Colorado-based upstream Venoco filed a $12 million lawsuit earlier this month against Plains All American Pipeline for losses it claims to have suffered due to a May 2015 California pipeline spill.
According to the Pacific Coast Business Times, the complaint was filed on April 1 at the Santa Barbra Superior Court and seeks about $12.4 million in alleged damages caused by lost profits and reduced earning capacity dating from May 19 through November 30, 2015.
The suit also alleges that Houston-based Plains has so far refused to pay Venoco’s claim, the Pacific Coast Business Times added.
The claim has been filed under the Federal Oil Pollution Act of 1990 and the California Lempert-Keene-Seastrand Oil Spill Prevention and Response Act, Venoco General Counsel Brian Donovan told KEYT.
Plains All American said it does not comment on pending legal matters.
The lawsuit refers to a May 2015 spill on Line 901 near Santa Barbara, California that polluted a four miles stretch of Refugio State Beach.
Line 901 has been shutdown since the spill was detected on May 19.
Donovan told KEYT that the pipeline closure has shutdown “nearly half of Venoco’s production, causing a significant impact on the company and the broader Venoco family.”
A preliminary report issued by the Pipeline and Hazardous Materials Safety Administration in February found that external corrosion was the “root cause” behind the failure of the Plains operated pipeline.
The PHMSA said that Plains has verbally reported a spill estimate of 2,960 barrels but added that the company has not provided technical documentation or a final accounting report of the spill size.
Venoco filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware on March 18.
The company cited financial strain caused by the pipeline shutdown as a factor in its decisions to file for bankruptcy.
“It is unfortunate that a third party pipeline spill has impacted Venoco, but this process will make it stronger and ensure its continued contributions to the Santa Barbara County community,” Venoco founder Tim Marquez said when the filing was announced.
The company has not disclosed details about the financial impact of the shutdown.
Venoco expects to maintain all operations during the restructuring process.