Pipeline leak sets owner back $14.3m
The rupturing of Auckland’s jet fuel pipeline cost Refining NZ $14.3 million.
The pipeline was out for two weeks last September and led to airlines rationing their fuel and a string of flight cancellations.
Refining NZ chief executive Sjoerd Post released the total cost of the pipeline leak in an announcement to the New Zealand stock exchange yesterday.
The incident lost the company $8.3m in revenue and another $6m in ‘‘extra costs’’. Insurance covered $2.9m of the losses.
Last year, Refining NZ forecasted the incident would take a $10m to $15m bite out of its annual revenue.
Refining NZ was contacted to break down the extra costs.
Air New Zealand reimbursed affected travellers at the time. The airline has been asked if it received any of the $6m from Refining NZ to cover the cost it passed onto travellers.
The pipeline transferred fuel from Refining NZ’s Marsden Point Refinery in Ruakaka, Northland, to Auckland.
The pipe burst in a farmland area and leaked 124 cubic metres of fuel near the refinery in September.
A Northland Regional Council investigation found no immediate cause. In February it announced it had no grounds to prosecute Refining NZ or the company that monitors the pipe, First Gas.
Council group manager Colin Dall said that ‘‘in a nutshell, the discharge was beyond the control of either party or their employees’’.
An ‘‘unknown digger illegally searching for swamp kauri’’ appeared to have gouged the pipeline some time after July 2014, he said.
Refining NZ turned up the pressure in the pipeline about a month before it ruptured to carry 5 per cent more fuel.
Refining NZ spokesman Greg McNeill ruled out links between the increased pressure and leak last year.
At its annual shareholder meeting in Auckland yesterday, Post said the company was ‘‘pursuing a number of resilience improvement initiatives’’.
The pressure in the pipe was now at a higher level than before the leak, he said.
He welcomed the council’s findings and apologised for the disruption the leak caused.
‘‘[The] regional council has decided not to prosecute us, with external expert studies concluding … the pipeline was well run in the lead-up to the incident.’’