UPDATE 4-US govt issues corrective order for Exxon spill
* Order says Exxon estimates 3,500-5,000 barrels of oil spilled
* Line was inspected in February, results not yet known
* Arkansas AG launches probe into spill
* Rain could complicate cleanup, nearby lake protected by booms
By Suzi Parker and Kristen Hays
LITTLE ROCK/HOUSTON, April 2 (Reuters) - U.S. pipeline regulators on Tuesday ordered Exxon Mobil Corp to take necessary corrective action for its ruptured pipeline that spilled thousands of barrels of crude oil into a small Arkansas housing development last week.
The U.S. Transportation Department's Pipeline and Hazardous Safety Administration's corrective order said Exxon estimated that 3,500 to 5,000 barrels of crude spewed from the breach. Exxon had so far only said publicly that it had recovered 12,000 barrels of oil and water.
"The cause of the failure is still undetermined and the investigation is ongoing," PHMSA's order said.
Earlier on Tuesday, Arkansas launched an investigation into the cause and impact of the rupture, just as forecast rain was expected to complicate the cleanup.
Arkansas Attorney General Dustin McDaniel asked Exxon to preserve all documents and information related to Friday's spill and ongoing recovery at the site in Mayflower, Arkansas, about 20 miles northeast of Little Rock.
"This incident has damaged private property and Arkansas's natural resources. Homeowners have been forced from their homes," McDaniel said in a statement. Asking Exxon to secure the documents is the "first step in determining what happened and preserving evidence for any future litigation," he said.
Exxon spokeswoman Kim Jordan said the company will "cooperate fully" with any investigation.
The spill from Exxon's 848-mile (1,381 km) Pegasus line, which covered lawns and snaked down residential streets, forced the evacuation of 22 homes as police blockaded the affected area. The strong smell of oil, which resembled asphalt, permeated the town far beyond the affected area, a Reuters witness reported on Monday.
The incident has received widespread attention and stoked a national debate about the safety of carrying rising volumes of heavy crude from Canada into the United States.
Some environmentalists have used the incident to illustrate why pipelines, such the proposed Keystone XL line that would carry Canadian crude to the U.S. Gulf Coast, should not be built.
Exxon said in a statement on Tuesday that 14 "oiled" ducks, two turtles, and one muskrat have been recovered for treatment following the spill. Two other ducks were found dead, the oil major said.
The pipeline remained shut on Tuesday, and Exxon had yet to say how long repairs would take and when the pipeline might restart.
Exxon also said on Tuesday that a plan to allow residents to return to their homes was under way, though the speed of the return would depend on approvals from state health authorities.
The company was developing a plan to excavate, remove and replace the ruptured portion of the near 65-year-old line, which transports Canadian crude oil from Illinois to Texas. Excavation is crucial in determining the cause of a pipeline spill.
PHMSA's order issued Tuesday said Exxon was preparing to install valves to enable removal of the damaged portion of the pipe. That section will be sent to a metallurgist for examination and failure analysis.
The order also said Exxon learned of the failure on Friday afternoon because pressure in the pipeline dropped. The company shut valves north and south of the rupture site - 18 miles apart - within 16 minutes of the pressure drop, PHMSA said.
The order noted that the pipe was originally built in 1947 and 1948. It used to transport oil from Texas to Illinois, but in 2006 Exxon reversed the flow to move Canadian crude south.
"A change in the direction of flow can affect the hydraulic and stress demands on the pipeline," PHMSA's order said.
The order also noted that Exxon inspected the line in July 2010 with a device that both cleans and finds problems, but no anomalies were found. The area of the rupture also was inspected in February this year, but Exxon has not yet received results of that test.
The order said Exxon must submit a restart plan before the line can resume service post-repair, and metallurgical tests must be completed on the damaged section within 45 days.
Also, when the line restarts, the pressure used to move crude must be 80 percent of what it was when it ruptured, PHMSA said.
Meanwhile, rain was forecast on Tuesday afternoon and expected to remain on and off for at least two days, which could complicate cleanup efforts. The spill occurred a mile from Lake Conway, a popular fish and wildlife area stocked with bass, catfish, bream and crappie.
Local responders that included firemen, city employees, county road crews and police built dikes of dirt and rock which stopped crude from fouling the lake, according to Faulkner County Judge Allen Dodson.
Exxon later deployed 3,600 feet of boom near the lake as a precaution.
Exxon spokesman Alan Jeffers said that rain would not hamper clean-up efforts, but it could carry some of the oil sheen towards the lake.
"Our big focus is to keep it from moving from the ground to the lake," Jeffers said.
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