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Tesoro Cleared to Restart North Dakota Line After Spill

Tesoro Corp. (TSO) accepted a federal order requiring upgrades on its oil pipeline system spanning North Dakota and Montana that clears the company to restart a section shut since a 20,000-barrel spill discovered Sept. 29.

The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration, known as Phmsa, issued a safety order today allowing Tesoro to restart a 35-mile (56-kilometer) section of the 200-mile High Plains pipeline system. The order requires weekly aerial patrols of the line for a year and new leak detectors along all regulated sections of the High Plains system.

The spill in North Dakota last month and debate over TransCanada Corp. (TRP)’s Keystone XL proposal have renewed criticism over the government’s regulation of pipelines as a boom in domestic oil production drives increasing investments in new and expanded networks to deliver the oil to market.

“Safety is our highest priority,” U.S. Transportation Secretary Anthony Foxx said in a statement today. “Today’s safety order is an important step to protect the people and environment in this area and to strengthen the integrity of the pipeline so that something like this doesn’t happen again.”

Tesoro accepted the safety order today, Tina Barbee, a spokeswoman at Tesoro’s headquarters in San Antonio, said by e-mail. She declined to say when the section of the pipeline that leaked will return to service.

The segment, used for both oil-gathering and transmission, runs from Tioga to Black Slough, North Dakota, according to Barbee. The line carries oil to a rail site at Battleview, North Dakota, Maxine Herr, a spokeswoman for the state Mineral Resources Department in Bismarck, said by telephone Oct. 10.

Phmsa’s safety order shows the line was carrying oil from a field in North Dakota’s Bakken formation at the time of the leak. A preliminary analysis indicates that “a strong electrical discharge” such as lightning caused the pipe failure, according to the agency.

To contact the reporter on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net

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

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