipe thickness for crossings at major tributaries to the Fraser, Skeena and Kitimat River, the placement of remotely operated isolation valves on each side of major tributaries of the Fraser,Skeena and Kitimat Rivers, and dual remote monitoring systems ….
Northern Gateway has not provided any details relating to these proposed design
features. Their relevance and suitability to enhancing safety and reliability of the
pipelines cannot, therefore, be assessed.

The motion asks

that Northern Gateway is required to provide details of its proposed additional
design features for thicker pipes for the pipeline generally and at identified
watercourse crossings, for additional valve placements, and for additional remote
monitoring, as well as all studies and reports that support how these additional
design features enhance pipeline safety, by a date to be fixed by the Panel.

The Haisla motion also asks for more details on various environmental and other questions.

The Joint Review Panel has not yet ruled on the Haisla motion.

Haisla Nation Notice of Motion  (pdf)

US Pipeline and Hazardous Material Safety Admin cites Enbridge for violations in Kalamazoo spill, wants $3.7 million fine

Updated with Enbridge statement

The United States Pipeline and Hazardous Materials Safety Administration today cited Enbridge for a series of violations in connection with the pipeline rupture and bitumen spill at Mashall, Michigan,  in 2010 and is proposing the company be fined a record $3.7 million.

A letter issued today, July 2, 2012, from the PMHSA  to Richard Adams, Vice President, U.S. Operations, Enbridge Energy Limited Partnership, lists a series of alleged failures by Enbridge.

The letter says the investigation began on July 26, 2010, the day after the Enbridge Energy Limited Partnership’s 30-inch diameter Line 6B pipeline ruptured near Marshall, Michigan on July 25, spilling 20,000 barrels of crude and contaminating 38 miles of the Kalamazoo River.

That investigation, the letter says, turned up numerous violations of US regulations including, safety rules, faulty risk analysis, failure to follow proper operation and management procedures and problems with reporting and operator qualification requirements.

The PHMSA alleges that Enbridge violated 24 regulations for pipeline safety and procedures, with civil penalties ranging from $41,200 to $1,000,000 for a total of $3.7 million.

None of the allegations have been proven and Enbridge is free to contest the filings and allegations and ask for a hearing.

In a news release, Enbridge responded:

Enbridge appreciates the hard work and due diligence that PHMSA has put into this investigation,” said Stephen J. Wuori, President, Liquids Pipelines, Enbridge Inc. “Safety has always been core to our operations. Enbridge completed a detailed internal investigation of this incident in the fall of 2010 and has made numerous enhancements to the processes and procedures in our control center since the Line 6B accident, including the training provided to pipeline operators, and has made significant changes in this critical component of our operations. Incident prevention, detection and response have also been enhanced. We will carefully examine the NOPV to determine whether any further adjustments are appropriate.

The letter says the investigation began on July 26, 2010, the day after the Enbridge Enbridge Energy Limited Partnership’s 30-inch diameter Line 6B pipeline ruptured near Marshall, Michigan on July 25, spilling 20,000 barrels of crude and contaminating 38 miles of the Kalamazoo River.

That investigation, the letter says, turned up numerous violations of US regulations including, safety rules, faulty risk analysis, failure to follow proper operation and management procedures and problems with reporting and operator qualification requirements.

The letter also outlines what happened during the spill, as seen through the eyes of PHMSA investigators.

According to the letter, the Enbridge pipeline failed despite a series of In-Line Inspections that the company had performed on the pipeline. Those inspections, the PHMSA investigators say found “multiple corrosion and crack-like anomalies on the pipe joint that failed on July
25, 2010.” It is alleged that Enbridge did not conduct any field examination of the reported anomalies before the accident.

According to the PHMSA, there was actually a crack detection being performed on Line 6B on the day of the failure and the testing equipment was left in the pipeline until the after the line was restarted on September 27, 2010.

The reports says the Michigan pipeline ruptured at 17:58 EDT on July 25, 2010, approximately 0.6 miles downstream of the company’s Marshall pumping station. At the time, Enbridge’s Edmonton Control Center  (CCO) was in the process of starting a scheduled 10-hour shutdown of the pipeline.

