Secrecy surrounding Exxon's Pegasus probe fuels questions over Keystone XL plans

Exxon Mobil Corp.'s bid to shield from public view its inspection results for a shuttered pipeline that leaked at least 5,000 barrels of heavy Canadian oil sands crude in Arkansas this spring is galvanizing a debate over transparency and spill readiness that could affect the future of Keystone XL.

Federal regulators at the Pipeline and Hazardous Materials Safety Administration are set to decide as soon as this week whether Exxon can claim a trade secret exemption that would let it withhold inspection data for the ruptured Pegasus pipeline from Arkansas officials seeking it, including two GOP members of Congress. The immediate dispute hinges on a request from the local water utility to relocate the 96,000-barrel-per-day Pegasus following the spill, but the Arkansas conflict over Exxon's confidentiality rights echoes warnings from KXL opponents that pipeline operators are too loosely overseen to ensure safe oil transportation.

Exxon sought "confidential treatment" of both a 2010 Pegasus inspection and one completed several weeks before the March 29 spill in Mayflower, Ark., PHMSA chief Cynthia Quarterman told Arkansas lawmakers and the utility Central Arkansas Water (CAW) in a Friday letter first reported by the Arkansas Times. PHMSA must notify the oil giant if it decides to deny the trade secret request under the Freedom of Information Act and may opt to keep a close hold on the inspection data while it pursues a civil enforcement case against Exxon, agency spokesman Damon Hill said in an interview.

CAW and Exxon are discussing the utility's concerns for the Lake Maumelle watershed, which keeps faucets running for 400,000 Arkansans and sat hundreds of feet from the six-decade-oil Canadian oil sands crude pipe. Exxon spokesman Aaron Stryk said his company "is committed to sharing appropriate pipeline integrity data related to the watershed," but CAW Protection Manager John Tynan described the talks as yielding "no direct information" on the Mayflower spill's ramifications.

The sought-after inspection results are "critical to help safeguard the drinking water supply," Tynan said in an interview. "We are both disappointed and surprised about their refusal to share that."


Rep. Tim Griffin (R-Ark.), who co-signed state officials' records request, yesterday hailed "PHMSA's work and investigation on this issue" in a statement, adding: "Community leaders and the public need to know the facts so that we can do everything in our power to make sure the water source for more than 400,000 Arkansans remains safe."

Pipeline Safety Trust Executive Director Carl Weimer, whose watchdog nonprofit is respected by both industry and environmentalists, was less surprised by the FOIA invocation. Integrity management plans that operators such as Exxon and KXL sponsor TransCanada Corp. must draft to monitor safety along their pipelines also are kept closely held by private-sector companies, not public regulators, he explained.

"I've always been suspicious that this is planned this way, but industry doesn't have to give this stuff to PHMSA -- it's never in their hands, so no one can ask for it" under FOIA law, Weimer said in an interview.

He added a crucial caveat: "I don't think I've been able to get anybody to say that out loud."

When EnergyWire requested a copy of the integrity management plan for the southern leg of KXL, approved by the White House last year and set to start operation before 2014, a TransCanada spokesman aligned with standard industry practice by saying that document is "not something that we ever produce publicly ... for the safety and security of our employees."

The Pegasus rupture spilled heavy crude from Canada's oil sands, reviled by environmentalists for its higher carbon footprint than conventional oil and the same type of fuel that would dominate KXL. Exxon has not yet asked to begin reshipping fuel along the line's northern portion, and PHMSA denied a previous request to allow oil to run through its southern leg outside the spill zone.

More plans under wraps

Public release of emergency response plans and facility response plans, two separate requirements for pipeline companies to ensure oil spill preparation, is a major sticking point for activists seeking to block a presidential permit for the $5.3 billion KXL. The State Department's environmental impact statements for the controversial oil sands crude link between Alberta and the Gulf Coast include placeholder emergency plans drafted for its predecessor pipeline, known simply as Keystone, and do not touch on the facility response plan.

Paul Blackburn, an independent legal consultant to green groups and other pipeline safety nonprofits, urged the State Department to examine TransCanada's facility response plan in an April memo submitted to the government by the Plains-state anti-KXL group Bold Nebraska.

"A failure by PHMSA to ensure that TransCanada has complied with federal law could result in a botched worst case oil spill response with disastrous environmental and financial impacts and consequences," Blackburn wrote.

Another nonprofit watchdog group, Public Employees for Environmental Responsibility, recently sued PHMSA for disclosing six of 300 emergency response plans it sought under FOIA (EnergyWire, April 11).

Weimer said PHMSA took more than a year to begin responding to his group's FOIA requests for facility response plans that are expected to address "how big a spill could be, what resources they have to clean spills" and other readiness capabilities. Emergency response plans, by contrast, are tailored for local responders to facilitate communication on the ground in the event of an oil leak.

A provision in Congress' 2011 pipeline safety law called on the agency to make the facility response plans more publicly available. The conservative Canadian government of Prime Minister Stephen Harper, acutely aware of KXL's uncertain future and eager to expand U.S. markets for oil sands imports, yesterday vowed to ensure that "companies' emergency and environmental plans are transparent and easily available to the public" as part of a broader safety agenda that would set a $1 billion liability floor for pipeline operators.

What's Exxon hiding?

The documents shielded by Exxon likely include the result of in-line Pegasus inspections typically performed using "smart pigs," state-of-the-art robotic devices descended from simpler spherical tools that made piglike squeals as they moved through the interior of pipes. Smart pigs are designed to detect potential future failures or anomalies inside steel tubes that run hydrocarbons, but Weimer of the Pipeline Safety Trust said different breeds are tuned finely enough to catch trouble spots that may not require immediate attention.

"If I try to put the industry's hat on, I can kind of understand that they'd be worried about putting out a report about 10,000 flaws on 5 miles of pipe, because people in Mayflower would freak out," he said. "But it's too bad that they haven't done a better job of educating the public before there's an incident so they can actually explain that."

A PHMSA-commissioned study of Canadian oil sands crude's behavior within pipelines this week sparked fierce lobbying on both sides of the KXL controversy with a finding that the heavy fuel poses no greater risk of a pipeline leak than its conventional cousins. The conclusion from the National Academy of Sciences earned consternation from environmentalists and plaudits from the oil industry (Greenwire, June 25).

Stryk, the Exxon spokesman, referred to the inspection results as containing "a significant amount of data," adding that "much of this information is confidential in nature due to commercial and other considerations."

Weimer suggested a compromise approach to the dispute. Because the industry argues that "there's only a few people who can interpret the data," he said, inspection firms "have to be writing a report for people at the pipeline companies, and I think that report should be available."

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