(Adds National Transportation Safety Board criticism of PHMSA in paragraphs 16, 17)
By Ayesha Rascoe
WASHINGTON, Aug 6 (Reuters) - Enbridge Inc's ruptured pipeline, which leaked about 1,200 barrels of crude into a rural Wisconsin field 10 days ago, seemed like no big deal.
The scene was contained within hours, the line repaired within days. The leak was miles from running water or endangered wildlife. The immediate impact was limited to the evacuation of two houses and "veterinary attention" for some horses and cows.
And yet some experts and traders warn that Canada's Enbridge might not be able to restart its 318,000-barrel-per-day Line 14 for weeks - or even months - as a once-obscure U.S. regulatory agency gets more comfortable with flexing its recently enhanced muscles.
The Pipeline and Hazardous Materials Safety Administration is in the spotlight after two big accidents in 2010 - BP Plc's Macondo disaster in the Gulf of Mexico and another Enbridge leak of 20,000 barrels into Michigan's Kalamazoo River in one of the biggest spills onshore.
"Pipeline accidents have a high profile right now," said Andy Black, head of the Association of Oil Pipelines trade group.
The U.S. Transportation Department, which oversees the PHMSA, began a new pipeline safety effort in 2011, urging operators to replace aging infrastructure and winning Congressional support for more resources and enforcement powers.
Based on interviews with industry experts and a Reuters review of the agency's recent enforcement record, the change has been noticeable, and the message is clear: If pipelines are found wanting, do not count on a quick resumption in oil flows. That message may be doubly true for Enbridge, which has suffered a string of incidents -- one on the same pipeline years earlier.
Last Tuesday, the agency issued Enbridge a corrective action order, a tough but not uncommon response to a spill. Since 2007, the PHMSA has issued 23 such orders.
But the agency went a step further on Thursday. It demanded an exhaustive safety plan, which it and an independent auditor must review, for the entire 1,900-mile (3,060-km) Lakehead pipeline system, not just Line 14. Those were among the toughest terms for any order since a pair of BP oil spills in Alaska in 2006.
"This is PHMSA saying: 'We mean business,'" said industry consultant Don Deaver, a former Exxon pipeline engineer. It could take weeks to hire the independent inspector and begin a review of the system, he added.
The Wisconsin spill was the latest black eye for Enbridge's pipeline network, the main conduit for Canadian crude exports and one of the largest systems in the world. The company says it has had a 99.999 percent success rate in delivering 12 billion barrels over the past decade and is investing $800 million this year as it strives for a perfect record.
But U.S. Transport Secretary Ray LaHood blasted Enbridge last week, demanding the company demonstrate why it should be able to keep operating the pipeline without a complete replacement or major overhaul.
The rupture on Line 14 left a 4-foot by 6-inch (1.2-metre by 15-cm) gash, according to the initial report. The cause of the pipeline failure has not been determined.
Enbridge said on Friday that it had submitted safety plans for both Line 14 and the Lakehead system and was waiting for news. Neither the company nor the PHMSA offered a timetable for when shipments might resume.
The PHMSA will move forward when it is certain that the pipeline is not posing a risk to public safety, said spokeswoman Jeannie Layson.
The agency's pipeline oversight has faced some criticism in the past.
In a report on Enbridge's 2010 spill in Michigan released last month, the National Transportation Safety Board charged that PHMSA's review of Enbridge's oil spill response plan in that case was "inadequate."
Looking at the incident on its own merits, some see little reason for holding up approval.
"I'd be really surprised if this not up and running pretty darn quick, unless they find something structurally flawed," said Sarah Emerson, president of consulting firm Energy Security Analysis Inc in Boston.
Oil traders were less certain.
The disruption helped trigger a record surge in Chicago wholesale gasoline premiums as local refineries operated by BP and Exxon Mobil Corp face tighter supplies. It also threatens to depress crude prices in Canada as a lack of alternative pipelines leaves producers few avenues for export.
