California Gov. Pete Wilson last week signed into law a bill clarifying oil pipelines financial liability for damage caused by leaks or discharges.
The new law imposes liability of as much as $100 million on pipelines that qualify as a public utility. The measure passed both houses of the California legislature with no opposition.
A spokesman for the proposed Pacific Pipeline System Inc. hailed the law as a win-win move for everyone: property owners, the public, and public agencies.
Pacific Pipelines Dan Mihalik said, The bill recognized property owners concerns about compensation and the accountability of pipeline companies. By responding to those concerns, the legislation clears the air of any uncertainty and makes it easier to move ahead with our pipeline.
System, liability
Pacific Pipeline is planned as a 132 mile crude oil system in southern California. Proposed route for the 130,000 b/d line begins at Emidio in Kern County and follows the Interstate 5 highway to deliver crude oil feedstock to Los Angeles area refineries.
Mihalik cited unmatched pipe- line safety measures that will include a fiber optic cable to monitor the system, along with sensors and automatic shutdown valves.
He said Pacific Pipeline, well before the liability measure became law, committed to buy a $100 million liability policy for the life of its system. It backed that up with a $100 million performance bond, amounting to a package greater than those required by the toughest state and federal programs.
Pacific Pipeline figures the package equals more than 20 times the cleanup costs of any leak or spill that has occurred on arc welded lines.
Pacific Pipelines voluntary financial commitment now has the force of law behind it, he said. With the liability issue resolved, an obstacle has been removed and incentives for needed pipeline development have been kept in place.
Project partners estimate their new line will eliminate 50,000 trips/year by tanker trucks and a unit train that presently transport Kern County crude. Partners are units of Chevron Corp., Texaco Inc., Unocal Corp., and Anschutz Co. Copyright 1995 Oil & Gas Journal. All Rights Reserved.
