REGULATION:

N.D. pipeline spill prompts calls for better oversight

North Dakota needs to do more to ensure that pipelines can safely carry the rapidly expanding oil production from the Bakken Shale, state officials, transportation experts and environmentalists said after a pipeline leaked 20,600 barrels in a wheat field last week.

It typically takes months to determine the cause of a pipeline leak. The North Dakota accident fits a general pattern, though, of pipeline problems that critics have pointed out over the past few years -- it involved an older pipeline and there appeared to be a delay in detecting the leak.

According to published reports, it's the biggest oil spill in North Dakota since the current oil boom began in the Bakken Shale, a dense rock formation that has been opened up by horizontal drilling and hydraulic fracturing.

Oil pipelines are regulated by the Department of Transportation's Pipeline and Hazardous Materials Safety Administration, known as PHMSA. The state may have to step up its own inspections, though, if the federal agency can't keep up, said Brian Kalk, chairman of the North Dakota Public Service Commission, which regulates gas pipelines and has authority over siting for oil pipelines.

"When you get more pipeline in the ground, you need more inspectors," Kalk said in an interview Friday. "I just think they need to make sure they have the adequate people to adequately inspect it. Otherwise, then, that's something the state should probably be looking at doing."

Kalk also questioned why the spill wasn't made public for 12 days and whether the pipeline's computer-control system was adequate enough to detect the leak.

"All these things are tied in together -- and if they're not working, you're going to lose the public trust," he said.

The Dakota Resource Council, an environmental group, said the leak showed the need for tighter regulation.

"It is hard to imagine how fewer regulations would have prevented this spill, made it more transparent to the public, or sped up the cleanup," Don Morrison, the group's executive director, said in a statement. "It also puts the spotlight on current state government claims that it is uniquely qualified to deal with energy development in our state."

Delays in detection

The farmer who discovered the leak, Steve Jensen, said he smelled oil in the area for four days before noticing oil spurting 6 inches from the ground, the Associated Press reported.

Tesoro Logistics LP, of San Antonio, initially told state officials that 750 barrels had spilled when it reported the incident Sept. 29 but increased its estimate to 20,600 barrels Oct. 8, said Dennis Fewless, director of the state Health Department's Water Quality Division.

The pipeline has been shut down, and there's been no impact on water quality or wildlife, Tesoro said in a statement Thursday.

Tesoro said the 6-inch pipeline was installed in 1993. It runs from Tioga, which is in the heart of the Bakken Shale oil field, to Black Slough, N.D.

Tesoro tested the pipe in early September with an inline device known as an "intelligent pig" and was awaiting the results of those tests when the leak occurred, Megan Arredondo, a Tesoro spokeswoman, wrote in an email.

PHMSA officials weren't available to comment due to the government shutdown.

The agency has been criticized as understaffed and slow to respond to the rapid evolution of the pipeline system, according to government watchdogs.

The National Transportation Safety Board faulted PHMSA's lax regulations for contributing to a 20,000-barrel oil spill in Marshall, Mich., in 2010. PHMSA didn't give the pipeline's owner, Enbridge Inc., clear guidance on whether it was required to fix cracks in its pipeline and whether the company's response plan was adequate. PHMSA had only 1.5 staffers assigned to monitor response plans for 450 facilities, the NTSB reported.

The U.S. needs to make sure it has enough inspectors to adequately police the pipeline network, and it could pay for the staff by charging a fee to pipeline operators, said James Hall, a former NTSB chairman.

"If we don't invest in our infrastructure, as they say in the South, we're eating our seed corn," he said.

PHMSA says on its website that pipeline safety has improved over the years, and the agency issued a record $8.75 million in fines in 2012.

At the same time, the Wall Street Journal reported in August that pipeline spills increased in 2013, after decreasing for the previous two years, based on PHMSA data. EnergyWire reported in July that about 371,000 barrels of oil and other liquids spilled from wells, tanks and pipelines in 2012 -- more than the 1989 Exxon Valdez tanker crash -- based on an analysis of data from 12 states.

The increase in spills came as U.S. oil production reached levels not seen in 20 years. Much of the increase has come from the Bakken formation, which pushed North Dakota's output to 874,000 barrels a day in July, from 173,000 barrels a day in July 2008.

The rapid growth has overwhelmed the state's ability to enforce safety in the oil field, said Mindi Grieve, field director for the Environmental Law and Policy Center.

"These are the kinds of things that fall through the cracks when you have too-fast development," she added.

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