Two underground petroleum pipelines, which posed a potential safety hazard to residents of a George Town apartment complex, were not dealt with for years despite the fact the problem was identified in 2004, the Caymanian Compass has learned.

The fuel pipes, which originate at the Jackson Point fuel terminal in South Sound and then veer apart to terminate at the Caribbean Utilities Company plant and Owen Roberts International Airport, are operated by CUC and Chevron-Texaco.

According to a March 2004 risk management report done by the Advantage Risk Solutions consulting company, major concerns were identified about the fact that the two fuel lines - one 4 inches in diameter and the other 8 inches - run underneath a multi-unit apartment building that was apparently constructed over the fuel lines.

“This is clearly not an acceptable situation,” Advantage Risk Solutions President Phillip Myers wrote in a 31 March, 2004 memo. “There are obvious risks with the potential for pipeline failures and releases of diesel fuel or aviation jet fuel under, into and around the apartment building and subsequent hydrocarbon contamination or fire.

“Further, the result of inspections of the diesel pipeline...using a mechanical ‘pig’ indicated that a deformation in the pipeline exists at the location of the apartment building site. This is probably the result of damage during construction activities.”

Mr. Myers recommended that both fuel lines be re-routed around the apartments - which were not named in the memo - within a year.

An internal government audit obtained by the Caymanian Compass via the Freedom of Information Law indicated that the situation still existed in September 2009, five-and-a-half years after Mr. Myers’ memo identified the problem.

According to CUC officials, the company’s diesel fuel pipe was moved in late November or early December 2009. However, they believed the Chevron-Texaco operated pipeline was still underneath the apartments. Texaco Caribbean officials could not be reached for comment. 

CUC’s Neil Murray said the apartment complex owner was notified when the utilities company performed work to move its pipeline to the edge of the property and away from the building itself. He could not comment on who initially gave approval to build the structure directly over the fuel conduit.  “We weren’t aware of it when the person started building (over the pipeline),” Mr. Murray said.

The Caymanian Compass determined through further investigation that the six-unit apartment complex built over the fuel pipelines are between Newport Avenue and Anthony Drive in the Windsor Park area. Outside one complex along Anthony Drive – Newport Garden – a small circular sign has been implanted in the sidewalk. It reads: “CUC – WARNING: buried fuel pipeline” with phone numbers listed below the warning urging people to call before they start digging.

The Internal Audit Unit noted in its September 2009 report that the chief petroleum inspector had attempted to address the pipeline re-routing some years ago, seeking legal advice about issuing a remedial notice to have the pipes moved. However, the report notes that the Legal Department advised the petroleum inspector he could not do so because Texaco did not own the pipeline at the time.

The situation has since changed, and the petroleum inspectorate has now been informed that Chevron-Texaco and CUC are the pipeline operators.

“Should an incident occur before the pipelines are re-routed, the chief petroleum inspector, the legal department and government may be required to explain why the consultant’s advice was not heeded,” the internal audit team stated in its report. “Such an event could potentially increase the government’s legal exposure.”

According to Chief Petroleum Inspector Gary McTaggart’s response to the audit, pipelines carrying fuel should never be located under houses as a matter of policy. However, the petroleum inspector also stated “the likelihood of a release while the ground remains undisturbed is not likely”.

Negotiations aimed at re-routing the remaining pipeline have been held between Cayman Islands Cabinet members and the oil companies, as well as Cayman’s Civil Aviation Authority, according to auditors.

“All agreed that the lines should be moved, but for many reasons, some political, the pipelines are still intact in the same location,” the chief petroleum inspector’s response noted. “Should a leak occur, Chevron or CUC would be liable, depending on which line leaked.” (His response was issued before CUC moved its pipelines.)

The Internal Audit Unit disagreed with the petroleum inspector’s assessment of the situation, quoting section 27 of the Dangerous Substances Handling and Storage Law (2003). The law states that the government and the petroleum inspector cannot be held liable for damages in the case of death, injury or loss incurred by any person due to any fire or explosion or any release or spillage involving dangerous substances “unless it can be established that there was negligence in carrying out” their duties under the law.

Part of the difficulty, according to Mr. McTaggart’s response in the audit, is that agreement about what to do with the pipeline operated by Chevron-Texaco must be reached by the oil companies before any works can begin.

The petroleum inspector also made reference to “mitigating issues involving the Civil Aviation Authority” that were of a “competitive and political nature”. Mr. McTaggart said those matters had “escalated beyond the control of this department”. The audit did not identify the nature of those issues.

According to the September 2009 audit report, CUC apparently agreed to move their diesel fuel pipeline in October or November, and he supposed Chevron-Texaco would “follow suit”. If no agreement could be reached with Chevron-Texaco about moving its aviation fuel pipeline, government would have to issue a remediation notice - basically an order to force the company to move the pipeline.