Emails Show PG&E Knew of Problems Before Blast

SAN FRANCISCO (CN) — Pacific Gas and Electric knew it was missing critical records for older pipelines flowing through populated areas, but adopted a “loophole” strategy to avoid testing those lines, according to emails federal prosecutors showed a jury Thursday.
On the fourth day of a criminal trial over the San Bruno pipeline explosion, which killed eight people and leveled a neighborhood, federal prosecutors presented their third witness, former PG&E employee Chris Warner, who developed the company’s integrity management system for gas pipelines in the early 2000s.
Prosecutors showed an email from Nov. 13, 2003 that identified several pipelines, including Line 132 in San Bruno, as “significant lines of concern.” Each line had at least two miles of untested pipe flowing through highly populated areas, the email said.
Nonetheless, a PG&E employee sent Warner an email on Nov. 24, 2003, recommending the company raise pressure on those lines so it could maintain higher capacity without conducting pressure tests.
“The idea was to make sure we didn’t lose the allowable operating pressure,” Warner testified.
Under a grandfather clause established by Congress in 1968, pipelines installed before 1970 could maintain operating pressure at the highest level of the previous five years without conducting a pressure test to determine the maximum pressure.
But prosecutors say PG&E raised pressure on lines up to 10 percent beyond the maximum allowed, and that should have triggered immediate action to shut down, test and inspect the lines for safety problems.
Warner told federal prosecutor Hartley West he did not know if the company had a policy of spiking pressure on lines beyond the maximum level allowed.
Under new pipeline safety laws passed in 2002, to take effect in 2004, PG&E would have to identify lines in “high concentration areas” and assess the riskiest lines within five years.
But an industry lobbyist had interpreted the new regulations in a way that allowed utility companies to circumvent the new requirements.
PG&E’s director of system integrity, Alan Eastman, sent Warner an email in 2003 voicing concern about the lobbyist’s “loophole” interpretation of the new laws.
Terry Boss, vice president of the Interstate Natural Gas Association of America, suggested that pipeline operators could delay identifying lines as being in “high concentration areas” until after they verified their maximum pressure by spiking pressure on those lines.
“It smells like a loophole interpretation,” Eastman wrote in a December 2003 email to Warner.
Despite Eastman’s unease with that strategy, PG&E adopted the plan and spiked pressure on Line 132 beyond the maximum allowed in 2003 and 2008.
PG&E conducted external assessments of the line to check for corrosion but never conducted a required strength pressure test that would have detected problems and revealed that it had inaccurately listed the pipe as seamless rather than welded.
A welded pipe with a long seam presents a higher risk for potential problems, Warner told the jury.
“There’s more concern about an anomaly causing a fracture or rupture,” Warner said of long-seam pipes such as Line 132 in San Bruno.
Eastman sent Warner another email in July 2003 about another pipeline segment that was slated for external corrosion inspections until missing records of leaks and severe corrosion were found.
In that email Eastman said that pipeline, which flowed under a residential city street, would be replaced instead of externally inspected as planned, due to the discovery of missing records.
“It’s a nugget I found,” Eastman wrote in the July 31, 2003 email. “And, let me add, a nugget I don’t intend to encounter again, if you know what I mean.”
San Bruno City Manager Connie Jackson, who attended the trial Thursday, said Warner’s testimony suggested PG&E was “self-congratulatory” in its thinking, despite having identified significant areas with missing information and serious deficiencies.
“What I found most disturbing was an email that indicated someone at PG&E was questioning the practice, but, they still did what they wanted to do,” Jackson said. “Clearly they knew they had missing records and deficiencies on Line 132 in 2002 and 2003.”
PG&E is accused of violating 12 counts of the Pipeline Safety Act and one count of obstructing an investigation into the 2010 San Bruno pipeline blast that killed eight people and destroyed 38 homes.
If convicted, the utility giant faces a $562 million fine.
Last year, the California Public Utilities Commission fined PG&E $1.6 billion for the San Bruno blast, the largest penalty ever assessed against a utility in the state’s history.

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