Murphy Oil fined $172,500 for pipeline spill that went undetected for 45 days

Murphy Oil has been fined $172,500 after the Alberta Energy Regulator concluded the Arkansas−based company did not maintain a pipeline that leaked oil for 45 days before it was discovered.

From January to March of 2015, about 1.4 million litres of light oil was spilled about 65 kilometres east of Peace River in northwestern Alberta due to internal corrosion, the regulator said Tuesday.

The leak of condensate, a light oil used to dilute heavy oil to help it flow in a pipeline, came after Murphy Oil staff had failed to maintain its leak detection system as required, AER pipelines director Ron Wagener said.

"The AER found that maintenance was not being performed," Wagener said in a written decision. He said most diluent meters at well pads hadn’t been calibrated since October 2012.

"If the end−point meters would have been calibrated on a minimum yearly interval and alarm set−points adjusted to appropriate tolerances, the system would have been able to provide early leak detection capabilities."

Murphy Oil’s delay in detecting the release was also flagged as a concern as the AER said the company did not make a timely report nor take immediate remedial action.

Craig Sinclair, director of health, safety and environment for Murphy Oil’s Calgary−based Canadian operations, said the company has agreed to pay the fine and is working to ensure similar leaks don’t occur in the future.

"We’ve made significant changes," Sinclair said, adding that Murphy Oil is performing pipeline integrity checks more frequently and is investing in more training of personnel assigned to conduct those checks.

Some repairs were made to the five−year−old pipeline but the company has since purged and abandoned it, using other pipelines to ship condensate from one part of its Seal heavy oilfield to another, he said.

The fine is one of the largest the AER has issued for a pipeline spill since it was formed in 2013.

According to an AER database, the largest financial penalty for a pipeline spill was $250,000 last year against Calgary−based producer Pengrowth Energy for a leak of about 540,000 litres of oil emulsion. That spill near Red Earth in northwestern Alberta went undetected for 48 days.