The PHMSA report says:

as soon as the failure occurred, the CCO received multiple alarms and indications of abnormal operations on Line 6B, but the company did not execute its suspected-leak or emergency procedures. Instead, Enbridge allowed the pipeline to remain idle as part of the Scheduled Shutdown for approximately 10 hours, during which time a new shift came on duty at the CCO, which brought in a new set of controllers, supervisors, and support personnel.

At approximately 04:00, on July 26, 2010, Enbridge initiated the scheduled start-up of Line 6B … Within minutes, the CCO received multiple alarms and indications of abnormal operating conditions, which indicated that the pressure at the Marshall pumping station had not increased as expected and the imbalance between the volume of product injected into the pipeline and the volume of product being delivered from the pipeline exceeded established thresholds. Again, Enbridge did not execute its suspected leak or emergency procedures. Instead, Enbridge continued to pump crude oil into the line while the controller, supervisors, and support personnel evaluated the situation.

After an hour, the Edmonton control centre abandoned the attempted restart and shut down the pipeline. During the time Enbridge was trying to restart the pipeline, an additional 10,460 barrels of crude oil was injected into the pipeline.

The PHMSA report says that the Enbridge control room was monitoring the “lack of typical pressure and flow conditions for this pipeline configuration and alarms.” Control room supervisors contacted managers and the decision was made to restart the pipeline a second time, which began at 0720 on July 26.

Again the Enbridge control “received multiple alarms and indications of abnormal
operating conditions.”

Enbridge continued to pump oil for another 31 minutes sending 5,831 barrels of oil into the pipeline.

By this time supervisors and managers were discussing the possibility of a suspected leak but no one activated Enbridge’s spill procedures. The second restart was halted at 0751 at which time a new shift took over the control room.

Enbridge managers “discussed the two restart attempts, resulting in the Line 6B controller
conducting further investigation into the historical operating information on the line but
taking no action to deal with a spill.”

It was three hours and fifteen minutes after the shift change, at 11:18 on July 26, roughly 17 hours after the failure occurred, that the Enbridge control room received an emergency call from an employee of a local gas company, Consumers Energy, reporting oil in a creek near Marshall, Michigan.

It was at that point that Enbridge closed remotely operated valves on each side of the reported leak, isolating three miles of pipeline on either side of the rupture. It was then that Enbridge activated its emergency procedure and field personnel were sent to the scene. The field personnel confirmed the spill to the Edmonton control room at 11:43.

On July 28, the Pipeline and Hazardous Materials Safety Administration issued “a Corrective Action Order” to Enbridge requiring the company to take action to protect the public, property, and the environment. “Amongst other things, the Corrective Action Order required a pressure reduction, verification of pipeline integrity, integration of information, and provisions for ensuring ongoing safe operation considering all risk factors.”

The letter then cites Enbridge for the following alleged violations:

Pipeline integrity management in high consequence areas

The letter says that after an integrity assessment of Line 6B, Enbridge failed to obtain, within 180 days, sufficient information about anomalous conditions presenting a potential threat to the integrity of Line 6B. Enbridge conducted a high-resolution integrity assessment of Line 6B on October 13, 2007 and received the “vendor report” on June 4, 2008. The citation says “The 180 day deadline was April 10, 2008. Enbridge did not demonstrate that the 180 day period was impracticable.”

The report says Enbridge implemented pressure restrictions on the pipeline on July 17, 2009, approximately 462 days after the deadline to have sufficient information to identify anomalous conditions. A year later, according to the PHMSA, Enbridge submitted a “Long Term Pressure Reduction Notification” to PHMSA on July 15, 2010. The date of discovery was reported by Enbridge as July 17, 2009 not June 2008.

