Plains All American said Wednesday that a May crude spill at one of its California pipelines may have been 41 percent larger than its initial estimate.
According to Reuters, the company told investors that a rupture at Line 901 near Santa Barbara may have released up to 3,400 barrels of crude, or about 1,000 more barrels than initially estimated.
Line 901 has been shutdown since it ruptured on May 19, polluting a four mile stretch of beach and creating oil slicks that extended about nine miles along the coastline.
The company’s initial worst case scenario placed the size of the spill at 2,400 barrels, a figure that was reached by calculating how much crude was moving through the line between the time that the spill occurred and when the line was shutdown.
In the initial estimate Plains also included how much oil drained from the line at the rupture point due to gravity.
Line 901 has a daily capacity of 48,000 barrels.
Plains said it reached the alternative estimate after removing about 26,500 barrels from Line 901 in June that were left in it when flows were stopped.
The company has retained a third-party firm to review the estimates and will not finalize its own estimate until the review has been completed, Reuters added.
Plains reported a $65 million contingency loss tied to the spill in its second quarter results.
Plains chairman and CEO Greg Armstrong added that the remaining $192 million in costs will be covered by insurance, Reuters said.
The funds will cover emergency response and clean up efforts, anticipated legal claims and potential fine and penalties.
“While it is based on what we believe to be a reasonable set of assumptions, our costs can vary from these estimates,” Armstrong told Reuters.
Plains expects Line 901 to be shutdown for the rest of 2015 as the company works with regulators to pinpoint the cause of the spill, Armstrong added
The Central Coast Regional Water Quality Control Board said on Wednesday that it’s seeking penalties for the spill that could reach $25,000 per day of violation in addition to $25 for every gallon of oil spill.
A preliminary report published in June by the Department of Transportation found that Line 901 was suffering from corrosion prior to the spill.
“Third-party metallurgists in the field estimated that corrosion at the failure site had degraded the wall thickness to an estimated 1/16 of an inch (.0625″),” the report said.
An internal pipeline inspection conducted by Plains found the line’s wall was thicker than the measurements included in the report.
The company said in June it will work with federal officials to understand the measurement discrepancies.