Texas companies strike deal over 2021 California oil spill

Houston-based Amplify Energy Co and two subsidiaries — Beta Operating Co and San Pedro Bay Pipeline Co — agreed on Friday August 26th to plead guilty to federal environmental charges and as a result will pay just under $13m in fines. The legal case relates to a crude oil spill in October 2021 that polluted the coastline of Southern California (IMN October 13th 2021).

Although signals had been available for hours that a 17.3-mile oil pipeline might have been leaking, Houston-based Amplify Energy and two subsidiaries continued to pump crude oil. Some 25,000 gallons of oil leaked into the waters off Huntington Beach.

The companies have agreed to pay a $7.1m criminal fine. They will also reimburse federal agencies for the estimated $5.8m that had to be spent responding to the spill.

Amplify Energy and its two subsidiaries also have agreed to the standard four-year probationary period. During this time they will be subject to stricter regulatory scrutiny.

The firms would be required to install a new leak detection system in the pipeline, notify regulators of every leak detection alarm, and contract with a group that would be able to detect oil on the surface of the water at night or in low-light conditions.

Amplify president and CEO Martyn Willsher said that “we believe this resolution, which is subject to court review and approval, reflects the commitments we made immediately following the incident to impacted parties and is in the best interest of Amplify and its stakeholders. We are committed to safely operating in a way that ensures the protection of the environment and the surrounding communities.”

Willsher said that Amplify Energy was still “vigorously” pursuing a lawsuit against the companies that own and operate two container ships that have been accused of dragging their anchors across the sea floor and damaging the pipeline, several months before the oil spill.

In the plea agreement on Friday prosecutors acknowledged that the anchor drags may have weakened the pipeline and may have been one cause of the spill.

The US attorney’s office said that representatives for the three firms were expected to appear in federal court in Santa Ana in “the near future” to enter their guilty pleas formally.

Amplify Energy and its subsidiaries were indicted by a federal grand jury in December. That indictment claimed that the underwater pipeline, which runs between a production and processing platform and the Port of Long Beach, was being operated by “an understaffed and fatigued crew” that “had not been provided sufficient training regarding the pipeline’s automated leak detection system”.

The indictment said that on October 1st 2021 a series of alarms generated a scene of confusion as crews on the offshore platform attempted to deal the messages coming from the rig’s leak detection system.

Prosecutors said that the first alarm sounded about five minutes after the pipeline ruptured during the afternoon of October 1st. The crew shut down the pipeline an hour after that, but then started pumping again a half-hour later. Between 16:00 and midnight that day the crew shut down the pipeline seven times, each time incorrectly assessing that there was no crude oil leak, and then restarted operations, prosecutors said.

Platform workers incorrectly believed that the alarms were caused, not by a leak, but by a “higher-than-normal” amount of water mixed in with the oil in the pipeline, prosecutors wrote.

The crew turned the pipeline back on overnight to manually measure the flow of oil to try to determine whether there was a leak, prosecutors wrote. Their readings at 12:50. and 01:20. showed that “10 barrels more was being pumped into the pipeline at Platform Elly than was arriving onshore, further indicating a potential leak.”

In all, prosecutors wrote, 588 barrels of crude oil — nearly 25,000 gallons — spilled into the water over a 14-hour period.

The oil spill required more than a week of clean-up, disrupted activity along the coast and forced the cancellation of the Pacific Airshow in Huntington Beach, one of the city’s most popular annual events. On the Thursday, August 25th, Amplify tentatively agreed to settle more than a dozen lawsuits brought by business owners and residents, including Laguna Beach coastal property owners, a Huntington Beach surf school, a Seal Beach bait and tackle store, and several groups of fishing and seafood sales companies. The terms of the settlement have not been disclosed and still need to be approved by the court