US regulations require pipeline companies to fix “corrosion anomalies” in pipelines with 180 days. The citation says that starting back as far as 2004, Enbridge “did not schedule remediation of
corrosion anomalies involving the longitudinal weld seam of pipe joint #217720, that is the joint that eventually ruptured causing the spill. The report says Enbridge also did not remediate crack-like anomalies on the same pipe joint… that could impair the integrity of the pipeline” and “Enbridge could not demonstrate that the company attempted or scheduled any remediation of the corrosion or crack anomalies that were identified by the assessments” nor did Enbridge schedule that joint for excavation prior to the rupture.

Risk analysis

The PHMSA alleges that Enbridge failed to consider all relevant risk factors associated with the determination of the amount of product that could be released from a rupture on the pipeline. Enbridge’s risk analysis process also assumed a pipeline rupture of this magnitude would be identified by its leak detection instrumentation within five minutes, and that it would take an additional three minutes to close remotely operated valves on either side of the rupture.

Before the spill, Enbridge had estimated the worst case scenario at the that location would be a release 1,670 barrels initially with another 1938 barrels released during “drain down” for a total of3,608 barrels

The actual failure scenario demonstrates the rupture was not recognized by Enbridge, and the isolation valves were not closed, until approximately 17 hours after it occurred. An additional 16,431 barrels of product was injected into the ruptured pipeline, causing the total spill volume to greatly exceed Enbridge’s worst case discharge scenario for this location.


The PHMSA letter alleges that “Enbridge did not properly consider the results of corrosion and cracking assessments nor did Enbridge integrate the information from these assessments to
properly assure overall pipeline integrity.”

While the investigation revealed that while “Enbridge has a long history of performing
integrity assessments” those assessment results “were evaluated independently and not integrated in a fashion that assures pipeline integrity.”

General Requirements

The PHMSA says US regulations require that whenever an operator discovers any condition that could adversely affect the safe operation of its pipeline system, “it shall correct it within a
reasonable time,” adding that “if the condition is of such a nature that it presents
an immediate hazard to persons or property, the operator may not operate the affected part of the system until it has corrected the unsafe condition.”

The letter says” “Enbridge failed to correct a condition that could affect the safe operation of a
pipeline within a reasonable time following discovery. Enbridge discovered the
condition as a result of …. instrumentation alarms and events that alerted
within seconds and minutes of the rupture…”

Since the alarms would have indicated conditions that could adversely affect the safe operation of the pipeline,” the PHMSA says: “The expected initial corrective action is to notify appropriate company and emergency response personnel to investigate and mitigate the effects of any unsafe conditions. This was not done until approximately 17 hours after discovery of the conditions.”

The letter says Enbridge did not follow established written procedures for responding to,
investigating, and correcting the cause of pressure outside of normal operating
limits during the shutdown and Enbridge did not notify responsible personnel in accordance with
the procedure. It says that Enbridge has not developed a specific written procedure for responding to an Invalid Pressure Alarm, but has instead developed a written procedure for required actions based on alarm severity.

For an S6-Severe Alarm, the procedures require the controller to: (1) Notify the Shift Lead; (2) Advise on site/on-call personnel; (3) Create a F ACMAN (Enbridge term for Facility Management record-keeping system used to documents abnormal operating conditions).

The PHMSA says “Enbridge failed to take any of these required actions.”

It goes on to allege that Enbridge did not follow established written procedures for responding to,
investigating, and correcting the cause of pressure in the pipeline that were outside of normal operating limits and goes on to say that Enbridge has not developed a specific written procedure for responding to a Low Suction Pressure Alarm.

As in the previous case, Enbridge’s procedures were based on “alarm severity.”

For an S4-Warning Alarm, the procedures require (1) Discretionary controller response to alarm dependent on operating conditions, (2) Notify the Shift Lead if unsure of response, (3) If multiple S4 alarms are active for a related issue, the response and severity may be raised, ( 4) FACMAN creation may be required, (5) Advise on-site/on-call personnel if required.

Again the PHMSA alleges: “ Enbridge did not take any of the above actions, or any
other actions, in response to this alarm. The fact the Marshall suction pressure
abruptly dropped to 0 psig, which was unexpected and abnormal, dictates followup
investigative actions in accordance with the procedure, in order to determine
the reason/source of the alarm.”

