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ConocoPhillips Fined $180,000 for 2016 Leak of Condensate in Northwest Alberta

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CALGARY — Oil and gas producer ConocoPhillips Canada is being fined $180,000 for a 2016 pipeline leak that spilled a light petroleum liquid in a remote area of northwestern Alberta.

Prices rose to a four-month high after the Energy Information Administration reported inventories rose by 96 billion cubic feet last week to 1.725 trillion. The median estimate by analysts predicted a gain of 102 billion. The slower pace means storage is about 23 percent below the five-year average, the most for the time of year since 2014.

Gas is barreling toward $3 per million British thermal units as unexpectedly hot weather this month quickly followed a cold April. The temperature swing is hindering the normal seasonal ramp-up of the fuel flowing into storage caverns. Forecasts show the heat will persist, and intensify in places like Texas, into mid-June. Even so, market gains have been capped as production climbs to new records this year.

“People are concerned that if the weather continues to be hot, we are going to see some low injections,” said Kent Bayazitoglu, an analyst at Gelber & Associates in Houston. “The market is really going to want to see those triple-digit injections to really calm the market down.”

Gas futures for July delivery rose 6.7 cents to $2.952 per million British thermal units on the New York Mercantile Exchange, the highest settlement since Jan. 31. Futures advanced 6.8 percent this month, the most since August and the highest for any May since 2010.

The Alberta Energy Regulator says the leak of 380,000 litres of condensate resulted in 38 observed fatalities to unspecified species of wildlife and hundreds of potential wildlife deaths as it affected nearly three square kilometres of land as well as nearby waterways.

It is assessing a $165,000 fine to account for the 33 days in May to June 2016 that the company failed to report the release to the regulator as it should have.

The regulator is also fining the Canadian arm of Houston-based ConocoPhillips Co. $5,000 each for three counts related to failing to develop and maintain a leak-detection manual for the pipeline, failing to take reasonable measures to remedy and confine the leak and for allowing the release to damage public land.

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In a report posted on its website, AER director Mark Miller says failing to detect the leak when it began and then not reporting it immediately made worse environmental damage that included the loss of all fish spawning output in Webb Creek for the year.

The leak took place near a pipeline right-of-way at ConocoPhillips’ Resthaven gas plant about 65 kilometres northeast of Grande Cache, Alta.

“The failure to report and take remedial actions as soon as ConocoPhillips ought to have known very likely resulted in a greater degree of adverse effects to the environment that could have been mitigated if dealt with sooner,” said Miller in his decision.

ConocoPhillips’ staff noticed lower pressure in the pipeline but couldn’t see a leak on the pipeline right of way because the condensate had travelled underground to a less visible area, Miller noted.

They concluded the lower pressure resulted from overnight ambient temperature changes, he noted, as well as minor leaks from inlet and outlet valves on the pipeline.

The Canadian Press

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