"I am expecting an extended standoff - weeks not days," said one crude trader.
At issue is the corrective action order, a list of demands the PHMSA can issue whenever it determines that a pipeline is "hazardous to life, property, or the environment."
The agency determines how and when to apply an order, based on the age of the pipe, the commodities being transported, the operating pressure, the surrounding area and any other factors "deemed important" by the PHMSA associate administrator.
According to a Reuters review of such orders over the past five years, most followed large pipeline leaks or spills in sensitive areas.
The remedies tend to follow a fairly clear pattern.
The orders typically require the PHMSA's permission for a company to resume operations on the pipeline in question. They usually set out a number of additional measures: running the pipeline at reduced pressure; conducting mechanical or metallurgical tests within a month, and additional tests within several months; and reporting more frequently to regulators.
Richard Kuprewicz, head of pipeline consulting firm Accufacts Inc, said Enbridge's history was a major reason why a relatively small spill is getting such a close look.
Besides the 2010 spill, Enbridge's Line 14 experienced a leak of 1,500 barrels in Wisconsin back in 2007 -- an incident that did not result in a corrective order. In November of that year, another Enbridge line caught fire in northern Minnesota, killing two workers.
"There are other issues showing up that indicate the integrity management program is seriously incomplete," Kuprewicz said.
HARD TO PLEASE
It also seems to be getting more difficult for companies to satisfy the PHMSA, whose most powerful enforcement tool is blocking the operation of a line. The agency has rarely fined a company more than $1 million; the $3.7 million penalty it issued against Enbridge a month ago for the 2010 spill was the largest ever.
Of five corrective orders issued to oil companies between 2007 and early 2010, none resulted in the closure of a pipeline for more than a week, according to the agency's own data. The longest outage - five days - occurred on Line 2 of Enbridge's Lakehead system, which spilled 2,237 barrels of crude in Neche, North Dakota, in January 2008, the data showed.
But outages have tended to last far longer since the Michigan spill in mid-2010 heightened public anxiety over oil pipelines. Of 14 incidents that resulted in corrective action orders since that leak, at least eight have resulted in pipeline closures of 25 days or more.
For example, Exxon Mobil's Silvertip line received a corrective order after a spill in Yellowstone County, Montana, last year and was shut for 85 days. Another Exxon pipeline in Louisiana was still shut after a leak on April 28; the company has requested a hearing to discuss aspects of the order.
"The fines are still small - a drop in the bucket compared to the revenues that pipeline companies generate," said Deaver, the former Exxon engineer.
But Deaver said Secretary LaHood's hard-hitting statement demanding Enbridge demonstrate why it should be allowed to continue operating its pipeline without major changes "indicates they are getting more serious." (Editing by Lisa Von Ahn and Marguerita Choy)
Niger Delta ExxonMobil Spill, Nigeria - May 2010
In Nigeria's Akwa Ibom State, an ExxonMobil pipeline ruptured on May 1 and spilled over a million gallons of oil, <a href="http://www.guardian.co.uk/world/2010/may/30/oil-spills-nigeria-niger-delta-shell" target="_hplink">reported the <em>Guardian</em></a>. The leak continued for seven days before it was stopped. <a href="http://www.huffingtonpost.com/omoyele-sowore/the-oil-spill-no-ones-tal_b_649220.html" target="_hplink">HuffPost blogger Omoyele Sowore explained</a> in July 2010 that an oil spill from ExxonMobil operations was nothing new to the country. He wrote that an "environmental catastrophe [had] been going on since December 2009." He described the toll on Nigeria: "There's oil on the surface of the ocean, wildlife coated in crude, fishermen losing their businesses."
