oversight

Energy Management: Extent of Crude Oil Contamination Is Uncertain

Published by the Government Accountability Office on 1990-03-08.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

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GAO   I kkl’ing f-kport~ to t,hc Chairman,
      Knv i ron ment, Energy, and Natural
      ICt~sourccsSubtrommittee, Committee on
      Cbwwrwnt, Operations, House of
      ~~rtl)rOesent,al,ives




      Extent of Crude Oil
      Contamination Is
      Uncertain
United States
General Accounting OfTice
Washington, D.C. 20548

Resources, Community, and
Economic Development Division

B-236565

March 8, 1990

The Honorable Mike Synar
Chairman, Environment,   Energy,
  and Natural Resources Subcommittee
Committee on Government Operations
House of Representatives
Dear Mr. Chairman:
This report responds to your June 13, 1989, request that we
examine allegations       that crude oil in Oklahoma and elsewhere
in the United States may be contaminated with hazardous
wastes and/or other noncrude substances.l           Some substances
occur naturally       in crude oil, while others could be
intentionally     or unintentionally     added when the oil is
produced and transported.          The substances inc,lude organic
chlorides,    sulfur,    waste oil, and PCBs.
You were concerned whether the presence of such wastes
could, among other things,       increase the risk of fires and
explosions   in refineries    that process the crude oil and
increase air pollution.       As agreed with your office,   we are
providing  information     on
--   instances of crude oil contamination,    the substances
     found in the crude oil, the circumstances      involved, the
     safety and environmental  effects  of refining
     contaminated crude, and the extent to which refinery
     fires and explosions can be linked to the processing of
     contaminated crude oil;
-- what impact the Resources Conservation   and Recovery Act
   (RCRA) and the Hazardous Liquid Pipeline   Safety Act have
   on the crude oil contamination  issue: and
-- what government and industry     actions    are being   taken to
   address the contamination    issue.


lAs defined in this report,        crude oil contamination    refers
to the presence of substances in crude oil which could
potentially      impair refinery   operations   or result  in unusual
safety,     health,   or environmental   risks.
 B-236565

We also agreed with your office to generally       limit     the
scope of our work to (1) reviewing the cases reported in a
series of articles      appearing in the Tulsa Tribune and (2)
obtaining   information    on each of the three issues from
federal agencies and from state and industry       officials     in
California,    Louisiana,   Oklahoma, and Texas.
In summary, industry officials       at 9 companies we contacted,
including    6 companies identified     in the Tulsa Tribune,
disclosed    40 cases of crude oil contamination       which occurred
between 1981-89.      Thirty-three   of these cases were reported
by 1 company. The contaminants found included chlorides,
iodine,   alcohol,   bromine, nitrogen,    and iron.    Three of the
cases resulted     in damage to refinery     equipment, including
one that led to a fire that caused millions          of dollars   in
damages.
The extent to which crude oil contamination             is occurring  is
uncertain.       Industry officials      we contacted had differing
views on how much crude oil contamination            is taking place,
while federal officials        had little     awareness of
contamination       problems.   Industry officials      advised us that
contamination       is not a problem when they know about it and
can act to reduce its effect.            While federal,   state, and
industry    officials     we spoke with believed that refining
certain noncrude substances could damage refinery
equipment, they generally         did not believe that the refining
of noncrude substances was likely           to create unusual safety,
health,    or environmental     risks.     Industry and government
officials    we contacted had not carried out an analysis to
determine whether there was a link between refining
contaminated crude oil and the occurrence of fires and
explosions.
Hazardous wastes must be controlled       and disposed of in
accordance with the hazardous waste provisions         of Subtitle
C of RCRA, which is implemented by the Environmental
Protection   Agency (EPA) or authorized      state agencies.
Since RCRA prohibits     the disposal of hazardous wastes
except in a permitted treatment,      storage, or disposal
facility,   the disposal of hazardous wastes in crude oil is
not allowed.     Certain hazardous wastes generated from oil
and gas exploration,     development, and production     are exempt
from RCRA, however, and these wastes may remain in and
contaminate crude oil in pipelines      without violating     RCRA.
The transportation     of hazardous liquids,     such as petroleum
products,   crude oil, and anhydrous ammonia in pipelines          is
monitored by the Department of Transportation         (DOT) Office
of Pipeline Safety.      According to Office of Pipeline Safety
.2
B-236565

officials,   however, pipeline   safety    regulations     prohibit
pipeline   operators from transporting      hazardous    liquids    that
would corrode the pipeline     system.
The government agencies we contacted generally       had not
gotten involved in the crude oil contamination       issue.   It
is difficult    to determine the extent to which crude oil
contamination     is occurring because overall  industry testing
for contaminated crude oil varies both in terms of the
number of companies with testing procedures in place and
the substances for which the tests are being performed.
According to industry      officials, it would be cost
prohibitive   to test for every substance that could possibly
be in the crude oil.
WHY CRUDEOIL MAY CONTAIN
RONCRUDESUBSTANCES
Crude oil may contain noncrude substances for various
reasons.    Crude oil contains naturally    occurring
substances,    including  naphthenic acids, iron, vanadium,
nickel,   and copper.    These substances can damage refineries
by reacting with and neutralizing      the catalysts  in the
refining   process.
Some noncrude substances, such as organic chlorides,               may
also be intentionally     mixed with crude oil.        For example,
as part of normal exploration        and production    activities,
chlorinated   solvents may be used to treat oil wells and
dissolve paraffin     in well piping.     In addition,       organic
chlorides   may be used to treat pipelines,        to dissolve
sludge and heavy sediment from the bottom of crude oil
storage tanks, and to clean equipment.           During these
processes, small amounts of these chlorides           may become
mixed with crude oil.      Industry officials      we talked to said
there may also be incentives       for those parties       involved in
the crude oil production      and transportation      process to
blend noncrude substances such as chlorides           with crude oil
to increase the volume of crude oil available            for sale, and
in the case of hazardous substances, avoid the cost of
proper disposal.
CASES OF CRUDEOIL CONTAMINATION,
AND GOVERNMENTAND INDUSTRY VIEWS
Through our contacts with industry officials,    we verified
five cases of crude oil contamination   that were reported in
the Tulsa Tribune.   Refinery equipment was damaged in three
instances, including  a fire that caused $7 million    in
3     *
  B-236565

  damages at a Beaumont, Texas, Mobil Oil Company refinery       in
  1982. Refinery operations were affected       in the two
  remaining instances.     In the first,   the contaminated crude
  oil was held in a separate tank so that it could be diluted
  and refined.     In the second, the refinery   was shut down so
  that the distillation    columns could be cleaned.
  Industry officials   informed us of 35 other cases between
  1982 and 1989 in which contaminated substances were
  detected through tests run on oil that is removed before it
  goes into the pipeline.
  The contaminants found in all 40 cases included chlorides,
  iodine, alcohol,   bromine, nitrogen,       and iron.     Industry
  officials   we spoke with were particularly         concerned with
  the existence of organic chlorides,         which become highly
  corrosive   in the refining    process.     The concentration      of
  organic chlorides   that refineries       can tolerate   before
  damage occurs varies.       The officials    said that although
  crude oil is routinely      monitored,    contaminants are not
  always identified   because not all shipments of crude oil
  are tested for all possible contaminants.
 There was no consensus among the officials        we spoke with
 from EPA, DOT's Office of Pipeline Safety, and industry           on
 the extent to which the contamination       is occurring.    They
 were aware that the refining      of crude oil contaminated with
 certain noncrude substances could damage refinery         equipment,
 but these officials     did not think that the refining     of any
 noncrude substances created unusual safety, health,         or
 environmental   risks.     Because EPA's Office of Solid Waste
 does not regulate the production      or refining   of crude oil,
 the officials   we spoke with there did not know how refining
 contaminated crude oil would affect safety and the
 environment.    However, the general opinion of the EPA staff
 we interviewed    was that refining   contaminated crude would
 probably not pose any unusual health or environmental          risks.
 RCRA'S SUBTITLE C PROGRAM
 RCRA was enacted in 1976 to address a problem of enormous
 magnitude-- how to safely manage and dispose of high volumes
 of municipal and industrial     solid waste generated
 nationwide.   To control hazardous wastes, Subtitle          C
 requires EPA first  to identify     which wastes are to be
 regulated as hazardous and to establish        standards to
 regulate those that handle such waste.         The standards for
 handlers include recordkeeping      and labeling    practices,
 manifest systems, and reporting      requirements,    which are
* 4
B-236565

