By Suzi Parker and Kristen Hays
MAYFLOWER, Ark./HOUSTON (Reuters) - Exxon Mobil Corp continued efforts on Monday to clean up thousands of barrels of heavy Canadian crude oil spilled from a near 65-year-old pipeline in Arkansas, as a debate raged about the safety of transporting rising volumes of the fuel into the United States.
The Pegasus pipeline, which ruptured in a housing development near the town of Mayflower on Friday, spewing oil across lawns and down residential streets, remained shut and a company spokesman declined to speculate about when it would be fixed and restarted.
Exxon, which was fined in 2010 for not inspecting another portion of the Pegasus line with sufficient frequency, had yet to excavate the area around the Pegasus pipeline breach on Monday, a critical step in assessing damage and determining how and why it leaked.
Police set up a check point keeping residents away from the affected area, while helicopters mapping the spill continuously circled the neighborhood on Monday. A strong smell of oil, which resembled asphalt, permeated the town well beyond the affected area, according to a Reuters witness.
Two front lawns less than fifty feet from where the rupture occurred were blackened by oil. Crews in yellow hazmat suits bagged up oil-covered leaves from the yards.
Exxon said in a statement that 10 "oiled ducks" were being treated at a local animal welfare center. Two more ducks had been found dead, the oil major said.
The spill in this small commuter town has stoked a discussion about the environmental dangers of using aging pipelines to transport heavy crude from Canada, including tar sands, as a boom in oil and gas production in North America increases volumes moving across the continent.
The Pegasus line, which can transport more than 90,000 barrels per day of crude from Patoka, Illinois to Nederland, Texas, was carrying Canadian Wabasca Heavy crude at the time of the leak, a bitumen oil from the massive Pelican Lake field in northern Alberta. It needs to be blended with lighter oils or natural gas liquids to flow through pipelines.
Traders said a prolonged disruption of Canadian crude supplies on the Pegasus line could bolster prices for physical crude in the Gulf Coast. Heavy Mars crude, produced in the Gulf of Mexico, saw its premium to benchmark West Texas Intermediate rise on Monday.
"An influx of tar sands on the U.S. pipeline network poses greater risks to pipeline integrity, challenges for leak detection systems and significantly increased impacts to sensitive water resources," environmental group the Natural Resources Defense Council said in an emailed note on Monday.
Some environmentalists argue that oil sands crudes are more corrosive to pipelines than conventional oil, although a report this year for the Canadian Energy Pipeline Association by consultancy Penspen argued diluted bitumen is no more corrosive than other heavy crude.
Exxon did not have a specific figure of how much oil was released when the 20-inch line ruptured on Friday. The company repeated on Monday a statement it made on Sunday that 12,000 barrels of oil and water had been recovered.
Exxon Mobil's Pegasus pipeline crosses 13 miles of the Lake Maumelle watershed. Many are concerned this poses a risk to Central Arkansas's water supply, which includes the drinking water for Little Rock, the capital and the largest city of the state of Arkansas
The Pegasus line was last "pigged" in July 2010, Exxon said, with a device that runs through the pipe to detect corrosion, thinning of the pipe wall, dents and other potential problems that could need repair. Such devices, called "smart pigs," are standard in maintaining pipeline integrity.
PIPELINE MAINTENANCE
Exxon, the world's largest publicly traded oil company, is no stranger to incidents on its lines and has in the past been fined for not inspecting Pegasus frequently enough.
In November 2010, the U.S. Department of Transportation slapped ExxonMobil Pipeline Co with a fine of $26,200 for allegedly allowing more than 5 years to lapse between inspections of a stretch of Pegasus that underlies the Mississippi River, between Missouri and Illinois, last decade.
The Exxon subsidiary did not contest the fine levied by the Office of Pipeline Safety, according to documents on the PHMSA website.
Since 2006, according to PHMSA, "incidents" on pipelines controlled by ExxonMobil Pipeline Co or Mobil Pipeline Co caused more than $147 million in property damage and spilled 6,830 "gross barrels" of hazardous liquids.
Another pipeline company operated by an oil major, Shell Pipeline Co LP, inflicted around $50 million in property damage over the same period, according to PHMSA data, spilling 11,019 gross barrels.
The Pipeline and Hazardous Materials Safety Administration (PHMSA) said in a recent report that more than half of the nation's pipelines were built in the 1950s and 1960s in response to higher energy demand after World War II.
Some, like Pegasus, were built earlier. Exxon spokesman Charles Engelmann said the ruptured section of the pipeline was installed in the late 1940s.
Nearly two years ago Exxon grappled with another crude oil pipeline rupture that sent 1,500 barrels into the Yellowstone River in Montana.
The 40,000 barrel-per-day Silvertip pipeline ruptured underneath the river in July 2011 after heavy flooding and did not fully restart until September that year after Exxon had dug deeper under the riverbed to install the new section.
A week ago, PHMSA proposed that Exxon pay a $1.7 million fine over pipeline safety violations stemming from the Silvertip spill.
(Writing by Edward McAllister in New York. Additional reporting by Scott Haggett in Calgary and Joshua Schneyer in New York; Editing by Gerald E. McCormick, David Gregorio, Nick Zieminski and Andre Grenon)
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