Exxon halts 3 plat­forms af­ter spill crip­pled pipeline

The China Post - - WORLD BUSINESS - BY BRIAN MELLEY

The shut­down of a pipeline that spilled up to 101,000 gal­lons of crude on the Santa Bar­bara coast forced Exxon Mo­bil Corp. to halt oper­a­tions at three off­shore plat­forms be­cause it couldn’t de­liver oil to re­finer­ies, the com­pany said Tues­day.

The com­pany tem­po­rar­ily ceased oper­a­tions last week be­cause Santa Bar­bara County re­jected its emer­gency ap­pli­ca­tion to truck oil to re­finer­ies, spokesman Richard Keil said.

A Santa Bar­bara County of­fi­cial said the com­pany’s prob­lem did not con­sti­tute an emer­gency and it could go through the nor­mal pro­ce­dure, which re­quires ex­ten­sive en­vi­ron­men­tal re­view, to get a per­mit to truck the oil.

The shut­down is not ex­pected to have an im­pact on oil prices, but it does harm Exxon Mo­bil’s bot­tom line even though pro­duc­tion from the plat­forms is small com­pared to the com­pany’s over­all out­put, said Tom Kloza, global head of energy at the Oil Price In­for­ma­tion Ser­vice.

Crude was selling last week for US$60 to US$64 a bar­rel and could fetch more than US$91 when re­fined for au­to­mo­bile gas, he said. That pro­vided a lot of in­cen­tive for Exxon Mo­bil.

“I’m sure it’s a royal pain for them,” Kloza said. “Given the profit mar­gins for ga­so­line, whether you have to (de­liver) it by wheel­bar­row or rick­shaw, you’re very mo­ti­vated.”

Exxon Mo­bil had cut pro­duc­tion from the rigs by two-thirds af­ter Plains All Amer­i­can Pipeline’s con­duit was shut down by a May 19 spill that soiled pris­tine coast­line and spread tar balls as far as Los An­ge­les County, some 100 miles away. Nearly 200 birds and more than 100 marine mam­mals have been found dead in the wa­ters.

Fed­eral reg­u­la­tors in­ves­ti­gat­ing the cause of the spill have re­vealed the 2-foot-wide pipe was se­verely cor­roded where it rup­tured but have not is­sued any find­ings or penal­ties.

The pipeline car­ried oil to re­finer­ies from an Exxon Mo­bil fa­cil­ity in Las Flores Canyon that sep­a­rates crude, wa­ter and nat­u­ral gas about 15 miles west of Santa Bar­bara.

Be­fore the shut­down, daily pro­duc­tion from the Hondo, Har­mony and Her­itage rigs that sit 5 to 8 miles off­shore had been cut from 30,000 bar­rels to 10,000 bar­rels.

That pro­duc­tion is just a sliver of the more than 4 mil­lion bar­rels per day Exxon Mo­bil re­ported in the first quar­ter of the year. There are 42 gal­lons in a bar­rel. While the plant is ca­pa­ble of stor­ing up to 540,000 bar­rels of crude, the com­pany said it ex­pected to reach ca­pac­ity less than a month af­ter it filed its June 4 emer­gency ap­pli­ca­tion.

Plains has not pro­vided an es­ti­mate of when it might be able to restart the pipeline af­ter meet­ing fed­eral reg­u­la­tors’ re­quire­ments.

Mean­while, Exxon Mo­bil is weigh­ing op­tions, Keil said. No im­me­di­ate lay­offs are an­tic­i­pated be­cause the plat­forms need to be main­tained while dor­mant, Keil said.

The com­pany’s big­ger prob­lem in Cal­i­for­nia, Kloza said, is get­ting its Tor­rance re­fin­ery restarted af­ter a fire ear­lier this year.

The big­gest lo­cal im­pact of a pro­longed shut­down will be on Santa Bar­bara County’s tax rev­enue, said Mark Sch­niepp, di­rec­tor of the Cal­i­for­nia Eco­nomic Forecast.

Exxon Mo­bil said in its emer­gency ap­pli­ca­tion that the county stands to lose up to US$4 mil­lion in school fund­ing if the Las Flores Canyon fa­cil­ity shuts down.

“When the county says, ‘No, we’re not go­ing to give you that per­mit,’ they’re just shoot­ing them­selves in the foot,” Sch­niepp said.

In re­ject­ing the per­mit June 9, Dianne Black, as­sis­tant plan­ning di­rec­tor for the county, said schools could file a claim against Plains if they lose fund­ing through tax rev­enue.

Exxon Mo­bil had planned to have eight trucks per hour haul oil around the clock to a Phillips 66 re­fin­ery 70 miles away.

Phillips has op­er­ated its Santa Maria re­fin­ery at a re­duced rate since the spill but is still meet­ing the de­mands of cus­tomers in the area, spokesman Dennis Nuss said.

AP

In this May 21 file photo, work­ers pre­pare an oil con­tain­ment boom at Refu­gio State Beach, north of Go­leta, Cal­i­for­nia.

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