Husky Energy set to repair pipeline that spilled crude into river a year ago

Husky Energy set to repair burst pipe

CALGARY — Husky Energy (TSX:HSE) says it has been granted permission to repair and replace a section of pipeline that leaked 225,000 litres of crude in Saskatchewan just over a year ago.

Chief executive Robert Peabody said that it will be applying lessons learned from the spill on the rebuild.

“My mother used to tell me this, learn from your mistakes and don’t do it again,” Peabody told a conference call Friday to discuss Husky’s latest financial results.

With the pipeline out of commission, Husky has been relying on tanker trucks to transport crude the final leg to Lloydminster, Sask., until it is repaired and permission is granted by the government to resume operations.

The company said it plans to include more monitoring equipment that will measure ground movement, as well as add thicker and higher grades of steel pipe to the section of pipe that burst near the North Saskatchewan River.

The spill sent about 40 per cent of the leaked crude into the waterway, forcing communities downstream to shut off a main source of water for almost two months.

“There’s a lot of changes that’s going to take place there, changes to the design, changes to monitoring equipment,” Peabody said.

Husky has been criticized for its slow response to the spill.

The company said two leak detection systems indicated pressure anomalies at 8 p.m. on July 20, 2016, but it didn’t start shutting down the line until 6 a.m. the following morning.

A government investigation found that pipeline’s alarms were warning of potential problems and continued until the line was shut down for scheduled maintenance at 7:15 a.m. on July 21.

Peabody said the many variables including temperature, pressure and flow in pipelines make it hard for standard leak detection systems to know for sure when a leak has happened, as was the case in the North Saskatchewan spill.

“It’s not that the systems failed, it’s just that there wasn’t an unambiguous message coming from the system,” he said.

The planned extra equipment for the section, including fibre optic cables to detect pipeline and ground movement, will help make it clear when a spill has happened.

Husky’s investigation determined the pipeline buckled because of ground movement. The company has said it accepts full responsibility and is using what it learned to improve operations.

The Saskatchewan Justice Department said recently it was still reviewing Husky’s response to the spill to decide whether charges should be laid.

The government is itself under scrutiny on its spill prevention measures, with the James Smith First Nation launching a lawsuit alleging the province ignored recommendations from its own auditor general on pipeline safety and so is at least partly to blame for the spill.

Talk of the spill came after a lacklustre quarter for the company, which reported a $93-million loss for its second quarter and just $10 million of adjusted earnings, well below analyst expectations of $80 million in adjusted earnings according to Thomson Reuters data.

The results were, however, a boost from the same quarter last year when the company had a net loss of $196 million and a $91-million adjusted loss.

Ian Bickis, The Canadian Press


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