Exxon Mobil expects to incur costs of about US$135M from July 1 oil pipeline break beneath Montana's Yellowstone River

Graziela Medina Shepnick

BILLINGS, Montana , November 4, 2011 (Associated Press) – Exxon Mobil Corp. said Friday it expects to incur costs of about $135 million from an oil pipeline break beneath Montana's Yellowstone River that triggered a massive effort to limit damage to the scenic waterway.

The cost figure was released in response to a request from The Associated Press and is more than triple an earlier estimate. It includes for the first time the expense of replacing the section of broken pipeline with a new one buried more deeply beneath the river.

The company's 20-year-old Silvertip crude oil pipeline broke July 1 during severe flooding.

In the 56 minutes it took Exxon Mobil to seal off the 12-inch line, an estimated 1,000 barrels of oil, or 42,000 gallons, poured into the river near Laurel. That fouled dozens of miles of riverbank, numerous islands and swaths of low-lying cropland with crude.

More than 1,000 workers were involved in the cleanup effort at its peak. Work to remove the damaged pipeline began Monday and is expected to take several weeks.

An Exxon Mobil spokeswoman declined to release a breakdown of the company's costs, providing only a broad overview of expenses.

"This estimate includes costs for overall emergency response and cleanup efforts including personnel, equipment, landowner claims and projects associated with the restart of the pipeline such as the horizontal directional drill," company spokeswoman Claire Hassett said.

"Horizontal directional drill" refers to the process the company used to bore a new route for the pipeline dozens of feet beneath the riverbed. That move was mandated by federal pipeline regulators.

The original pipeline was buried only a few feet beneath the river. State and federal officials have speculated that summer flooding scoured the riverbed and left the pipe exposed to damaging debris and the force of the rushing river.

An investigation into the cause remains pending.

State officials said they hope to learn more when the first pieces of the damaged section of pipeline are pulled from the river, possibly this weekend. Those will be sent to an independent laboratory for analysis, according to state and federal officials and the company.

An inspector from the federal Pipeline and Hazardous Materials Safety Administration will be on site throughout the removal process. The agency wants to make sure all evidence is preserved as part of the accident investigation, spokesman Damon Hill said.

Several property owners along the river have sued Exxon Mobil in federal court, accusing the company of damaging their land and conducting a "haphazard, sloppy" cleanup.

The landowners also claim the company failed to heed warnings from local officials who raised concerns about Silvertip months before the accident.

The lawsuit was originally filed in state court but was transferred last week to U.S. District Court in Billings. The case was assigned to Judge Richard Cebull.

In a response filed Thursday, Exxon Mobil attorneys rejected many of the lawsuit's assertions and suggested some of the injuries suffered by the plaintiffs were caused by their own negligence.

Exxon Mobil's Hassett said the company has reached settlements with 95 percent of affected property owners.

The U.S. Environmental Protection Agency oversaw the most intensive parts of the cleanup before turning over authority to the state Department of Environmental Quality in September.

At the time, EPA representatives said they were pleased with the cooperation they had received from the company.

Although Gov. Brian Schweitzer clashed with Exxon Mobil over its initial response, a spokeswoman for the Montana Department of Environmental Quality said Friday that the state has no major complaints as the first phase of the cleanup nears an end and long-term monitoring begins.

"We're not thrilled we had to do it in the first place," DEQ spokeswoman Mary Ann Dunwell said. "We can scientifically clean up something appropriately and have no problem with it. But there's also the inconvenience, the lifestyle changes that many people were forced to endure this last summer and fall. I don't know if you can put a price on that."

State agencies through October spent about $900,000 on the spill and cleanup, said DEQ deputy director Tom Livers.

Livers said the state expects to be fully reimbursed by Exxon Mobil and through an oil industry fund set up to pay for emergency spill response costs.

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