ExxonMobil Disputes New Hampshire Well Count With MTBE

ExxonMobil Corp. told a jury that the number of New Hampshire wells contaminated with a gasoline additive is less than one-fifteenth as many as the state has contended in its trial seeking damages from the oil company.

David Lender, a lawyer for ExxonMobil, cross-examined a witness who is a state expert on oil spills today in Concord. New Hampshire has said that as many as 5,590 wells may have more than 13 parts of the additive methyl tertiary butyl ether, or MTBE, per billion parts of water, a level the state has determined makes it unfit for drinking.

“We know and you know that the state has only found 349 wells with contamination above 13 parts per billion in 30 years, isn’t that right?” Lender said to the state’s witness, Gary Lynn, a manager of its petroleum mediation section.

“Every fifth or sixth well has detectable levels of MTBE in it,” Lynn replied. “How much more widespread can it be?”

New Hampshire might be seeking more than $200 million from ExxonMobil, the last defendant on trial in the $816 million state-court lawsuit filed in 2003. The number of wells found to be contaminated with MTBE is one factor in determining damages if ExxonMobil is found liable. The trial began Jan. 14.

Oil Refiners

This is one of scores of cases involving MTBE filed since 2000 against oil refiners, fuel distributors and chemical makers.

Lynn, questioned yesterday by the state, testified that MTBE still shows up in wells six years after it was banned. He said the chemical moves through water quickly and unpredictably.

“It’s widespread in drinking water wells, and it shows up frequently in places that we don’t expect it,” Lynn said, mentioning a daycare center’s water supply.

ExxonMobil, based in Irving, Texas, has argued in court that it isn’t liable for damage because it added MTBE to gasoline to comply with federal regulations that pre-empt state law. Oil companies added MTBE to make gasoline burn more thoroughly in order to reduce air pollution, as required under the 1990 Clean Air Act.

Kent Colburn, who once worked for New Hampshire’s Department of Environmental Services, testified Jan. 28 that the state wouldn’t have participated in a federal clean-air program called Reformulated Gasoline, or RFG, if Exxon had warned of the the additive’s risks.

RFG Program

ExxonMobil said in court that the state was aware of MTBE’s risks when it opted into the RFG program in 1991 because there had been studies of the additive for several years.

The additive was banned in New Hampshire as of January 2007.

MTBE, which is highly soluble in water and thus can be carried great distances from where it leaked, is a “toxic chemical that does not belong in the state’s drinking water,” Jessica Grant, an attorney for New Hampshire, said in opening remarks to the jury. It leaked from gas stations, vehicle junkyards, underground storage tanks and pipe fittings, the state said.

Lender raised questions today about who was responsible for the leaks that put MTBE into the groundwater. He cited a state DES memo that said serious violations by the owners of a junkyard in Chester had resulted in contaminating the water.

‘All the Things’

“If the owners had done all the things they were supposed to do, we wouldn’t have had MTBE in the groundwater, right?” Lender asked Lynn during cross-examination.

“Even if you do everything you’re supposed to do, there’s a potential for MTBE to get into the groundwater,” Lynn replied.

The number of contaminated wells is one element in the determination of monetary damages if ExxonMobil is found liable. The state is also seeking damages from the companies based on their market share of gasoline sales in New Hampshire during the period covered by the lawsuit.

ExxonMobil’s share was about 30 percent, the state said. Based on an estimated cost of $816 million to test for, monitor and clean up the groundwater, New Hampshire could be seeking about $245 million from the company.

Citgo Petroleum

On Jan. 15, New Hampshire Superior Court Judge Peter Fauver agreed to dismiss Citgo Petroleum Corp., the other defendant, from the trial while the company and the state work to complete a settlement. Citgo is the Houston-based unit of Petroleos de Venezuela SA, the country’s state-owned oil company.

Citgo’s market share ranged from 3.1 percent to 8.7 percent, New Hampshire said. Based on those figures, the state could be seeking $25 million to $71 million from Citgo. If an accord isn’t reached by Feb. 15 and no extension is approved, Citgo would be reinstated to the trial.

Besides ExxonMobil and Citgo, New Hampshire also sued Shell Oil Co., Sunoco Inc., ConocoPhillips, Irving Oil Ltd., Vitol SA and Hess Corp. All settled before the trial began except ExxonMobil and Citgo.

New Hampshire has received more than $100 million in settlements from defendants so far, according to court papers.

MTBE lawsuits have also been consolidated in federal court in New York for pretrial evidence-gathering and motions. In 2009, a federal jury ordered ExxonMobil to pay New York City $104.7 million after finding it liable for polluting wells in the city. ExxonMobil has appealed.

New Hampshire’s lawyers said last week they hoped to conclude their case by Feb. 21. ExxonMobil would then begin presenting its case.

The case is New Hampshire v. Hess Corp., 03-C-0550, New Hampshire Superior Court, Merrimack County (Concord).

To contact the reporter on this story: Don Jeffrey in New York at djeffrey1@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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