designed to identify   the specific      hazardous waste from
generation to ultimate    disposition.
RCRAls Subtitle   C generally prohibits   the disposal of
hazardous wastes except in a permitted      facility,    thus its
disposal in crude oil is not allowed.       Contamination may
occur without violating    RCRA, however, since certain types
of wastes are exempted, in whole or in part, from RCRA
Subtitle  C Regulation under the following      conditions:
-- The wastes are generated from oil and gas exploration,
   development, and production  operations.
-- Used oil is recycled     and blended with    crude oil   and
   shipped to a refinery     for processing.
-- A small amount of waste ranging from more than 100
   kilograms but less than 1,000 kilograms of hazardous
   waste is generated by a business in any calendar month.
ACTIONS TAKEN TO ADDRESS
CRUDEOIL CONTAMINATION
Officials   from all nine refineries     and oil companies we
spoke with routinely     test crude oil for temperature,
gravity,   and basic sediment and water.      These basic
properties    define the quality    and price of the crude oil.
If the crude oil purchased is not of the level of quality
expected, then the refinery      will suffer an economic loss due
to inadequate product yield.        Samples are also periodically
taken before the crude oil enters the pipeline         so that tests
can be conducted when complaints are received from
refineries    or when there are indications     of contaminants.
All of the companies we contacted are aware of the
potential   for crude oil contamination,     and eight of them
have implemented crude oil-testing     programs to detect
certain   noncrude substances.    As a result of a growing
awareness of crude oil contamination,      these programs now
include tests for such substances as organic chlorides       and
metals, which can damage refinery     equipment and reduce
yield and profit.    Three companies we contacted have either
warned, banned, or sued suppliers     when these suppliers   were
suspected of providing    contaminated crude.
Federal and state regulatory   agencies we contacted are
taking little,  if any, action specifically  aimed at
addressing the issue of crude oil contamination.

5   *
B-236565



As agreed with your office,       we conducted our work in the
states of California,      Louisiana,   Oklahoma, and Texas. To
obtain information     on the substances being added, the
circumstances    involved,   and the extent to which refinery
fires and explosions can be linked to the processing of
contaminated crude oil, we interviewed          federal officials
from the Departments of Energy, Transportation,            and Labor,
and the EPA: state officials       representing     state corporation
commissions, tax commissions, and environmental            and
pipeline   safety offices;    as well as officials       representing
the oil industry.      Also, as agreed with your office,          we
contacted officials     about these same issues in Kansas,
Michigan, and New Jersey, although we did not visit             their
states.    Our discussions    also concerned the actions taken
or being taken to address crude oil contamination.
We discussed segments of this report with EPA's Office of
Solid Waste, DOT's Office of Pipeline Safety, and the
Department of Labor's Occupational     Safety and Health
Administration   (OSHA) officials.    They generally  agreed
with the facts presented and suggested changes that were
incorporated   where appropriate.   However, as requested by
your office,   we did not obtain official    agency or industry
comments on this report.
Section 1 of this report presents information           on the means
through which noncrude substances may be present in crude
oil; how crude oil is tested, transported,          and refined;    and
additional      details   on our scope and methodology.      Section 2
identifies      cases of crude oil contamination     and government
and industry views.          Section 3 discusses RCRA Subtitle     C
provisions      and provides information     on the regulations
within DOT's Office of Pipeline Safety governing crude oil
transportation.         Section 4 discusses government and
industry    actions that address the crude oil contamination
issue, including        more extensive testing programs by certain
refineries     we identified.
As arranged with your      office,  unless you publicly     announce
its contents earlier,      we will make no further    distribution
of this report until      30 days from the date of this letter.
At that time, we will      send copies to the Secretaries        of
Energy, Transportation,       and Labor: the Administrator,
B-236565

Environmental  Protection  Agency; and other interested
parties.   Copies will also be made available   to others upon
request.   If you have any further  questions,  please contact
me at (202) 275-1441.
Sincerely   yours,
                         CONTENTS

                                                        Pase
LETTER                                                    1
SECTION
  1       INTRODUCTION                                   10
              Why Crude Oil Contains Noncrude
                Substances                               10
              How Crude Oil Gets to Refineries           11
              Refinery Operations and Finished
                Products                                 11
              Testing of Crude Oil by Pipelines   and
                Refineries                               12
              Objectives,  Scope, and Methodology        12

  2       GOVERNMENT   AND INDUSTRY OPINIONS ON CRUDE
           OIL CONTAMINATIONVARY                         15
             Cases of Contamination That We
                Verified,   1981-89                      15
             Government and Industry Opinions
                Differ on Extent of Contamination        17
             Crude Oil Testing Is Limited                18
             Effects of Refining Contaminated
                Crude                                    19

  3       HOWRCRA AND THE HAZARDOUSLIQUID PIPELINE
            SAFETY ACT PERTAIN TO CRUDEOIL
            CONTAMINATION                                21
              RCRA's Subtitle  C Program                 21
              Some Wastes Are Exempt From RCRA           22
              How RCRA Relates to Crude Oil
                Contamination                            24
              Some State Environmental   Regulations
                Are More Stringent  Than RCRA            24
              Pipeline Safety Programs                   25
.




    4            ACTIONS TAKEN TO ADDRESSCRUDEOIL
                   CONTAMINATION                                  27
                     Testing Programs Initiated  by Industry      27
                     Oil Company Actions Taken Against
                        Suppliers                                 28
                     Limited Actions Taken by Federal and
                        State Regulatory Agencies Against
                        Suppliers                                 29
    APPENDIXES
        I        FORTY CASESOF CRUDEOIL CONTAMINATION
                   INVOLVING 9 COMPANIES                          31
    ~ I%t        HAZARDOUS
                         WASTECHARACTERISTICS                     34
    I
    'III         MAJORCONTRIBUTORS
                                 TO THIS REPORT                   35
    TABLES
    1 2.1        Number of Crude Oil Contamination    Cases
                   at the Refineries                              16
    1 2.2        Number of Contaminated Crude Oil    Cases
                   Detected at the Pipeline                       17

                             ABBREVIATIONS
    ACT           automatic custody transfer
    API           American Petroleum Institute
    DOT           Department of Transportation
    EP            extraction    procedure
    EPA           Environmental Protection    Agency
    FBI           Federal Bureau of Investigation
    LDEQ          Louisiana Department of Environmental Quality
    MCPL          Mid-Continent    Pipeline Company
    NPRA          National Petroleum Refiners Association
    OSHA          Occupational Safety and Health Administration
    'PCB          polychlorinated    biphenyl
    wm            parts per million
    RCRA          Resource Conservation and Recovery Act