The report says that Enbridge did not follow established written procedures for responding to, investigating, and correcting the cause of an unintended shutdown at the Marshall Unit and Enbridge also did not notify responsible personnel in accordance with the procedure.


The PHMSA says Enbridge did not take necessary action to minimize the volume of hazardous
liquid released in the event of a failure or notify police during an emergency, even though that was required by Enbridge’s own emergency notification procedures, saying that the shift lead in the Edmonton control room should have initiated the procedures at 18:03, on July 25, when an alarm went off.

Enbridge policy on leak “triggers” that is “unexplained abnormal operating conditions or events that indicate a leak” requires that a number of procedure be started once a leak trigger is detected. The PHMA says neither the suspected leak or confirmed leaks procedures were executed by the Edmonton control room nor were managers, field personnel and local police notified.

Public Awareness

The PHMSA letter says that Enbridge did not evaluate the effectiveness of its public awareness program in accordance with the written procedures. The company’s plan calls on the public awareness manager to “informally assess the effectiveness of public awareness efforts” each year, but the PHMSA says “Enbridge could not demonstrate this was being performed.”

The investigation identified a number of instances where actions taken by members of the PAP target audience were not in accordance with the program message (e.g. not associating the odour with that of a possible crude oil release, not contacting Enbridge’s Emergency Number in response to the odour complaints, and entry into the spill area by untrained individuals).

The release resulted in a number of local residents being displaced, contamination of approximately 38 miles of the Kalamazoo River, and contamination of affected fish and wildlife.

Accident reporting

The PHMSA also alleges that Enbridge failed to properly report the incident to the proper authorities, in this case the US Department of Transportation. It says Enbridge failed to accurately report the time of failure and other significant facts relevant to the extent of damages associated with a pipeline rupture which occurred at 17:58, on July 25, 2010. According to the PHMSA, Enbridge incorrectly reported the time the accident was discovered as 09:45 July 26 and also reported the material had not reached the Kalamazoo River yet, and that the release was secured.

According to the letter, investigative interviews show that the Edmonton control room personnel were aware that there were abnormal conditions on the pipeline, that “the rupture had likely occurred when the pipeline was shutdown, the night before” that “the release was not secured, as oil was moving down the Kalamazoo River. The impacts to people, property, and the environment were immediately obvious when emergency response actions were initiated.” The letter says that Enbridge did not file follow up reports to augment the initial report to Department of Transportation nor did it “currently available accident information” to the DOT within 30 days.

A report filed by Enbridge on August 25, 2010, again misreported the time of the spill, now calling it “11:41 on July 26, 2010, when it had been clear within hours of discovery that the failure date and time was approximately 17:58 on July 25, 2010.” It goes on to say that Enbridge report “also did not indicate the number of general public evacuated, even though daily EPA Pollution Reports indicated the number of residences that were evacuated, and Enbridge paid for alternative lodging for these evacuees as necessary.” It also alleges that some of the technical details in that August report on pipeline pressure were inaccurate and goes on to say that some subsequent reports filed by Enbridge were inaccurate although “the correct information has been known by the operator for some time.”

One example was that a witness told investigators on December 5, 2011 indicated that Enbridge determined the total costs of damages associated with the Line 6B rupture were currently $720
million but the value reported in a report filed on February 22, 2011 report was $550 million. The PHMSA says: “It is unknown at what point the $720 million value was determined by Enbridge, but the reported value was not updated until March 6, 2012, approximately 3 months after the interview.”

Employee qualifications

The PHMSA report alleges that Enbridge allowed an “unqualified individual to perform covered tasks (operating a pipeline) without direct observation by a qualified individual.” It says a previously qualified controller, who had been off duty for an extended period of time, was operating the pipeline console, and a qualified controller was assigned to oversee the operations.

