Exxon Pegasus Pipeline Cracks May Have Worsened With Age

Exxon Mobil Corp. (XOM)’s Pegasus pipeline failed because of original manufacturing defects that may have worsened, according to a report paid for by Exxon and released by regulators today.

“It is highly probable that some micro-cracking within the upset/heat-affected zones might have occurred immediately following the pipe manufacturing,” Hurst Metallurgical Research Laboratory of Euless, Texas, said in the report. “The micro-cracks then likely would have merged by further cracking through the adjacent areas” during service.

Exxon doesn’t have a timetable for restarting the line, David Rosenthal, vice president of investor relations, said today on a conference call to discuss second-quarter earnings.

The line, which was built in the 1940s and delivers 96,000 barrels a day to Gulf Coast refineries from Patoka, Illinois, was shut March 29 after spilling 5,000 barrels of oil in Arkansas. Exxon said on July 11 that the report showed the line failed because of original manufacturing defects.

The Pipeline and Hazardous Materials Safety Administration, released the Hurst report and has finished an initial review of it, said Damon Hill, a spokesman based in Washington.

“The (Hurst) study is one part of our overall ongoing investigation, as we continue working to identify the underlying cause of the failure,” Hill said by e-mail today. “The pipeline will remain shut down until PHMSA is convinced it can be restarted safely.”

The failed seam was electric resistance-welded, Exxon said in its statement. ERW seams in pipelines built before 1970 are known to have defects, according to a 1989 federal report, and the process was changed in the 1960s to use higher-frequency current.

To contact the reporter on this story: Eliot Caroom in New York at ecaroom@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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