                                  9
                                    SECTION I
                                  INTRODUCTION

      According to allegations    made in a series of articles        in the
Tulsa Tribune, noncrude substances including        hazardous wastes have
been added to crude oil and delivered      by pipeline    to refineries.
The articles   indicate that refining    such contaminated crude oil
increases the risk of refinery     fires and explosions and causes
environmental   harm.
      There are various reasons why crude oil may contain noncrude
substances.    Crude oil naturally    contains some noncrude substances,
while other substances can be introduced        into crude oil as a result
of industry  practices   and accidental    or intentional  disposal of
wastes.
       Because various parties handle crude oil from the time of
production   until  it reaches a refinery,   it is difficult     to
determine where and when noncrude substances are introduced          into
the crude oi1.l     Although oil companies periodically      test crude oil
to ensure that the oil is not contaminated,       not all crude oil
entering pipelines     is tested because of the large number of
receipt points,    manpower constraints,   and the cost of such testing.
WHY CRUDEOIL CONTAINS
PONCRUDESUBSTANCE$
        Crude oil may contain noncrude substances for various reasons.
Crude oil contains various naturally         occurring substances,
including    benzene, naphthenic acids, nitrogen,      iron, vanadium,
nickel,    and copper.    Napthenic acid, iron, vanadium, nickel,      and
copper can damage refineries       by reacting with and neutralizing     the
catalysts    in the refining   process.
        Some noncrude substances, such as organic chlorides,            may also
'be intentionally      mixed with crude oil.       For example, as part of
 normal exploration      and production   activities,     chlorinated   solvents
 are used to treat oil wells and dissolve paraffin              in well piping.
 In addition,     organic chlorides    are used to treat pipelines,        to
 dissolve sludge and heavy sediment from the bottom of crude oil
 storage tanks, and to clean equipment.            During these processes,.
 small amounts of these chlorides        may become mixed with crude oil.



lFollowing     production,   pipelines     are used to gather crude oil;
transport    it to refineries;      and then distribute    the refined
products to process plants,         retail   markets, and other forms of
transportation,      such as railroads      and trucking companies.
                                      10
       Industry officials said there may also be incentives      for those
pakties involved in the crude oil production     and transportation
process to blend noncrude substances with crude oil to increase the
vo ume of crude oil available    for sale, and in the case of
ha %ardous substances, avoid the cost of proper disposal.
     CRUDEOIL GETS TO REFINERIES
        Crude oil pipelines     move both imported and domestic crude oil
fr'm ports and producing oil fields,          which may contain hundreds of
oi wells, to refineries.           Oil from the producing wells is
ac umulated in tanks.        Small pipeline-gathering        systems, or
ga Ehering lines,    collect    the crude oil from the tanks and transport
thb oil to the major crude oil pipeline            systems, or trunk lines.
Th se trunk lines link gathering systems to storage terminals                 and
refineries.
   "             According   to   DOE's  Energy  Information    Administration,
in 1988, approximately       716 million    barrels of crude oil was shipped
vi pipeline      between the 5 petroleum districts         in the United
St t tes.
   I According to industry
t ie oil pipeline
                      a 1989 National Petroleum Council report,       in 1987
                               operated a network of over 108,000 miles
o 2, trunk pipelines,   in all 50 states, carrying    domestic and
i ported crude oil from producing fields        and ports to refineries.
0 7 the other hand, the gathering systems pipelines       are short
compared with trunk pipelines       and range from a few feet to several
miles.
RRFINERY OPERATIONS
,AND FINISHED PRODUCTS
        Modern refineries   include many process units and produce
numerous products from crude oil including        gasoline,  jet fuel,
liquified    petroleum gases, kerosene, coke, lubricants,       asphalt,
fuel oil, and special naphthas.        The process units in refineries
vdry according to the nature of crude oil feedstocks or product
lines:    however, most of the processes are designed to separate a
particular    chemical compound or a particular     substance such as
sulfur.     In addition,  the separation processes remove contaminants
such as metals from the crude oil.
       Refined products are transported       from refineries    to areas of
use largely by pipeline    distribution     systems.     These systems are
usually called llproduct pipelines'*      and, in 1987, there were 95,000
miles of product pipelines      in the 50 states.       The major products
are gasolines of various grades, jet fuel, kerosene, heating oils,
and liquified   petroleum gases.       Compared with crude oil, the
refined fuels require much more precise separation            of different
grades and brands of fuels because they are less compatible with
each other.
             Y




                                      11
    TING OF CRUDEOIL E

       Pipeline companies generally   do not test all crude oil
entering the pipeline    for noncrude substances because of the large
number of receipt points,    personnel constraints,      and the cost of
such testing.    For example, the Mid-Continent      Pipeline Company
(MCPL), just one of several intrastate       trunk pipelines    located in
Oklahoma, has 6 major receipt points,       11 major delivery    points,  210
automatic custody transfer    (ACT) units,2     and about 2,300 lease oil
connections3 through which crude oil enters the pipeline.
       Crude oil entering from lease oil connections and storage
tanks is not regularly    sampled or tested unless problems with
receiving   nonconforming crude oil have been experienced.
       Crude oil entering trunk pipeline       systems passes through ACT
units at all major receipt and delivery         points.      Small ACT units
are located at trunk pipeline-gathering         facilities,      and samples are
periodically      taken and retained.    Retained samples are tested when
refineries    file complaints or when there are other indications            of
nonconforming material.        Random,,"samples from smaller ACT units are
also taken and tested to get an indication          of the materials     being
shipped.     Testing for crude oil contamination          is discussed in more
detail    in sections 2 and 4.
QRJECTIVES. SCOPE,
AND METHODOLOGY
        In light of several allegations       that contaminated crude oil
was flowing through pipelines,         the Chairman, Environment,    Energy,
and Natural Resources Subcommittee, House Committee on Government
Operations,     asked us to determine the extent to which
contamination      is occurring    and whether it poses serious health,
safety,    or environmental     risks.    The June 13, 1989, request was
based on a series of newspaper articles           in the Tulsa Tribune which
raised concerns that crude oil shipped by pipelines            in Oklahoma and
elsewhere in the United States may be tainted with noncrude
substances,     including   hazardous wastes.      According to the articles,
the presence of such wastes could result in increased air pollution
and increase the risk of fires and explosions.
      As agreed with the Chairman's office,  we are providing
information   on (1) instances of crude oil contamination,    the
substances being added to crude oil, the circumstances     involved,

