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Federal report: Exxon put off repairs, ignored data 

Pipeline agency orders Pegasus plan overhaul.

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In the years leading up to ExxonMobil's Pegasus pipeline rupture in Mayflower, the company delayed a crucial inspection, put off urgent repairs, masked pipeline threats with skewed risk data and overlooked its own evidence that the oil pipeline was prone to seam failures, according to federal pipeline regulators.

The assertions are laid out in a bluntly worded notice sent to Exxon and released Nov. 6 by the Pipeline and Hazardous Materials Safety Administration (PHMSA). The preliminary citations, which came with a proposed $2.66 million fine for Exxon, grew out of the agency's investigation into the March 29 Pegasus seam failure that sent an estimated 210,000 gallons of crude into the Northwoods subdivision, surrounding wetlands and Dawson's Cove of Lake Conway.

"From my perspective, this is a pretty important notice," said Richard Kuprewicz, a pipeline safety consultant who serves on the PHMSA safety standards advisory committee for oil pipelines. "They've used some fairly strong words ... and they don't choose their words casually."

In the 12-page Notice of Probable Violation and Proposed Compliance Order, regulators said Exxon was "selectively using" risk assessment results for the Pegasus and relying on artificially lowered risk scores to determine if any pipeline segments need extra inspections or special spill-prevention measures. That caused Exxon to underestimate the vulnerability of the pipe that passed through Mayflower and several waterways, PHMSA said.

The agency also ordered Exxon to overhaul many aspects of its integrity management plan, the company's blueprint for keeping the Pegasus safe. Those changes should ensure that decisions affecting final risk scores "are not manipulated," that integrity management processes "are not circumvented," and that "conflicting budget goals" don't affect pipeline integrity priorities, PHMSA said.

PHMSA spokesman Damon Hill said the use of such explicit prohibitions constituted "normal language," for the type of notice Exxon received. The agency's use of words like "manipulated" and "circumvented," he added, "is not implying that those things were done."

Others aren't so sure.

"It sounds like PHMSA is saying 'we don't think you were intellectually honest about this,' " said a pipeline failure analyst who did not want to be identified because of ongoing work with oil companies. "I would read this as PHMSA basically accusing them of gaming their own risk assessment process."

Exxon is still reviewing PHMSA's notice. In a statement, the company said it was "disappointed" with the agency's action, adding that it appeared that the agency "made some fundamental errors" in its analysis. Exxon has 30 days to pay the proposed fine or challenge PHMSA's findings.

"Usually, PHMSA does its homework," Kuprewicz said. "But in fairness to the company, the process hasn't been completed. There could be new information uncovered where PHMSA didn't get something right, or didn't get a critical piece of information."

Industry knew pipe was defective

Most of the Pegasus pipeline, which stretches 858 miles from Illinois to the Texas Gulf Coast, was built in 1947 and 1948 using pipe made by Youngstown Sheet & Tube Co. In 2006, Exxon reversed the pipeline's flow so it could carry diluted tar-like Canadian crude to refiners in Texas. The 65-year-old pipeline, which has been closed since the spill, can carry more than 90,000 barrels per day of diluted bitumen, or dilbit, extracted from Alberta's oil sands.

The Youngstown pipe segments on the Pegasus were made using an inferior manufacturing process that employs low-frequency electric resistance welds (ERW). The industry has known for decades that pipe made that way can harbor hook cracks and other defects that can cause lengthwise seam welds to fail.

Tests following the Mayflower spill determined that at least one of the known types of manufacturing flaws set the stage for the rupture. But regulators have not said what caused one or more previously dormant defects to grow into a 22-foot-long gash along the pipe's lengthwise seam.

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