Trans-Alaska Pipeline Spill - May 2010
In May 2010, several thousand barrels of oil spilled from the Trans-Alaska pipeline "during a scheduled pipeline shutdown at a pump station near Fort Greely," <a href="http://www.huffingtonpost.com/2010/05/26/alaska-oil-spill-trans-al_n_589974.html" target="_hplink">explained AP</a>. No injuries were reported and officials said the spill was likely "limited to the gravel on top of the containment area's line."
Red Butte Creek Spill, Utah - June 2010
In June 2010, a Chevron pipeline ruptured and spilled oil into a creek near Salt Lake City, Utah. It was first estimated that over 400 to 500 barrels spilled into the creek, which leads into the Great Salt Lake, <a href="http://www.huffingtonpost.com/2010/06/12/utah-oil-spill-500-gallon_n_610232.html#s99698" target="_hplink">reported AP</a>. Around 150 birds were "identified for rehabilitation." The <a href="http://www.huffingtonpost.com/2010/06/14/utah-oil-spill-officials-_n_611014.html" target="_hplink">oil did not reach the Great Salt Lake</a>, however. <a href="http://www.huffingtonpost.com/2010/07/14/chevron-cited-for-oil-spi_n_646340.html" target="_hplink">Chevron was later cited for the spill</a>, which released an estimated 33,000 gallons in total. In March 2012, <a href="http://www.huffingtonpost.com/huff-wires/20120324/us-oil-spill-utah/" target="_hplink">a group of 66 residents of a Salt Lake City neighborhood sued Chevron</a> for damage caused by the Red Butte Creek spill and a smaller spill in December 2011.
Kalamazoo River Spill, Michigan - July 2010
In late July 2010, an Enbridge pipeline in southwestern Michigan sprung a leak and <a href="http://www.huffingtonpost.com/2010/07/27/michigan-oil-spill-among_n_661196.html" target="_hplink">spilled over 800,000 gallons of oil into a creek</a> which flows into the Kalamazoo River. By August, a regional EPA administrator said that significant progress had been made at the site, but "the agency cautioned that it will take months to complete the cleanup," <a href="http://www.huffingtonpost.com/2010/08/02/michigan-oil-spill-epa-of_n_667556.html" target="_hplink">reported AP</a>. By the end of September, <a href="http://www.huffingtonpost.com/2010/09/27/michigan-oil-pipeline-res_n_741233.html" target="_hplink">the pipeline -- which travels from Ontario to Indiana -- was back in operation</a>. The EPA later <a href="http://www.huffingtonpost.com/huff-wires/20111116/us-michigan-river-oil-spill/" target="_hplink">reported that about 1.1 million gallons of oil were recovered</a>, but pipeline operator Enbridge said that it would stick with previous estimates that only about 843,000 gallons were spilled.
Xingag Harbor Spill, Dailan, China - July 2010
In July 2010, China experienced what was reported as the "<a href="http://www.huffingtonpost.com/2010/07/21/china-oil-spill-grows-off_n_653852.html#s120708" target="_hplink">country's largest reported oil spill</a>" after a pipeline rupture near the northeastern port city of Dailan. Several days after the spill, cleanup efforts were underway over a 165 square mile (430 square kilometer) area of the Yellow Sea. The Chinese government reported that about 1,500 tons or 461,790 gallons of oil had spilled, but <a href="http://www.huffingtonpost.com/2010/07/30/china-oil-spill-far-bigge_n_665038.html#s120708" target="_hplink">experts contended that the spill could have been "dozens of times larger,"</a> reported AP.