2ACT units automatically      measure the volume of crude oil       being
injected    into crude oil   pipelines,  and take representative      samples
for testing     purposes.
3These are the connections      at the well   sites.
                                     12
 khe safety and environmental      effects of refining.contaminated
 crude, and the extent to which refinery       fires and explosions can be
 ilinked to the processing of contaminated crude oil;          (2) the impact
 of the Resource Conservation and Recovery Act (RCRA) and the
 Hazardous Liquid Pipeline Safety Act on crude oil contamination;
   nd (3) government and industry actions being taken to address the
   ontamination   issue.   In conducting our work, we agreed to visit
 Ehe states of California,     Louisiana,  Oklahoma, and Texas and to
 kelephone officials     in Kansas, Michigan, and New Jersey to
 /determine if they were aware of pipeline       contamination    problems.
 I
        To determine the extent to which crude oil contamination        is
Ioccurring,    the substances added, the circumstances      involved,  and
the extent to which refinery      fires and explosions can be linked to
lthe processing of contaminated crude oil, we obtained and
summarized the views of federal,        state, industry,   and other
officials,     and obtained and analyzed supporting      documentation when
available.      As agreed with the Chairman's office,      we did not
 interview   comparable officials     in all of the states because of time
constraints.
           We interviewed       industry officials     from the National Petroleum
   Refiners Association            (NPRA); the Oklahoma Independent Petroleum
   Association;       the Petroleum Industrial        Security Council; the
 IAmerican Petroleum Institute              (API): the Sun and Conoco Refineries;
 /the Sun, Permian, Mobil, and Shell Oil companies: and the Sun
 /Pipeline Company.
II
           We interviewed       Oklahoma State officials      from the Corporation
   Commission, Department of Health, Department of Pollution                Control,
  Tax Commission, Office of Pipeline Safety, and Bureau of
   Investigation:        Texas officials      from the Railroad Commission;
   Louisiana officials          from the Department of Environmental      Quality
  and Department of Natural Resources, Office of Conservation:
  California       officials      from the Department of Health Services, Air
  Resources Board, and Department of Conservation;                Kansas officials
   from the Corporation           Commission and Department of Health and
  Environment: New Jersey officials               from the Department of
  Environmental         Protection     and the Petroleum Council; and a Michigan
  official      from the Department of Natural Resources.
        We interviewed federal officials     in headquarters  and field
 offices   from the Environmental   Protection   Agency (EPA): Department
 of Energy: Office of Pipeline Safety, Department of Transportation
~ (DOT); Occupational  Safety and Health Administration      (OSHA),
 Department of Labor; and Federal Bureau of Investigation        (FBI).
      Other officials     interviewed  were the Tulsa Tribune reporters
who wrote the newspaper articles       about crude oil contamination     in
Oklahoma. We obtained information         and points of contact on the
alleged cases of crude oil contamination        described in the articles
and identified
           Y      by  the  reporters.    We did not collect  documentation
                                      13
for other cases we became aware of because of time constraints:
however, we verified   the instances of contamination    during
discussions with officials    of the companies involved.
       To determina the impact of RCRA and the Hazardous Liquid
Pipeline Safety Act on the crude oil contamination          issue, we
contacted those federal and state officials       indicated     above. In
addition,    we obtained and reviewed applicable     federal and state
regulations    on pipeline  safety, hazardous and toxic waste, and
small-quantity    generators of hazardous wastes.      Also, we obtained
and reviewed studies on the composition and management of used oil
generated in the United States: management of wastes from the
exploration,    development, and production    of crude oil: API
environmental    concerns: and used oil, oily waste water, oily
sludge, and other wastes resulting      from the use of oil products.
      To determine what government and industry actions have been
taken to address crude oil contamination,   we obtained information
on crude oil-testing   programs, and changes in current federal
regulations   now being considered.
      We performed our work from May to December 1989 in accordance
with generally   accepted government auditing   standards.      The views
of responsible   industry and state officials   are incorporated     where
appropriate.    We also obtained and incorporated     EPA officials'
views regarding how crude oil contamination     relates to RCRA
regulations.




                                   14
                                       CTION 2


                      QN CRUDEOIL CONTAMINATIONVARY

        Our discussions    with oil industry officials         identified      40
c'ses of crude oil contamination,           including   the 5 instances
r ported in the Tulsa Tribune.           Three of the cases we identified
r 3 sulted in damage to refinery        equipment, including       one that led to
aifire    causing millions     of dollars     in damages. We found little
c nsensus among the government and industry officials                 regarding the
e tent of crude oil contamination.             While the federal,       state, and
i dustry officials      we spoke with believed that refining             certain
n ncrude substances could hinder refinery             operations,     they
g nerally    did not think that the refining          of noncrude substances
wEs likely     to create unusual safety, health,         or environmental
risks.
Ck3ES OF CONTAMINATION
TkAT WE VERIFIED, 1981-89
  I
  /     Through our contacts with industry officials,           we verified   five
cases of crude oil contamination       involving      six companies that had
b/een identified     by the Tulsa Tribune reporters.          Refinery
ekuipment was damaged in three instances,           including     a fire that
cbused $7 million       in damages at a Beaumont, Texas, Mobil Oil
C(ompany refinery     in 1982. Refinery operations were affected            in the
tyo remaining instances.        In the first,    the contaminated crude oil
was held in a separate tank so that it could be diluted                 and
refined.      In the second, the refinery     was shut down so that the
dsistillation    columns could be cleaned.
      Industry officials informed us of 35 other cases between 1982
and 1989 in which contaminated substances were detected through
tests run on oil that is removed before it goes into the pipeline.
       The contaminants found in the 40 cases included chlorides,
iodine, alcohol,    bromine, nitrogen,   and iron.  Industry    officials
we spoke with were particularly      concerned with the existence of
solvents such as organic chlorides,      which become highly corrosive
in the refining    process.   They said that although crude oil is
routinely   monitored,   contaminants are not always identified
because not all shipments of crude oil are tested for all possible
c$ontaminants.
       The cases of contamination   we identified  are listed   in tables
2.1 and 2.2.    Table 2.1 lists   those cases of contamination,
including   one that led to a fire causing millions    of dollars    in
damages, in which the contaminant was not detected until        it
reached the refinery.     Table 2.2 lists   those cases in which the
                                       15
contaminant was detected at the pipeline.       In addition,  a more
detailed   description of the cases we identified    is included in
appendix I.
Table 2~. . Number of Crude Oil Contamination Cases at the
Refineries
                                                                    Damage
       Company(s)                Type of           Effect of       reported by
Year   involved               contaminant(s)     contamination       industry
1989   Quaker State's            Carbon tetra-   Affected               None
       Congo Refinery,           chlorides       refinery
       Newell, W.Va.                             operationsa
1987   Sun Refinery,             Alcohol         Damaged                $20,000
       Tulsa, Okla.                              refinery                  to
                                                 equipment               30,000
       Sinclair Refinery,        Alcohol         (not refined)
       Tulsa, Okla.
1987   Atlas Refinery,           Bromine,        Operational            Unknown
       Shreveport,   La.         iodine,         problemsb
                                 chlorides,
                                 nitrogen
1982   Mobil Oil Co.,            Chlorides       Fire and              $7 million
       Beaumont, Tex.                            refinery
                                                 shutdown
1981   Conoco Oil    Co.,        Organic         Damaged                cost of
       Ponca city,    Okla.      chlorides       refinery               replacing
                                                 equipment              pipe
aThe contaminated crude oil had to be placed in a holding               tank and
diluted with other crude oil before it was refined.
bDistillation   columns had to be cleaned before        the refinery      could
be reopened.




                                        16
.



