* Evacuation zone established around site
* No injuries reported
* Emergency official says fire getting smaller (Adds latest Chevron statement)
By Erwin Seba
HOUSTON, Nov 14 (Reuters) - A Chevron Corp. pipeline exploded near a tiny Texas town south of Dallas on Thursday, shooting flames high in the air and prompting evacuations from nearby homes and a school district, but no injuries were reported, the company and emergency officials said
The explosion south of Milford, Texas, was caused by a construction crew that accidentally drilled into a 10-inch liquefied petroleum gas (LPG) line, Tom Hemrick, director of Hill County Emergency Management, told KTVT-TV in Dallas. He said all workers were accounted for
"The fire is definitely getting smaller," Hemrick said of the conflagration in an open field near Milford, which is located some 50 miles south of Dallas.
A 1.5-mile (2.4-kilometer) evacuation zone has been established around the site of the fire, Chevron said on Thursday night. The 700 residents of Milford have been asked to evacuate their homes.
Chevron said it had stopped the flow on a 14-inch LPG line that runs a few feet from the one that blew up and was preparing to empty the product from it.
"The flow of product in the pipeline has been shut off and residual burn continues," the company said of the burning pipeline.
A state regulator said the line was part of the West Texas LPG Pipeline Limited Partnership, a 2,295-mile common-carrier pipeline system that transports natural gas liquids from New Mexico and Texas to Mont Belvieu, Texas, for processing.
Chevron owns 80 percent of the pipeline system and Atlas Pipeline Partners has a 20-percent stake.
Milford's volunteer fire chief, Mark Jackson, told Dallas' WFAA-TV that about 200 students in the town's school district were evacuated, and officials closed off numerous roads around the fire.
A local CBS-TV affiliate broadcast footage of big flames rising from a field and engulfing what appeared to be a drilling rig or other large piece of equipment. Several nearby pickup trucks were burned. (Reporting by Edward McAllister, Jeanine Prezioso, Robert Gibbons and Sabina Zawadzki in New York and Anna Driver, Kristen Hays, Erwin Seba and Eileen O'Grady in Houston; Editing by Terry Wade and Bob Burgdorfer)