Peace River Spill, Alberta, Canada - April 2011
In late April 2011, a pipeline in northwestern Alberta began leaking, and created the worst spill in the province in 36 years, <a href="http://www.calgaryherald.com/news/alberta/Rainbow+pipeline+leak+largest+years/4720888/story.html" target="_hplink">reported the <em>Calgary Herald</em></a>. About 28,000 barrels of oil were reportedly spilled from the Rainbow pipeline, which is operated by Plains Midstream Canada. The <em>Globe and Mail</em> revealed that the pipeline operators "<a href="http://www.theglobeandmail.com/report-on-business/oil-on-rainbow-line-halted-8-hours-after-problem-detected/article2013335/" target="_hplink">detected a potential problem nearly eight hours before halting the flow of crude</a>." A nearby school in a First Nation community was closed after residents reported "nausea, burning eyes and other symptoms," and several animals were found dead. In late July, Plains Midstream <a href="http://www.huffingtonpost.ca/2011/07/28/alberta-pipeline-owner-as_n_912796.html" target="_hplink">requested to re-open the pipeline</a> and begin to ship oil to Edmonton again.
Bohai Bay Spill, China - June 2011
In June 2011, an oil <a href="http://www.huffingtonpost.com/2011/07/01/china-offshore-oil-spills-bohai-bay_n_888473.html" target="_hplink">spill occurred about 25 miles off the coast of China's Shandong province</a> in Bohai Bay. A second spill followed in July. In late August, <a href="http://www.huffingtonpost.com/2011/08/26/new-seeps-in-china-spill_n_937809.html" target="_hplink">it was reported</a> that ConocoPhillips had discovered more oil seeps in Bohai Bay, although only "1 to 2 liters (a quarter to a half-gallon) of oil and drilling mud were being released each day." The company reported that the 2011 spills released 700 barrels of oil and 2,500 barrels of drilling mud into the bay and that most of it was recovered. In September, <a href="http://www.huffingtonpost.com/2011/09/05/china-oil-spill-conocophillips_n_949745.html" target="_hplink">China's State Oceanic Administration claimed that oil was still seeping</a> underwater. In early 2012, Texas-based ConocoPhillips <a href="http://www.huffingtonpost.com/huff-wires/20120124/as-china-oil-spill/" target="_hplink">reached a settlement deal with the Chinese government</a> for $160 million.
Yellowstone River Spill, Montana - July 2011
In July 2011, a pipeline beneath Montana's Yellowstone River ruptured and sent an oil plume 25 miles downstream, <a href="http://www.huffingtonpost.com/2011/07/02/yellowstone-oil-spill-pro_n_889363.html" target="_hplink">reported AP</a>. Despite reassurances from ExxonMobil that the pipeline was safe, <a href="http://www.huffingtonpost.com/2011/07/06/yellowstone-river-oil-spill-exxon-mobil_n_891246.html" target="_hplink">the July spill released what was originally estimated to be 42,000 gallons of oil</a>. With other 1,000 workers assisting the cleanup, ExxonMobil <a href="http://www.huffingtonpost.com/2011/11/04/yellowstone-river-cleanup-costs_n_1077106.html" target="_hplink">estimated that it would cost $135 million to clean the river</a>. In January 2012, <a href="http://www.huffingtonpost.com/2012/01/19/exxon-yellowstone-oil-spill_n_1216830.html" target="_hplink">it was reported</a> that ExxonMobil had increased its estimate of the spill size by 500 barrels. AP later <a href="http://www.huffingtonpost.com/2012/04/06/yellowstone-river-spill-response-plan_n_1408328.html" target="_hplink">reported the estimated spill size as 63,000 gallons</a>. <em><strong>CORRECTION:</strong> A previous version of this slide stated the estimated spill size as 63,000 barrels instead of gallons.</em>
North Sea Spill, United Kingdom - Aug. 2011
In August 2011, <a href="http://www.huffingtonpost.com/2011/08/15/north-sea-spill-uk-oil-spill_n_927078.html" target="_hplink">an oil rig off the eastern coast of Scotland began leaking</a> oil into the North Sea. Royal Dutch Shell, which operates the Gannet Alpha oil rig, initially reported that 54,600 gallons of oil were spilled. A second leak soon occurred, turning the spill into the worst in the North Sea in a decade, <a href="http://www.huffingtonpost.com/2011/08/16/north-sea-oil-spill-shell_n_927941.html" target="_hplink">reported AP</a>. Several days later, Shell announced that it had "closed a valve from which oil was spilling into the North Sea," <a href="http://www.huffingtonpost.com/2011/08/19/shell-says-it-has-closed-_n_931379.html" target="_hplink">according to AP</a>. The spill released about 1,300 barrels of oil, which spread out over a 2.5 square mile (6.7 square kilometer) area.