                    Nwber    of Crude Oil Contamination         Cases Detected     at t&

      I
                                       Number
                 Company                 of
    *           involved                cases            Contaminants
    1$82-       Mid-Continent              33            Chlorides,     iron,
    1989        Pipeline Co.,                            gasoline
                Tulsa, Okla.
    1984       Conoco Oil Co.,              1            Used solvents
     /         Guernsey, Wyo.
    1$89       Shell Oil Co.,               1            Chlorides
               New Orleans, La.
    GOVERNMENT       AND INDUSTRYOPINIONS
    DIFFER ON EXTENT OF CONTAMINATION
       I
            There was no consensus among the officials            we spoke with from
    E A, DOT's Office of Pipeline Safety, and industry officials                   on
    t e extent to which crude oil contamination               is occurring.
      i;
            Officials      from EPA's Office of Solid Waste, who provide
    policy and technical            guidance for the implementation      of Subtitle     C
    of RCRA (which addresses the management and disposal of hazardous
    s' lid waste), had heard of no reported instances of crude oil
      &
    c,ntamination        and were not aware that crude oil contamination             was
    occurring.        EPA officials        in Dallas, Texas, however, said they had
    heard of one or two instances of contamination               but had not been
    officially       notified      of nor taken any action on these instances.
    Additionally,        officials      from DOT's Office of Pipeline Safety said
    they do not test crude oil in the pipelines               for contaminants and
    are not aware of any instances where contaminated crude oil shipped
    via the pipelines          to the refineries      has caused health or safety
    risks.
           API officials     believed that crude oil contamination        with waste
    material was not a problem because of federal and state waste
    disposal requirements        for the industry,   and because of industry
    equipment that is capable of mitigating          the effects  of
    contamination      before operating problems occur.       API officials     told
    us that although they understand that various noncrude substances
    may become mixed with crude oil, they were not aware of any
    incidences,     at least within the last 3 years, in which noncrude
    substances mixed with crude oil caused any safety or environmental
    problems.     A spokesperson from NPRA was not aware of any general
    contamination      problem and thought that the cases of contamination
    identified    in the Tulsa Tribune involved a few unique
    circumstances.       An official    from the Petroleum Industrial       Security
    Council, Austin, Texas, on the other hand, said that the crude oil
                                             17
contamination  issue has been one of the featured topics at recent
Council conferences,  and he believes contamination  is a problem.
Although he did not have any supporting documentation,   the official
said he has heard of about 8 cases of contaminated crude oil in
1989 compared to 3 cases in 1987 and 1988. He said that most of
these cases had been discussed in the Tulsa Tribune articles,     while
the other cases were not made public by the companies involved.
       Industry    officials      at the nine oil and pipeline        companies we
spoke with were aware of the existence of solvents such as organic
chlorides,     which become highly corrosive            in the refining    process.
However, the officials          in four of these companies did not think
that crude oil contamination              is currently    a problem because these
companies routinely          monitor whether the crude oil they receive
contains chlorides.           An official     from one of the four companies,
though, was concerned that contamination                could become a major
problem in the near future.               His opinion was based on a belief       that
the current practice          of disposing of refinery        wastes called "land
farming" might be banned by EPA. Two of the nine companies
believed that crude oil contamination                may be a major problem.
According to an official           from one of the companies, his concern was
just based on a "gut feeling, It while the other companyls concern
was based on actions taken against shippers suspected of shipping
contaminated oil.          The other three companies did not have comments
regarding the magnitude of the problem.
CRUDEOTL TESTING IS LIMITED
      It is difficult     to determine the extent to which crude oil
contamination     is occurring because industry testing   for
contaminated crude oil varies both in terms of the number of
companies with testing       procedures in place and the substances for
which the tests are being performed.
        All nine refineries   and oil companies we spoke with routinely
test crude oil for temperature,       gravity,  and basic sediment and
water.      These basic properties   define the quality   and price of the
crude oil.      If the crude oil purchased is not of the level of
quality     expected, then the refinery    will suffer an economic loss
due to inadequate product yield.
       Seven of the oil and pipeline        companies we contacted perform
tests for organic chlorides,        and two of the seven also test for
metals.    However, the frequency with which these tests are
performed varies.      (Sec. 4 contains a further          discussion    of various
industry   testing  programs.)     Additionally,       the tests that are
performed may not necessarily        identify    the existence of toxic
materials,    such as polychlorinated       biphenyls     (PCBs). According to
a pipeline    company engineering      superintendent,      for instance,     any
PCBs in the oil would show up as chlorides.               Hence, further    tests
would be needed to identify       the chlorides      specifically     as PCBs.

                                        18
       According to one industry     official,     the cost of the crude oil
tests limits     the number of tests performed and the specific
substances for which the tests are conducted.            The industry
typically    tests for those substances, such as organic chlorides,
thbt are known to cause operational          problems.    (The cost of the
tests for these substances is also discussed in detail             in sec. 4.)
             to industry  officials,    it would be cost prohibitive      to
       for every substance that could possibly be put into the crude




      The industry      and government officials      we spoke with were aware
      the refining      of crude oil contaminated with certain noncrude
                       hinder refinery   operations,     but these officials
                  that the refining     of any noncrude substances created
                     health,   or environmental    risks.    Although refinery
                  damaged as a result of refining         contaminated crude
                    that we identified,    in only one case did the
c ntamination     cause a fire or explosion.
 ci
        Refinery officials,        as well as officials       from API and NPRA


 n
a reed that refining         certain noncrude substances could cause
r finery damage and lower product yield.                According to a refinery
0 ficial,      the refining     of organic chlorides       creates hydrochloric
a id, which is highly corrosive            to refinery     pipes.    An official   of
a ipipeline      company said that some refineries,           with advance notice,
cdn tolerate        organic chloride     concentrations     up to seven parts per
million     in total crude volume, while other refineries              cannot
tQlerate      concentrations     which exceed one part per million.
Substances such as heavy metals and chlorides                 can react with and
neutralize       the catalysts     in the refining     process.    If the catalyst
has been neutralized,          certain reactions      cannot take place.
       On the other hand, officials       from API did not think that
refining    noncrude substances causes unusual health or
environmental     harm, and officials     from NPRA were unaware of any
specific   health or environmental      risks associated with refining
contaminated crude.      Because EPA's Office of Solid Waste does not
regulate the production     or refining      of crude oil, the officials    we
spoke with there did not know how refining           contaminated crude oil
would affect    safety and the environment.         However, the general
opinion of the EPA staff we interviewed          was that refining
contaminated crude would probably not pose any unusual health or
environmental     risks.
      Industry     and government officials    we contacted provided us
with little     information   linking  contamination   to the occurrence of
fires and explosions.        However, no one we contacted had carried out
an analysis to determine whether such a link exists.              According to
OSHA officials,      OSHA usually would not investigate      refinery    fires
                                        19
or explosions unless a worker was killed               or if at least five
workers were hospitalized.           Its investigation      might not determine
whether contamination         caused the fire.       According to an OSHA
official,     ON-IA's investigation      would look into whether refinery
pipes had been regularly         monitored for corrosion,         but would not
necessarily     focus on what was being transported           in the pipes.      OSHA
investigators      investigating     a fire or explosion would only become
aware of contamination         if someone told them about it.          While API
collects    information     on refinery    fires,    the information    is
incomplete because reporting           is voluntary.      The Director    of API's
Fire and Safety Group said that, in his opinion,                there is no link
between refinery       fires and contaminated crude oil.
        According to a refinery     official,    once a contaminant is
detected,     the source of contamination      is often hard to prove.
Crude oil may be delivered       from many sources, i.e.,       a crude oil
pipeline    may be accessed by many smaller gathering         lines which
transport     oil from many small gatherers.        These small gatherers
receive their oil from numerous leases or possibly oil rec1aimers.I
According to an Oklahoma State Bureau of Investigation              attorney,
crude oil contamination       cases are difficult     to investigate     because
it is almost impossible to trace contaminated crude oil to its
initial    source.    A prior FBI investigation      was dropped because the
evidence (i.e.,      the contaminant) was destroyed when the crude was
diluted    and refined.




IReclaimers   collect crude and used oil and make it           suitable    for
further*use   by removing insoluble contaminants.
                                       20
     .

.


                                            SECTION 3.
         I           HOWRCRA AND THE HAZARDOUS
                                             LIQUID PIPELINE
         /
                   SAFETY ACT PERTAIN TO CRUDEOIL CONTAMINATION
         I
         j Hazardous wastes must be controlled     and disposed of in
          rdance with the hazardous waste provisions      of RCRA. Since RCRA
          ibits the disposal of hazardous wastes except in a permitted
          tment, storage, or disposal facility,     the disposal of hazardous
          es in crude oil is not allowed.     Certain hazardous wastes
          rated from oil and gas exploration,    development, and production
                  from RCRA, however, and these wastes may remain in and
                    crude oil in pipelines without violating    RCRA.