According to the investigation “the qualified pipeline controller, even though seated adjacent to the un-qualified pipeline controller, was performing other tasks, and not directing and observing line operations, as required by the written procedures.” The report says that after multiple alarms went off “the unqualified pipeline controller did not respond to the alarms in full accordance with the operator’s written procedures, and the qualified pipeline controller’s oversight of the operations was insufficient to ensure that the required actions were taken.

In its news release, Enbridge added:

Enbridge has worked closely and cooperatively with all federal and state agencies, including PHMSA and the National Transportation Safety Board (NTSB) throughout the investigation of the Line 6B accident, and is now reviewing the NOPV in detail. Enbridge will not comment specifically on the contents of the NOPV until it completes that analysis.

On June 18, 2012, Lorraine Little, Enbridge senior manager of US public affairs, liquids operations and projects,  appeared before District of Kitimat Council. At that time, Little outlined how the company was working on clean up operations. She also said Enbridge had improved its operations and emergency response since the Michigan incident but would not go into detail, due to ongoing investigations and litigation in the United States.


PHMSA notice of possible violation to Enbridge Energy




Enbridge to spend $1.6 billion to upgrade Michigan pipeline, old line will be “abandoned in place”

Enbridge announced Thursday, May 10, 2012, it plans to spend $1.6 billion to upgrade and replace its pipeline through Michigan and Indiana, including the site of the leak in to the Kalamazoo River in July 2010. What Enbridge calls the “6B pipeline” broke open near Marshall, Michigan and spilled more than 840,000 gallons of bitumen sands oil into Talmadge Creek and the Kalamazoo River.

That doesn’t mean, however, that the broken and now disused pipeline will be demolished. Enbridge says that pipeline will be “abandoned in place,” meaning it will be deactivated, purged of any remaining oil and then filled with an “inert gas,” a move that is permitted under United States pipeline safety regulations.

In a fact sheet, Enbridge says it plans to replace approximately 75 miles of its 30-inch diameter “Line 6B pipeline.” The 75 miles to be replaced with new pipe consists of about 10 miles in Indiana and 65 in Michigan, with replacement pipe to be either 30 or 36-inch diameter pipe in Indiana and southwestern Michigan and 30-inch pipe in the eastern Michigan segment.

Enbridge map of pipeline 6B
A map, released by Enbridge, showing its plans for upgrading and replacing the 6B pipeline in Michigan and Indiana.

Enbridge says the new pipeline will closely follow the route of the old one.

Completion of this project, scheduled for late 2012, should result in fewer integrity digs and repairs along the replacement segments in the future, resulting in fewer disturbances to landowners and local communities.

For this project, we plan to remove the oil from the pipe segments being replaced and fill them with nitrogen before abandoning in place, as prescribed in regulations. In most cases, the new pipe segments will be installed adjacent to those segments being replaced.

Enbride says the “The Line 6B Maintenance and Rehabilitation Project” is part of the company’s “pipeline integrity maintenance program” that includes:

  • Using high-quality steel and anti-corrosion coatings when constructing our pipelines.
  • Installing cathodic protection (a low-level electrical charge) to inhibit corrosion of underground pipelines. Pressure testing of new and existing pipelines with
  • Periodically inspecting the inside of the pipeline with sophisticated tools called “smart pigs” to locate
  • pipe abnormalities so they can be corrected.
  • Conducting preventive maintenance programs.
  • Continually monitoring pipeline operations from Enbridge’s control center, which has remote shut-down capabilities and can monitor pressures and conditions when the pipeline is flowing.
  • Completing regular ground and aerial inspections of the right-of-way.
  • Providing public awareness safety information to emergency responders, local public officials, excavators and those who live and work along our pipelines.

Enbridge says the aim of the project is to restore the capacity of the pipeline to meet increasing
demand driven by current and planned refinery upgrades and expansions in Michigan, Ohio
and eastern Canada.

Enbridge plans to complete the Indiana segment of the replacement pipeline by 2012. As for the Michigan pipeline, the company says four segments will be completed in 2012 and the last 160 miles will be completed in late 2012 or early 2013.

All of Enbridge’s plans are subject to U.S. Federal and state approvals.

