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Kinder Morgan Agrees to Make $90 Million in Pipeline Safety Improvements

A rash of pipeline accidents since 2003 including an explosion that killed five workers and seriously injured four others in Walnut Creek, Calif. has prompted Houston-based Kinder Morgan Energy Partners LP to agree to make up to $90 million in safety improvements to its pipeline system in the western states.

Under an agreement with the federal Pipeline and Hazardous Materials Safety Administration, Kinder Morgan will review all accidents that have occurred in its Pacific Operations the company's 3,100-mile pipeline system in Arizona, California, Nevada, New Mexico, Oregon and west Texas since March 31, 2001, and fix any existing or potential safety threats that turn up in its review.

The agreement also requires Kinder Morgan to improve its methods for inspecting the inside of pipelines, to evaluate its effectiveness in controlling pipeline corrosion and to establish "one-call" centers that would determine if a pipeline is located where excavation is taking place.

Agreement Includes Directives from August Order

The agreement includes what PHMSA refers to as an "innovative penalty structure" that calls for fines ranging from $1,000 to $10,000 per day if Kinder Morgan fails to comply.

"Companies have an obligation to maintain and ensure the safety of their systems," PHMSA Acting Administrator Brigham McCown said. "Kinder Morgan has made a commitment to safety under this agreement."

The agreement includes directives made by PHMSA in an Aug. 24, 2005, corrective action order that required Kinder Morgan to size up the safety and reliability of its pipelines after PHMSA investigations identified "inadequacies in Kinder Morgan's interpretation of online inspection information to evaluate and repair their pipeline systems," according to PHSMA.

Kinder Morgan says it already has initiated many of the directives prescribed by the August order.

"We are pleased to enter into this consent agreement with PHMSA," said Kinder Morgan Product Pipelines President Tom Bannigan. "Both KMP and PHMSA share common goals toward public safety, and we believe our joint efforts will result in improved safety for the Pacific system. The consent agreement is an excellent resolution to the [corrective action order] issued last August, and we remain committed to operating our pipelines safely to protect the public, the environment and our employees."

Kinder Morgan Hit Hard with Fines After Walnut Creek

The consent agreement comes a year and a half after a pipeline owned by Kinder Morgan exploded in Walnut Creek, Calif., killing five workers, seriously injuring four others and causing extensive property damage.

The accident occurred on Nov. 9, 2004, when an excavator's backhoe punctured a high-pressure petroleum pipeline during construction of a water supply line for the East Bay Municipal Utility District. Several seconds after the pipeline ruptured, the gasoline flooding out of the pipeline was ignited by welders working on the water supply project, according to the state fire marshal's investigation report.

Although fines were levied against several companies involved in the project, Kinder Morgan bore the brunt of the penalties issued. The California Department of Industrial Relations' Division of Occupational Safety and Health issued two serious willful citations to Kinder Morgan and fined the company $140,000.

California Fire Marshal Ruben Grijalva hit Kinder Morgan with a $500,000 fine the maximum allowed by California law for failing to properly mark the petroleum pipeline and for failing to follow the company's own line-locating procedures.

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