         s
         ' The Hazardous Liquid Pipeline Safety Act of 1979 governs,
    amo g other things, the transportation
    pro ucts, including
    pip line safety.
    reg t lations prohibit
                                                   via pipeline
                              crude oil, and is primarily
                           According to DOT officials,
                               pipeline
                                                                   of petroleum
                                                              concerned with
                                                           pipeline
                                         operators from transporting
                                                                       safety
    hazardous liquids      that would corrode the pipeline       system.
    RCRA'S SUBTITLE C PROGRAM
        i RCRA was enacted in 1976 to address a problem of enormous
    magnitude --how to safely manage and dispose of high volumes of
    municipal and industrial           solid waste generated nationwide.          RCRA
    directs     EPA to, among other things, develop and implement a program
    to protect human health and the environment from improper hazardous
    waste management practices.             To control hazardous wastes, Subtitle
    C requires EPA first          to identify     which wastes are to be regulated
    as hazardous and to establish             standards to regulate those that
    handle such waste.          The handlers include generators,         transporters,
    and! facilities      that treat,     store, and dispose of hazardous waste.
    The standards for handlers include recordkeeping and labeling
    practices,      manifest systems, and reporting          requirements,    which are
    designed to identify          the specific     hazardous waste from generation
    to ultimate      disposition.
           As defined by RCRA, a solid waste includes any solid,
    semisolid,     liquid,   or contained gaseous material that is discarded
    or intended to be discarded.           Solid wastes are considered hazardous
    if *hey could cause injury or death, or pollute                  land, air, or
    wat+r.     Under RCRA, EPA was required to establish                standards for two
    apptioaches that would identify         which wastes are hazardous and need
    to he controlled.        Under one approach, EPA was to identify                  the
    chalracteristics,      or properties,     that make a waste hazardous.                Under
    the; second approach, EPA was to identify               and list specific         wastes.
    In )1980, EPA promulgated regulations              that established       criteria     for
    determining which wastes are hazardous.                 These regulations
    identified     four characteristics--ignitability,              corrosivity,
                                               21
reactivity,   and toxicity --and listed   several hundred known and
generally   agreed-upon commercial products and production-process
wastes that are hazardous.      (The four identified  characteristics
are described and illustrated     in app. II.)
         EPA considers wastes to be hazardous if they contain one of
these four characteristics      unless they are exempted from RCRA
regulation.       Further, EPA considers that any mixture containing a
listed     hazardous waste, regardless of the percentage,    is a
hazardous waste and must be managed accordingly.        Also, an EPA
official     in the Office of Solid Waste said that the mixing of
listed     hazardous wastes may be subject to specific   management
standards or permit conditions.
      The responsibility     of determining    if a particular     solid waste
is hazardous falls on the generators of the waste.             They must
determine whether they generate a listed hazardous waste, or must
test their waste using standard methods or have sufficient
knowledge about their waste to assess whether it exhibits              any of
the four characteristics.        If the waste does exhibit      a
characteristic,   then it is hazardous and must be managed
accordingly.    According to EPA officials,       a characteristically
hazardous waste can be blended or mixed with a nonhazardous waste
so that the resulting      mixture is no longer characteristically
hazardous; however, as with listed waste, this mixing may be
subject to specific      management standards.
SOMEWASTESARE EXEMPTFROMRCRA
      Certain types of solid wastes are exempted in whole or in
part from regulation      under Subtitle  C. These exemptions include
wastes generated from oil and gas exploration      and production,  some
characteristically     hazardous used oil, and wastes generated by
small-quantity     generat0rs.l
Exemption for Oil and Gas
Exploration  and Production Wastes
       In the 1980 amendments to RCRA, wastes generated from oil and
gas exploration,       development, or production  operations were
exempted from Subtitle        C. The various types of exempt oil and gas
wastes include drilling        fluids, produced water, well treatment and
stimulation    fluids,    and storage tank bottoms containing   basic
sediment and water from holding product and exempt waste.          Under
the amendments, EPA was directed to study such wastes and either
determine that the exemption should continue or recommend

lExempted wastes also include common solid wastes such as household
wastes and agricultural wastes that do not present a significant
threat to human health or environment, or are managed under other
programs.
                                     22
appropriate   regulatory  action.      On the basis of that study, EPA
dec$ded that the exemption was warranted, considering            factors such
as the adequacy of existing       federal and state regulations,        the
     er to human health and environment,       and the economic impact on
     stry.   However, in an attempt to fill       certain gaps and
     ngthen the regulations,     EPA is currently     collecting    data to
     ort the development of additional       management standards for
     e wastes under Subtitle     D of RCRA, which pertains       to EPA's
solkd waste disposal program.
      tion   for Used OiJ,
      I In 1985, EPA published a proposal to list used oil as a
haz Isrdous waste.2    However, in response to comments on the
pro osal, in 1986 EPA decided not to list used oil destined for
ret cling as a hazardous waste and decided to defer its decision
reg rding the disposal of used oil, even though EPA recognized that
use oil may contain listed hazardous wastes such as chlorinated
sol ents or exhibit     one of the Zour characteristics        of a hazardous
wasi 8. According to EPA Office of Solid Waste officials,             EPA
decided that listing     used oil could be environmentally        counter
pro b uctive because it would deter recycling       and result     in increased
du ing into the environment.
   "
     i In October 1988, the U.S. Court of Appeals for the District            of
Col/umbia rejected   EPA's rationale    for not listing     recycled used
oiq as a hazardous waste because it was based on a factor             not
allowed by RCRA, and ordered EPA to reevaluate          its earlier
position.     That reevaluation   is currently  in process.
BxemDtion for Srnu
Qudntitv Genesaf;nrrr
       A business that generates more than 100 kilograms but less
than 1,000 kilograms of hazardous waste in any calendar month is
considered to be a small-quantity    generator.   Small-quantity
generators must test, properly store, and dispose of their
hazardous wastes at approved facilities,     but are exempt from
certain   reporting  requirements.  According to EPA, small-quantity
generators account for less than 1 percent of the hazardous waste
generated and do not warrant extensive federal regulation.




2Used oil is defined as any oil that has been refined from crude
oil, which is used and, as a result of such use, is contaminated
by'physical   or chemical impurities.      Unused oil generally   becomes a
waste oil when it is spilled,     when  it  mixes with other   wastes, or
when it fails   specifications   for its intended use and is discarded.
Unused petroleum wastes are also classified       as waste oils.
                                      23
       Hazardous wastes must be controlled       and disposed of in
accordance with the hazardous waste provisions          of Subtitle    C of
RCRA. Since RCRA prohibits         the disposal of hazardous wastes except
in a permitted treatment,       storage, or disposal facility,      the
disposal of hazardous wastes in crude oil is not allowed.              Certain
hazardous wastes generated from oil and gas exploration,
development, and production        are exempt from RCRA, however, and
these wastes may remain in and contaminate crude oil in pipelines
without violating    RCRA. In addition,       used oil that is hazardous
could be reintroduced,     into a crude oil pipeline     and refined at a
petroleum refinery,     provided the used oil was from normal
operations   and refined along with the normal crude oil process
since such oil is exempt under the RCRA regulations.
       When hazardous substances are detected in crude oil, the
source and specific    intent to improperly dispose of the substance
must be established    to determine if RCRA regulations     have been
violated.    Acoording to EPA, this determination     is difficult  to
make because different     crude oils are commingled in tanks and
pipelines,   hazardous substances are generally    found in trace
amounts, and some hazardous wastes are exempt from RCRA
regulations.
        According to industry officials,       the introduction     of used oil
and wastes from oil and gas exploration           and production    into a
crude oil pipeline         is considered an appropriate    management
practice.      According to EPA Office of Solid Waste officials,             used
oil offers the potential         for disposing of hazardous and
nonhazardous substances because used oil cannot be detected when
blended with crude oil.          However, the presence of used oil may be
detected by identifying         contaminants in the used oil such as
chlorinated      solvents,    metals, zinc, and detergents.      These EPA
officials     did not believe RCRA exemptions contribute         significantly
to crude oil contamination.
SOMESTATE ENVIRONMENTAL
REGULATIONSARE MORE
STRINGENTTHAN RCRA
       Like many other environmental    laws, RCRA provides for states
to assume the responsibility     of implementing and enforcing       the RCRA
hazardous waste program and requires EPA to oversee the states'
programs by monitoring    the states'   activities.    The rationale     for
encouraging the states to implement the RCRA program is that each
state is more familiar    with regulating     its own community and,
therefore,   is in a better position    to more effectively     administer
the program and respond to local needs than the federal government.


