PG&E Knew it Lacked Pipeline Data Before San Bruno Blast, Emails Show

Federal prosecutors on Thursday presented several internal emails showing PG&E engineers knew back in 2002 that they lacked critical data for at least 100 miles of gas transmission pipelines.

On Thursday, the issue of recordkeeping on PG&E lines became the focus for prosecutors seeking to convict the company of 12 federal pipeline safety counts and one count of obstructing the National Transportation Safety Board probe into the 2010 blast that killed eight people in San Bruno.

As evidence, they revealed a July 2002 email by one company engineer who found that PG&E lacked such simple data as the diameter of the pipe used for some 60 miles of its lines, the grade of pipe for 83 miles and wall thickness for 102 miles.

Prosecutors seeking to fine the company more than a half-billion dollars suggested the email was evidence that the company knew well in advance of new regulatory restrictions that it had systemic problems. They contend the utility deliberately chose to sacrifice safety for profit in the years before the explosion.

In previous testimony, federal pipeline safety regulator Steve Nanney concluded that when operators lack key records and fail to test pipelines, there is “no safety margin’’ left or room for error.

Instead of expensive tests for lines where it lacked records, PG&E relied on much cheaper above-ground means that could only check for rust. The company allegedly did that on the San Bruno line even after internal emails show that the company lacked key records about leaks – a key measure of pipeline integrity.

The company’s defense lawyers have countered that its engineers were just trying to keep the gas flowing and costs down amid a complex array of new regulations.

They have stressed that no individual is facing charges, and there is no evidence that any allegation relates directly to the tragic events in San Bruno.

Prosecutors used other internal emails as they questioned one former company engineer, Chris Warner, about the company’s decision to intentionally boost pressure on some lines that began in late 2003.

In an email sent in September 2003, Terry Boss of the Interstate Natural Gas Association of America, described what he called a “trick” that would allow PG&E to bypass draft regulations based on pressure levels.

The rules were expected to require costly high-pressure water tests if pipeline gas pressure exceeded a five-year maximum. In his email, Boss suggested that operators manipulate that window by jacking up pressure before declaring that the particular line fell under the restrictions of the regulations.

In December 2003, PG&E did just that on the San Bruno pipe and other nearby lines.

But that came after at least one official at PG&E balked at Boss’s trick.

“It smells like a loophole interpretation,” wrote Alan Eastman in response to Boss’s email. At the time, Eastman was in charge of the company’s pipeline integrity management efforts and was Warner’s boss. He later left the company.

While Eastman objected, other PG&E engineers embraced the pressure boost as a “better way” to keep lines running at full capacity while avoiding expensive tests.

“In order to protect pipeline pressure, they were trying to be proactive,” Warner said in giving the rationale for the boosting program. “This is anticipating the new regulations.”

In her questioning on Thursday, a prosecutor showed Warner several emails he received or wrote before leaving the company for a PG&E contractor in 2008.

The emails detailed the effort the company made to convince federal officials to allow it to use the cheaper, above-ground method to vouch for lines.

In one, PG&E assured regulators early on that the company planned to pressure test major pipelines. But once the above-ground method won approval, PG&E relied on it heavily at great savings.

Documents show that PG&E estimated that above-ground corrosion inspection method would cost as little as $1,100 per mile – with $30,000 per hole dug to verify accuracy.

By contrast, the company estimated that high-pressure water testing and automated in-line inspection efforts would cost hundreds of thousands of dollars per mile.

Outside court, San Bruno City Manager Connie Jackson said she was startled to hear that anyone in the company thought twice about spiking the pressure on gas pipelines as a means to avoid inspecting them.

“I was a little surprised by that,” she said. “PG&E has always been quite confident of its interpretation of the regulations.”

Warner faces cross examination on Friday.

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