US investigating Exxon pipeline, prior problems found

Mon Jul 4, 2011 4:41pm EDT

* U.S. agency found prior problems at Exxon pipeline

* Exxon had been faulted for leaking valves on pipeline

* U.S. govt will have to approve restart of pipeline

By Tom Doggett

WASHINGTON, July 4 (Reuters) - The U.S. pipeline safety regulator said on Monday it is investigating the leak at Exxon Mobil's (XOM.N) Silvertip Pipeline in Montana that spilled about 1,000 barrels of oil and that it had warned the company before about problems with the pipeline.

"Inspectors are on site and have initiated an investigation into the cause of failure," said a spokeswoman with the Transportation Department's Pipeline and Hazardous Materials Safety Administration.

The spill, which Exxon Mobil found early Saturday near Billings, Montana, released up to 1,000 barrels of oil, or 42,000 gallons, into the Yellowstone River.

Though the Exxon pipeline is relatively small and does not cross state lines, the agency still regulates it.

PHMSA would have to approve a restart of the pipeline, said the spokeswoman, who added it was unclear when that might happen.

Depending on what inspectors find during their investigation, the agency may issue a citation or a notice requiring the company to take specific correction action, the spokeswoman said.

After inspecting the pipeline in July 2009, PHMSA issued a warning letter to Exxon a year later about oil leaking from some of the valves on the pipeline.

The agency said the valves did not have a means for clearly indicating whether they were opened or closed. As a result "there was fresh crude oil on the soil immediately adjacent to the valves," PHMSA said in its warning letter.

It also faulted Exxon for not following up in a timely manner on atmospheric corrosion issues that were identified during three years of corrosion surveys on the pipeline.

In addition, the agency said Exxon did not have an updated map or drawings of the pipeline to include information on the pipe's reconditioning near Rock Creek from 1999 to 2001. The agency said a mainline valve shown on the map appeared to no longer exist.

"Exxon Mobil must update the alignment of the Silvertip Pipeline to ensure that the drawings accurately reflect the pipeline location and the facilities installed," the agency said.

Exxon resolved all the concerns raised by the agency and no fine was issued.