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Posted: 02 Nov, 2017

Texas: A reminder that an Operator has Little Control over when a Third-party Can Damage a Pipeline

The Oct. 31 opinion of U.S. District Judge Sim Lake of the Southern District of Texas is a reminder of the accident when a Weeks Marine barge hit and ruptured Contango Operator’s natural gas pipeline on February 24, 2010 while dredging off Louisiana.   The spilled gas and condensate ignited on the water’s surface in a fire visible from miles away. It took Contango 35 days repair and restart the pipeline. 

Contango  and its insurer, Certain Underwriters, sued Weeks Marine and the Army Corps of Engineers in 2011, claiming that the United States, one and the same with the Corps of Engineers, and Weeks Marine were negligent under federal maritime law.   Though the charts included in the dredging contract given to Weeks Marine in August 2009 did not show Contango’s pipeline, the United States tried to blame the dredger by arguing that the National Oceanic and Atmospheric Administration had published an updated chart on its website on Nov. 25, 2009, showing Contango’s pipeline.

Judge Sim Lake refused to release the federal government’s liability. “Nothing in Weeks Marine’s contract with the Corps required Weeks Marine to independently determine whether there were pipelines that crossed the Atchafalaya Channel other than those identified in the Corps’ specifications.”     

The ruling also keeps Marine Weeks on the hook. “Given the significant damage that could result from striking a pipeline, the availability of current pipeline data in NOAA charts … and the ease of accessing such data, the court concludes that it was unreasonable for Weeks Marine to rely solely on pipeline information provided earlier by the Corps,” Lake wrote.

Because it was common practice at the time for dredgers to rely solely on pipeline data provided by the Corps of Engineers, Lake said the United States is responsible for 60 percent of Contango’s damages. Weeks Marine carries 40 percent of the blame.

The parties owe Contango more than $13.8 million for their repair costs, lost gas, deferred production damages and prejudgment interest, per the ruling.

It is hard for a pipeline operator to avoid such a leak, but the operator can minimize the damage with a reliable leak detection system that will quickly alarm the leak and employees who understand their roles in such an emergency and are well trained in the company rupture response plan. This is a good reason to take API RP 1175, very seriously.

Sources:

The Courthouse News  https://www.courthousenews.com/pipeline-damage-costsfall-primarily-to-u-s/

The Texas Lawyer https://www.law.com/texaslawyer/sites/texaslawyer/2017/11/01/dredging-company-denied-5-9m-indemnity-payout-from-u-s-for-pipeline-rupture/?slreturn=20171002122718

Learn how to improve your leak detection program here.