                                       24
        To receive authorization          from EPA, a state program must be at
least equivalent        to the federal program and provide for adequate
efiforcement.       However, states may impose more stringent              regulations
to provide broader coverage than the federal program.                    EPA
d"rectly      administers     RCRA in states that have not assumed the
r q sponsibility     to administer      the Subtitle      C program.
   I According to EPA officials              in the Office of Solid Waste, 45 of
54 states and territories,           including     3 of the states we visited
 (Louisiana,     Oklahoma, and Texas), have approved RCRA programs.
C lifornia,      the fourth state we visited,           does not have an approved
R4 RA program, but is currently             implementing RCRA provisions        under
a agreement with EPA. California's                 Hazardous Waste Control Law
p ovides that RCRA regulations             will operate as state regulations
u til RCRA authorization          is obtained.        In contrast,    Louisiana has
a Bopted more stringent         environmental      regulations     on small-
quantity     generators than those provided in RCRA regulations.                    This
irjcludes assigning state hazardous waste identification                   numbers,
    ling annual reports,        and including      the waste on the manifest
    fore transporting       it to a state-approved         disposal facility.
                    Louisiana laws prohibit          a lVproductll from
   ntaminating      a crude oil pipeline.         A llproductll is any commodity
   de from oil or gas such as refined crude oil, lubricating                    oil,
             and blends or mixtures of oil with one or more liquid
             or by-products      derived from oil or gas.
       In California,         used oil is regulated as a hazardous waste if
it does not meet federal standards to be recycled and burned for
eaiergy recovery.          According to EPA Office of Solid Waste officials,
RCRA's Subtitle         C regulations    do not classify    used oil as a
hazardous waste unless the used oil exhibits               a hazardous
characteristic        and is destined for disposal.         Also, California    laws
are more stringent          in that they reduced the limit        for lead content
to 50 parts per million            (ppm) (compared with the 100 ppm under RCRA
used oil fuel specifications)            and total halogens to 3,000 ppm or
less (compared with the 4,000 ppm under RCRA used oil fuel
specifications)         for used oil recycled and burned for energy
recovery.       California      does not allow the blending of crude oil with
used oil until        tests and verification      show that the used oil meets
the standards.         Also, California     does not recognize the exemption
for small-quantity          generators.    Therefore,    every generator in
California      is covered by state environmental          regulations.
PIPELINE SAFETY PROGRAMS
       DOT's Office of Pipeline Safety is responsible   for
implementing the Hazardous Liquid Regulations.      These regulations
a.re based on the Hazardous Liquid Pipeline Safety Act of 1979,
which governs the transportation   of hazardous liquids    such as
petroleum products,   crude oil, and anhydrous ammonia.


                                         25
       The primary function of the Office of Pipeline Safety is to
monitor the design, construction,       operation,    and maintenance of
natural gas and hazardous liquid pipelines          or pipeline   systems.
Office regulations     do not govern pipelines      at a refinery   or
pipelines   at crude oil-gathering     facilities.     According to Office
of Pipeline Safety officials,      Office regulations      do not address
the quality    of products or liquids     transported   in the pipeline    nor
do they test for contaminants in the pipeline.
       According to Office of Pipeline Safety officials,             Office
regulations    prohibit     the transportation     of any hazardous liquid
that would corrode the pipe or other components of the pipeline
system, unless the pipeline          operator has investigated     the corrosive
effect of the hazardous liquid on the system and has taken adequate
steps to mitigate       internal   corrosion.     The regulations    are based on
substances that occur naturally           in crude oil and do not
specifically    identify      any other corrosive    contaminants.
       The regulations  require pipeline   operators,   at least twice
each calendar year, to examine their monitoring        equipment to
determine the extent of any corrosion.        The Office of Pipeline
Safety relies on the test conducted by the pipeline         operators to
identify   the existence of corrosive    substances.    Office inspectors
review tests conducted by the pipeline      operators but do not conduct
their own tests.




                                      26




                                           I.
                                 SECTION   4



       All nine companies we contacted are aware of the potential
for crude oil contamination,     and eight have implemented crude oil-
te+ting programs to detect certain noncrude substances.          These
programs now include tests for such substances as organic
chlorides   and metals, which can damage refinery      equipment and
re uce yield and profit.     Three of the companies we contacted have
ei her warned, banned, or sued suppliers when these suppliers          were
su f petted of providing  contaminated crude.   Federal and state
regulatory    agencies we contacted are taking little,      if any, action
to~address the issue of crude oil contamination.
TESTING PROGRAMS
INiTrATED BY INDUSTRY
    ~ As discussed in section 2, all of the companies that we
co 4 tacted test samples of the oil for temperature,     gravity,   and
ba ic sediment and water.     However, crude oil-testing     programs for
no crude substances were being used in eight of the nine companies
we contacted.    Industry action with regard to crude oil testing has
be n focused on the detection    of contaminants that cause economic
lo i s.
      O fficials    of those companies with noncrude-testing     programs
we:contacted     stated that they have emphasized testing      of crude oil
for two reasons:
     -- Contaminated crude oil adversely affects     the product yield
        and results    in an economic loss to the refinery.    Crude oil
        containing    noncrude substances such as chlorides,   high
        sulfur,    and heavy metals does not produce the same
        quantities    of gasoline and kerosene as does virgin   crude.
     -- Distillation       of crude oil containing    organic chlorides
        results      in an economic loss due to unscheduled shutdowns
        and the cost to replace refinery         pipes.   These organic
        chlorides      react with the hydrocarbons in the crude to
        produce hydrochloric       acid.  Hydrochloric    acid adversely
        affects     the catalyst   needed in refining    the oil and also
        causes excessive corrosion to the pipes in the refinery.
       Shell O il was the only company we contacted that did not have
a testing    program for noncrude substances.    Shell is considering
implementing one in the future.      Two of the companies we contacted
pe:rform additional    tests for nonchloride  contaminants such as heavy
metals.     Conoco, for instance,  conducts laboratory    tests quarterly
to! determine to what degree metals, nitrogen,     vanadium, and other
nolncrude substances contaminate its crude oil.        Conoco officials
                                    27
                                                                          ,




stated that these procedures and testing methods have proven
effective  in reducing contamination caused by organic chlorides          as
well as other contaminants.
        Several oil companies provided us cost estimates for testing
one sample of crude oil.      A Mobil Oil official     estimated the cost
of testing     one chloride sample at $50-75.      Permian oil company
officials    estimated each chloride test costs $65 and each test for
sulfur content costs $35. MCPL's "finger print test" for sulfur,
iron, reid vapor pressure, organic chlorides,         and distillation
costs $136 per sample. Also, according to MCPL, the gas
chromatograph test for organic compounds and other substances
costs $250 per sample.
       Crude oil purchasers, a transporter,         and refiners   we
contacted typically    sample the crude at the point of sale and do
not receive the results of the tested samples until after the crude
is shipped through the pipelines          and processed at the refineries.
Mobil Oil Company, however, has instituted           a testing program that
allows Mobil refinery    officials      to stop shipments of crude oil that
contain more than one part chlorides per million             before it is
processed in the refinery.         Refinery personnel off-load      the crude
in question into a separate storage tank and conduct additional
testing.    If Mobil determines that the chloride level is
acceptable,    then the refinery     will dilute the chloride-contaminated
crude with noncontaminated crude until the mixture is at an
acceptable level for processing.           According to the regional
manager, Mobil Crude Oil Department, this "early warning" system
costs between $200,000 and $250,000 per year.
OIL COMPANYACTIONS
TAKEN AGAINST SUPPLIERS
      Three of the companies we talked with have either warned,
banned, or sued suppliers when these suppliers were suspected of
providing  contaminated crude.
      According to Mobil's Regional Manager, Crude Oil Department,
Mobil was able to link the 1982 Beaumont, Texas, refinery       fire to a
small trucking   company that sold crude oil heavily contaminated
with organic chlorides,    and was awarded $7 million in damages from
the supplier.    As a result of the Beaumont refinery   incident,    Mobil
established   new testing procedures to reduce the risk of a
recurrence.
       Officials from MCPL, which is owned and operated by Sun
Pipeline Company, informed us of 33 cases between June 6, 1982, and
July 31, 1989, in which actions have been taken against suppliers.
Twenty-seven of these cases involved high amounts of chloride
contamination.     Other cases involved high amounts of iron.
Actions taken against suppliers     led to written warnings being
issued, pretesting    of crude oil before shipment, indefinite
                                    28
suspension, and permanent disconnection              from the pipeline.         Since
1997 I MCPL has developed a progressive           warning system designed to
prevent crude oil contamination.           If MCPL identifies           or suspects a
supplier    of providing     contaminated crude, that supplier will be
pl+ced on "pretest.l'        Pretest is designed for those crude oil
suppliers    that have supplied %onconformingl'               crude in the past or
those suppliers     that MCPL deems suspicious.               During pretest,    MCPL
will sample and test the supplier's           oil before purchase.
Su pliers    that significantly       exceed the test limits          or who receive
th ! ee warnings for minor violations         (small       increases above test
limits)   are required to have a qualified             laboratory     test their
crude oil at their expense before selling                it to MCPL.
    I In 1982, Conoco sued a small gatherer after it was supplied
contaminated crude.        According to a Conoco official,              Conoco did not
win the court case because the jury determined that the evidence
dip not positively       identify   the accused gatherer as the supplier
responsible     for introducing     the contaminated crude.




