Energy In-depth: EPA research shows moderate, severe corrosion in most underground diesel storage tanks

Editor’s note: Each Friday, Talk Business & Politics provides “Energy In-depth,” a round-up of energy and regulatory news.

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EPA RESEARCH SHOWS MODERATE, SEVERE CORROSION IN MOST UNDERGROUND DIESEL STORAGE TANKS
In a new report on corrosion inside diesel fuel underground storage tanks (USTs), the U.S. Environmental Protection Agency (EPA) found moderate or severe corrosion that could affect metal components inside both steel and fiberglass underground tank systems. Corrosion inside USTs can cause equipment failure by preventing proper operation of release detection and prevention equipment. If left unchecked, corrosion could cause UST system failures and releases, which could lead to groundwater contamination.

Underground tank releases have historically been a leading cause of groundwater contamination. Groundwater is a source of drinking water for almost half of the people in the U.S.EPA’s report shows that 35 of 42 – or 83% – of the USTs studied exhibited moderate or severe corrosion, but less than 25% of owners were aware of corrosion prior to the internal inspection.

U.S, ENBRIDGE REACH $177 MILLION SETTLEMENT AFTER 2010 OIL SPILLS
The U.S. Environmental Protection Agency (EPA) and the Department of Justice announced a settlement with Enbridge Energy Limited Partnership and several related Enbridge companies to resolve claims stemming from its 2010 oil spills in Marshall, Mich. and Romeoville, Ill.

Enbridge has agreed to spend at least $110 million on a series of measures to prevent spills and improve operations across nearly 2,000 miles of its pipeline system in the Great Lakes region. Enbridge will also pay civil penalties totaling $62 million for Clean Water Act violations – $61 million for discharging at least 20,082 barrels of oil in Marshall and $1 million for discharging at least 6,427 barrels of oil in Romeoville.

In addition, the proposed settlement will resolve Enbridge’s liability under the Oil Pollution Act, based on Enbridge’s commitment to pay over $5.4 million in unreimbursed costs incurred by the government in connection with cleanup of the Marshall spill, as well as all future removal costs incurred by the government in connection with that spill.

EIA: U.S. OIL COMPANIES CLOSER TO BALANCING CAPITAL INVESTMENT WITH OPERATING CASH FLOW
Although the crude oil price decline since 2014 has led to significant reductions in operating cash flow for U.S. oil companies, their immediate financial situations are improving. As oil companies’ spending falls and crude oil prices increase, the need for oil companies to find external sources of funding may decline, which could reduce financial strain in the coming quarters.

First-quarter 2016 financial results from U.S. onshore producers reveal an improving balance between capital expenditure and operating cash flow. Although operating cash flow was the lowest in any quarter in the past five years, larger reductions to capital expenditure brought these companies closest to self-finance (when capital investment can be paid for entirely from operating cash flow). With crude oil prices such as the global benchmark Brent price averaging over $45 per barrel in the second quarter—a 34% increase from first-quarter 2016—cash flow may improve and help offset declining revenue from lower production.

See the full report here.