Exxon Targets Mid-March for Repairing Ethane Line in Australia

By Angela Macdonald-Smith

Feb. 6 (Bloomberg) -- Exxon Mobil Corp., operator of an oil and gas venture in southeastern Australia with BHP Billiton Ltd., said it’s targeting mid-March for completing repairs to an underwater ethane pipeline damaged in a December storm.

Work to mend the severed line, which lies in waters 14.5 meters (47.6 feet) deep, may last as long as the end of March, depending on the schedule, Gemma Allman, a spokeswoman for Exxon in Australia, said today in an e-mailed response to questions. Exxon has taken legal steps that reserve its rights to make a claim for losses from the accident, she said.

The incident, subject of an Australian Transport Safety Bureau investigation, happened on Dec. 13 when the anchor of the Hong Kong-registered container ship APL Sydney dragged across the pipeline in Port Phillip Bay. Exxon and Melbourne-based BHP Billiton declared force majeure on contracts to supply ethane to chemical plants in western Melbourne.

Exxon is working with government and regulatory agencies, including Energy Safe Victoria, Environment Protection Authority Victoria, port authorities and the state police as it completes the work, Allman said. She didn’t respond to questions about the cost of repairs and insurance cover.

Exxon and Melbourne-based BHP Billiton each own 50 percent of the Bass Strait petroleum venture, the largest in Australia’s eastern states. Ethane is separated from liquefied petroleum gases at Long Island Point for transportation by the 78- kilometer (48-mile), 10-inch-diameter pipeline to petrochemicals producers Qenos Pty, owned by China National Chemical Corp., and Huntsman Chemical Co. Australia Pty.

Force majeure is a legal clause that allows producers to miss contracted deliveries because of circumstances beyond their control.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net