Husky to spend more than $100 million for spill cleanup

By Geoff Lee

March 1, 2017 2:15 PM

MESSY This photo, from Acuren Group's metallurgical report, shows the location of an oil spill from a buckled section of the pipleine on Husky's Saskatchewan Gathering System that entered the North Saskatchewan River July 21. The cost of the cleanup rose to $107 at the end of 2016. FILE LLS PHOTO

Husky Energy’s North Saskatchewan River spill bill could top $107 million.
That’s the estimated total cost for the cleanup of a pipeline leak of about 225,000 litres of oil and dilutent into the river last July.
Husky reported the total as of Dec. 31 during a conference call to report on its fourth quarter and annual results on Feb. 24.
Husky had previously pegged the cleanup costs in October at $90 million including the recovery of approximately 210,000 litres of oil and dilutent.
“I think it’s not so much the cost has gone up as we just got more of the bills in,” said CEO Rob Peabody in response to a question to explain the higher than projected cost.
“Certainly, internally we actually started with a higher number and it’s gone down a little bit,” said Peabody initially.
Then he went to say, “From the very start, Husky was going to make sure this was an absolutely comprehensive cleanup and do whatever was required to restore the environment to the condition that it was in prior to the spill” in the river.
“So the cost reflects our unwavering commitment to do that as we went through the process,” he said.
The cleanup effort is over, but monitoring activities will continue through the winter and into 2017.
The cause of the spill from a ruptured pipeline was attributed to ground movement triggered by heavy rain and weak soil conditions, but the pipeline is not yet back in service.
“We haven’t put the pipeline back in service just because we want to have all the investigations finished, particularly at the provincial level,” said Peabody.
“They actually want to make sure they’ve got the root cause so we are absolutely sure that any revised installation is fully engineered to avoid any future incident like that.”
Husky reports the break occurred on land about 160 metres from the south slope of the river.
The gross costs incurred in response to the spill were approximately $107 million, of which $88 million has been recovered through insurance proceeds.
Both the spill costs and insurance recoveries have been incurred by Husky Midstream Limited Partnership (HMLP) formed last summer.
Husky is the operator of the assets within HMLP and holds a 35 per cent interest.
Additional costs could come from related ongoing compliance from regulatory authorities, but Husky has yet to incur any.
“I guess we’ll find out as regulatory authorities respond,” said Peabody during question period.
“What I would say is there is a lot of regulation around pipelines already, so I wouldn’t anticipate that the incremental costs will be dramatic.”
The spill, forced downstream cities of North Battleford, Prince Albert and Melfort in Saskatchewan to shut off their water intakes from the river and find alternate drinking water sources for almost two months.

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