Diamond Pipeline LLC, which plans to build a crude-oil pipeline across Arkansas, finalized a multimillion-dollar deal Wednesday with Clarksville Light and Water Co. to take steps to protect drinking-water sources from potential spills.
The deal comes after some agencies, including the Arkansas Health Department, expressed concerns earlier this year that the route of the 20-inch pipeline would place drinking-water sources in Arkansas at risk.
The Clarksville Light and Water Commission voted Wednesday to accept the agreement with Diamond Pipeline, said John Lester, general manager of the municipal utility.
"I had to protect my water supply," Lester said. "It's all about health and public safety and reducing the risk from an accident."
Diamond Pipeline, a joint venture between Plains All American Pipeline and Valero Energy Corp., is planning a $900 million pipeline project that would ship oil from Cushing Okla., to Valero's refinery in Memphis.
The 440-mile pipeline will stretch across north-central Arkansas. The pipeline, which will have a capacity of 200,000 barrels per day, will move sweet crude from shale formations in Texas and North Dakota.
The proposed route of the pipeline crosses several waterways, including the Arkansas River, Mississippi River, James Fork River and Big Piney Creek. It also crosses smaller waterways, including some drinking-water sources.
Under the deal, Diamond Pipeline will provide $6.6 million to extend a pipe that feeds a water-intake facility on Spadra Creek in Johnson County so it will be north of the oil pipeline's path.
If the pipe construction is not approved by regulatory agencies, the funds will be increased to $8 million to provide for the construction of a water-treatment facility on Spadra Creek.
If built, the treatment plant also will be north of the pipeline's path so, if there is an oil spill, the crude will move south with the flow of the water, and away from the intake facility.
Spadra Creek connects to Lake Ludwig, the backup water source for Clarksville Light and Water, which provides drinking water to about 28,000 people in Clarksville and surrounding areas.
Clarksville Light and Water's main water source is Piney Bay, into which the Big and Little Piney creeks flow. Those two creeks also will be crossed by the proposed pipeline.
Diamond Pipeline also will be required to have an emergency response plan; conduct training exercises with Clarksville emergency employees; and have a boom -- a floating barrier used to contain oil spills -- on site at Clarksville's Piney Bay Intake Facility for use if there's a leak.
In return, Clarksville Light and Water has withdrawn its petition to intervene with a permit hearing regarding the pipeline being held today by the Arkansas Public Service Commission.
When asked if the steps to be taken under the deal will be enough to protect the water source, Lester said, "It will certainly be better than the current situation."
In 2013, an Exxon Mobil pipeline cracked open between two houses, sending tens of thousands of gallons of oil into a Mayflower neighborhood that once had 62 homes, and a cove of Lake Conway.
Plains All American came under scrutiny in 2015 after one of its pipelines in California ruptured, spewing thousands of gallons of crude into the Pacific Ocean. The company has emphasized the reliability of its Diamond Pipeline.
"It's important to us to be a good neighbor, as we intend to responsibly operate and maintain the Diamond Pipeline for years to come," Diamond Pipeline said in an emailed statement Wednesday.
"We're pleased that we reached an agreement with Clarksville Light and Water to fund an escrow account with [$6.6 million] to cover the construction of enhancements to the Clarksville water system, including relocating the Spadra Creek intake, benefiting the utility's 28,000 customers," the statement said.
The Health Department and others previously said they wanted the route of the pipeline to be moved away from water sources so that if a leak occurs, oil won't contaminate drinking water.
A spokesman for the agency could not be reached Wednesday.
In March, the Health Department sent a letter to the U.S. Army Corps of Engineers, which was examining the pipeline's implications on navigable waterways.
The letter said several watersheds and water-intake areas in Johnson, Pope, Sebastian and Faulkner counties could potentially be affected by the pipeline.
The Corps' Little Rock district examined about 491 water crossing on the pipeline's route and verified permits for 443 of them in May, said Cynthia Blansett, environmental protection specialist with the agency.
She said the other crossings either did not need a permit or the agency did not have jurisdiction over them.
Construction of the pipeline is expected to be completed in 2017. Last week, Diamond Pipeline said it had hired Welspun Tubular in Little Rock to manufacture two-thirds of the pipe for the project in a $47 million order.
If there is an oil spill, the sweet crude that the pipeline will move will float in the water so the steps outlined under the agreement, such as the boom, will help contain the oil, said Richard Kuprewicz, president of Accufacts Inc., a pipeline consulting group.
He said such deals between a pipeline company and water utility are not unusual.
"This will not prevent any leaks," said Danna Schneider, a member of the Clarksville City Council and Arkansas River Valley Safe Water Coalition.
"What this will do is protect our water intake in an event of a leak," she said. "They have agreed to really consider that our watershed is at risk. And they agreed to step up and do what they could to protect our watershed."
Business on 08/18/2016