Campos Basin Spill, Rio de Janeiro, Brazil - Nov. 2011
In mid-November 2011, Brazilian authorities began investigating an offshore spill near Rio de Janeiro, <a href="http://www.huffingtonpost.com/2011/11/17/chevron-oil-spill-brazil_n_1100062.html" target="_hplink">reported AP</a>. Chevron initially reported that between 400 and 650 barrels of oil had spilled into the Atlantic, while a nonprofit environmental group using satellite imagery estimated that the spill rate was at least 3,738 barrels per day. Chevron soon claimed full responsibility for the spill. The brazilian division's COO said, Chevron "<a href="http://www.huffingtonpost.com/2011/11/20/brazil-oil-spill-chevron-_n_1104070.html" target="_hplink">takes full responsibility for this incident</a>," and that "any oil on the surface of the ocean is unacceptable to Chevron," reported AP. In December, Brazilian prosecutors announced that they were <a href="http://www.huffingtonpost.com/2011/12/14/brazil-oil-spill-chevron-payment_n_1149554.html"target="_hplink">seeking $10.6 billion in damages</a> from Chevron for the spill that leaked nearly 3,000 barrels of oil. In March 2012, a Brazilian federal judge <a href="http://www.huffingtonpost.com/2012/03/18/brazil-oil-spill-chevron_n_1355923.html" target="_hplink">allowed prosecutors to file criminal charges against Chevron and Transocean</a> and 17 executives from both companies were barred from leaving Brazil.
Rena Spill, New Zealand - Oct. 2011
In October 2011, a Liberian-flagged cargo ship ran aground on a reef in Northern New Zealand and began leaking oil. With oil washing up on shore, a government minister deemed it <a href="http://www.huffingtonpost.com/2011/10/11/new-zealand-oil-spill_n_1004643.html" target="_hplink">the country's largest maritime environmental disaster</a> a week later. Although over 2,000 sea birds were killed by the spill that spilled about 400 tons of fuel oil, <a href="http://www.huffingtonpost.com/2011/11/22/new-zealand-oil-spill-penguins_n_1107289.html" target="_hplink">343 little blue penguins were rescued and cleaned of oil</a>. <em>[<a href="http://www.huffingtonpost.com/2011/12/22/new-zealand-oil-spill-penguins-released_n_1151788.html" target="_hplink">Watch video of the penguins' release into the wild here.</a>]</em> In January, <a href="http://www.huffingtonpost.com/2012/01/10/new-zealand-oil-spill-ship_n_1196568.html" target="_hplink">half of the stricken Rena began sinking</a> into the sea after breaking apart and spilling over 100 cargo containers.
Nigeria Oil Spill - Dec. 2011
The spill, which took place near the coast of Nigeria, was reported as "likely the worst to hit those waters in a decade," <a href="http://www.huffingtonpost.com/2011/12/22/shell-oil-spill-nigeria_n_1164891.html" target="_hplink">according to AP</a>. After two days, the spill had affected 115 miles (185 kilometers) of Nigerian coastline. Several days after the December 20 spill, <a href="http://www.huffingtonpost.com/2011/12/26/shell-nigeria-oil-spill_n_1170198.html" target="_hplink">Shell reported that the leak -- which occurred about 75 miles offshore -- had been contained before it reached the Nigerian coast</a>. The spill, which covered 350 square miles of ocean at its peak, was reported as having released less than "40,000 barrels -- or 1.68 million gallons" of oil.
Also On The Huffington Post...