Oil spill brings calls for scrutiny of small lines

HELENA, Mont. (AP) – A northwestern Montana oil spill that went unreported for a month has led to calls for increased scrutiny over the thousands of small flow pipelines within the nation's oil and gas fields.

Flow lines are completely contained within the fields and pipe unprocessed oil, gas and water from wells to holding tanks and separating facilities and aren't regulated like larger pipelines, such as the one that broke under the Yellowstone River earlier this month.

But flow lines often face the same issues of corrosion and defects, and should fall under the same federal regulation as larger transmission pipelines, conservation advocates say.

“They're unregulated lines and they periodically have nasty spills,” said Lois Epstein, engineer and Arctic program director for The Wilderness Society in Alaska. “It's a problem. Whether there is any motivation to do anything about it, is where we're at right now.”

The broken line at the Cut Bank oil field on the Blackfeet Indian Reservation 50 miles east of Glacier National Park may have been slowly leaking oil for up to two weeks before FX Energy Inc. discovered it on June 12. FX Energy officials attributed the break to shifting ground during last month's heavy rain and flooding.

The Salt Lake City-based company fixed the break and shut down the two small oil wells that fed the line, but never reported it to the tribe or the Bureau of Land Management, which oversees the tribe's mineral leases.

The spill – estimated to be up to 840 gallons – then spread nearly a mile down a steep coulee and into the Cut Bank Creek before a neighboring landowner discovered the stained ground on July 12.

A cleanup crew has been digging oil by hand from the steep, treacherous ravine for more than a week. There have been no signs of wildlife affected by the spill.

The company is paying for the cleanup and has pledged to permanently plug the wells that fed the broken line. Grinnell Day Chief, the tribe's oil and gas director, said the company has been very cooperative.

FX Energy is one of the largest of the 15 oil and gas companies with production or exploration leases on the Cut Bank field. Combined with its five wells at Bears Den field and a small interest in two wells at Rattlers Butte field, FX Energy leases a total of 10,732 acres in Montana and produces 184 barrels of oil per day.

The broken flow line is one of many that gather oil from FX Energy's 125 wells on the declining field, which has been producing oil since the 1940s. Many of the 4-inch flow lines are 40 or 50 years old, said Don Judice, the BLM's Great Falls supervisor.

Because the failed line only carried unprocessed oil from wells to a central tank and never left the oil field, there were no requirements to inspect it, test it for corrosion or perform any preventative maintenance to ensure it doesn't break.

“Only when a pipeline is used for longer-range transportation does it get more scrutiny,” Judice said. “There's not a requirement within the regulations for the testing of flow lines.”

But depending on the outcome of an investigation into the recently discovered spill, federal officials may require FX Energy to upgrade all of the aging flow lines that carry oil from the wells to tanks on the Cut Bank field, Judice said.

It was not immediately clear how many flow lines there are, since the lines generally gather oil from more than one well. Judice and Day Chief each said they recalled only one other significant spill from a flow line in the past decade.

Day Chief said another oil company that leases a different part of the sprawling field is already in the process of voluntarily upgrading all of its flow lines. He said the tribe hasn't discussed recommending a similar remedy for the FX Energy itself, but would support the BLM if it required FX Energy to do so.

“We would back that 100 percent,” Day Chief said.

Andy Pierce, vice president for FX Energy, said the company will comply with whatever BLM requires, but the company already replaces the field's lines as it becomes necessary.

“We'll dig up flow lines all the time and replace them. It's an ongoing battle because it's an old field. That's where most of the revenue goes,” Pierce said.

A fix needs to come in the form of standardized federal regulations, Epstein said. Even though some states, such as Alaska, have their own flow line regulations, there needs to be federal legislation that establishes requirements for preventing corrosion, repairing defects and detecting leaks, she said.

The Department of Transportation's Pipeline and Hazardous Materials Administration, which regulates other pipelines, should also regulate these small lines, she said.

“A lot of the same things that cause problems with transmission lines are in these flow lines,” she said.

BLM and tribal officials are still trying to find out why the company didn't report the spill. Company officials previously said they originally believed the leak was small and contained to the immediate area.

Once the spill reached the waters of Cut Bank Creek, the company had 24 hours to report it. But even if the spill was small and contained to the oil field, the company was still required to notify BLM within 15 days, Judice said.

Neither the tribe nor BLM was ever notified by the company.

“We are very concerned that an action that transpired back in June was not reported within the required time frame,” Judice said. “We are awaiting a response ... to give a detailed accounting of what happened.”

Pierce said he could not answer why the spill was not reported.

Day Chief said the tribe makes periodic inspections of the FX Energy oil field, but the spill happened in a remote area that hadn't by visited by him or his inspector in months.

“We kind of depend on the operator to be upfront and honest with the tribe,” Day Chief said. “In this particular instance, there was just a breakdown in communication.”

The Environmental Protection Agency, which is the lead investigating agency, has said it is considering penalizing the company for not reporting the spill.