As for the spill in the Kalamazoo River, the Kalamazoo Gazette, in covering the Enbridge announcement reported today

Although one section of small section of the Kalamazoo River that had been closed following the Enbridge spill in 2010 reopened last month – just three of the 40 miles affected – environmental officials have said significant amounts of oil still remain submerged in the river bed, although they say it is not dangerous to human health. State and federal agencies are slated to open more parts of the river in coming months pending investigation.


Related Links:
WOOD-TV Enbridge plans new $1.6 bil pipeline Oil pipeline will not be demolished

NPR Michigan Radio Enbridge wants to replace 200 miles of aging pipeline in Michigan


Enbridge Handout Line 6B Phase 2  (pdf)

Enbridge Handout Line 6B Replacement Project  (pdf)

A map released by Enbridge showing its central Canada and US pipelines


Report on Enbridge Kalamazoo spill delayed until fall: Michigan media

The official United States National Transportation Safety Board report on the Enbridge pipeline breach and oil spill at Kalamazoo, Michigan has been delayed to the fall, according to local media reports.

The Kalamazoo Gazette and WDIV TV say the report will be six months late.

The Associated Press, quoting the Gazette says:

The National Transportation Safety Board attributed the delay to other investigations into separate pipeline incidents.

“Our investigations look at numerous aspects that could have played a role in the accident, such as maintenance, human factors, pipeline operations, and materials,” said NTSB spokesman Peter Knudson.

“We’ll also look at the emergency response and environmental remediation efforts to assess how they were handled.”

Local Enbridge spokesman Jason Manshum said the company will be able to finish its internal investigation after the report is released. Manshum said Enbridge is working to take what it’s learned from the spill and share that knowledge.

Michigan OKs plan to replace 15 miles of Enbridge gas pipeline: Lansing Journal

Michigan Pipeline

Michigan OKs plan to replace 15 miles of Enbridge gas pipeline Lansing Journal

Michigan has approved a plan by Enbridge Inc. to replace some sections of a pipeline that leaked more than 800,000 gallons of oil into the Kalamazoo River near Marshall in 2010.

The Michigan Public Service Commission on Wednesday approved plans to replace three 5-mile sections of pipeline in Calhoun, Cass and St. Joseph counties. Calgary, Alberta-based Enbridge proposed the replacements earlier this year.

Cleanup worker files whistle blower lawsuit over Kalamazoo oil spill

Energy Environment Law

The Kalamazoo Gazette reports in
Judge to hear whistle-blower lawsuit of Kalamazoo River oil spill worker

A Calhoun County judge next week will hear a whistle-blower lawsuit from a former Kalamazoo River oil spill cleanup worker who said he was fired after telling the media and state and federal agencies that crews were told to cover up oil instead of cleaning it up.

John Bolenbaugh, of Athens, filed suit Nov. 9 against his former employer, SET Environmental Inc.

[A] brief says that the lawsuit stems from “massive operations engaging in cover-ups, lies and deceit.”

Enbridge, the brief claims, ordered contractors including SET to “deliberately and intentionally engage in improper
clean-up efforts, which included covering up oil, spreading out oil, and hiding spilled oil from the public and EPA.”

The lawsuit also claims that Bolenbaugh was wrongfully fired because he “reported and threatened to further report to the EPA and other public bodies what he believed to be illegal activities relating to the improper cleanup efforts.”

Enbridge spokesman Jason Manshum said Wednesday night that the company “would never instruct a contractor to cover oil.”

“Since the outset of the incident, our goal has been to restore the area as close as possible to its preexisting condition,” Manshum said. “That is our only goal and we remain fully committed to that goal.”

Enbridge, EPA dispute amount of “oil” spilled at Kalamazoo

Energy Environment

AP reports that Enbridge and the US Environmental Protection Agency are haggling over how much “oil” was spilled into the Kalamazoo River. Enbridge is sticking with its estimate that 849,000 gallons were spilled when the pipeline was breached. The EPA says 1.1 million gallons have been recovered and there may be more to be recovered.
Apparently it all comes down to different definitions of the word “oil.”