        Seven of the eight state regulatory       agencies in the states we
  is
vi, ited have taken no direct action designed specifically
;;t;;Ezn;ude     oil contamination.      State regulatory
                                                                      to
                                                             agencies in
             , Louisiana,    Oklahoma, and Texas have enacted laws and
enforced regulations      to better account for and control      oil-
reclaiming    operations    and used oil recyclers.      Because these laws
and regulations     create a more accountable environment for tracking
crude oil, they may have a favorable         impact on crude oil
contamination.      According to officials     from state regulatory
agencies in California,       Oklahoma, and Texas, they have not taken
actions designed to specifically        prevent crude oil contamination.
        A Louisiana Department of Natural Resources, Office of
Conservation,      official     did identify    one regulation    that was aimed,
ifl part, at preventing         crude oil contamination.        He said that
according to title          30 of Louisiana state regulations,        products such
as gasoline,     kerosene, treated crude oil, benzene, wash oil, and
other noncrude substances cannot be placed into a crude oil
pipeline.      He also said that violations         of title    30 occur
frequently     but that the violators        are rarely identified.         According
to a production       audit analyst responsible        for monitoring     title   30
violations     at the Louisiana Office of Conservation,             only one
documented case of noncompliance was ever filed against a suspected
violator.      This case has not yet been resolved,            and no fine has
been levied.
      EPA, Department of Energy, and OSHA officials  that we
contacted were not aware of any direct actions their agencies have
taken to prevent crude oil contamination.    However, EPA will be
            r)
                                 29
developing management standards under RCRA Subtitle   D for oil   and
gas exploration and production wastes to strengthen   existing
regulations.




                                30
.   APPENDIX I                                                          APPENDIX I
                             FORTY CASESOF CRUDEOIL
                      CONTAMINATIONINVOLVING 9 COMPANIES

      SES OF CRUDFOIL
    CQM~INATION AT THE REFINERY

         -- According to a Quaker State Oil Company official,              in
            February 1989, Quaker State's Congo Refinery in Newell,
            West Virginia,     received a shipment of crude oil
            contaminated with carbon tetrachloride,            which contaminated
            a 50,000-barrel      tank.    Carbon tetrachloride       is sometimes
            used to clean paraffin         (which is commonly found in large
            amounts in the oil in that region) from the wells.                The
            official   believed the oil came from a supplier            in Ohio, but
            the specific     source has not been identified.           The
            contamination     did not cause any damage at the refinery,
            although refinery       operations were affected while the
            contaminated crude oil was held in a separate tank until              it
            could be diluted and refined.          Additional     independent
            laboratory    tests were needed to identify         the contaminant.
         -- According to the Federal Bureau of Investigation          (FBI) and
            company officials,       in February 1987, 800,000 gallons of
            contaminated crude oil was sold to Sun and Sinclair
            refineries    in Tulsa, Oklahoma. Sun attempted to refine the
            crude and sustained $20,000-30,000 in damages to refinery
            equipment.     After Sun determined that the mixture was not a
            hazardous waste, the mixture was diluted with other crude
            oil and refined.        Sinclair   did not refine the contaminated
            crude oil.     According to the FBI in Tulsa, the
            contamination     occurred when a shipment of alcohol was
            mistakenly    identified     as naphtha, mixed with crude oil, and
            sold to the refineries.          The investigation was dropped when
            Sun refused to prosecute the supplier.
        -- According to a Pennzoil plant manager, in 1987, Pennzoil's
           Atlas Refinery in Shreveport,        Louisiana, was forced to shut
           down after experiencing      operational    problems in its
           distillation  columns.      Analysis of the crude oil being
           processed identified     higher than normal quantities        of
           bromine, iodine, chlorides,       and nitrogen.     Atlas officials
           were not able to identify      the cause or specific       source of
           the contaminants,    although they think the contaminated
           crude came from one of their truck suppliers           rather than
           the pipeline.


                 I
                                         31
APPENDIX I                                                                   APPENDIX I
          -- According to a Mobil Oil Corporation            official,      in 1982,
             Mobil's Beaumont, Texas, refinery          experienced advanced
             corrosion     leading to a large fire and refinery             shutdown.
             Mobil determined the crude oil contained 65,000 parts per
             million     of organic chlorides,     including      trichlorethane       and
             trichlorethylene.         Organic chlorides,     even in
             concentrations       as low as about five parts per million             or
             less, can cause corrosion to the pipeline                and refinery
             equipment.      Mobil also identified      oxygenated solvents,          used
             lubricating      oil, leaded gasoline,     and tank bottom waste.
             The sludge from the shipment contained 65 percent alkyd
             resins used in paint plants as well as residual                  fuel oil,
             soap, water, and dirt.         Mobil was awarded $7 million           in
             damages from the trucking        company that supplied the oil.
         -- According to a Conoco Oil Company official,   in October
            1981, Conoco's refinery  in Ponca City, Oklahoma, received                   a
            shipment of crude oil contaminated with organic chlorides.
            The contaminated crude corroded a small 3- to 4-foot
            section of pipe that had to be replaced in the hydro-
            desulfurization  unit.
CASES OF CRUDEOIL CONTAMINATED
DETECTEDAT THE PIPELINE
         --
                   Officials  from Mid-Continent   Pipeline Company (MCPL), which
                   is owned and operated by Sun Pipeline Company, informed us
                   that between June 6, 1982, and July 31, 1989, there were 33
                   instances of contamination    in which actions have been taken
                   against suppliers.    MCPL's actions include issuing written
                   warnings, requiring   the supplier to pay for tests of the
                   crude oil shipments, and suspension from the pipeline.      The
                   primary substances MCPL has found in the crude oil are
                   chlorides.    Other contaminants include iron and gasoline.
     --
                   According to an 88 Oil Company official,   in 1984, Conoco
                   Oil Company in Guernsey, Wyoming, discovered a shipment of
                   crude oil contaminated with carbon tetrachloride,      a used
                   solvent.   The solvent came from a local strip mining
                   operation and had been mixed in with a batch of used oil
                   before being sold to a reclaimer.    The contamination    was
                   detected at the Conoco laboratory   before it reached the
                   pipeline.   The small gatherer filed a lawsuit against the
                   reclaimer  and recovered damages.
    --
                   According to a Shell Oil Company official,    the U.S.
                   Attorney and the FBI in Louisiana have charged two
                   independent companies, La Jet Petroleum and Challenger
                   Petroleum USA, with introducing   contaminated crude into
                   Shell's  Ship Shoal Pipeline.   On the basis of an anonymous
              I)                            32
*
    APFENDIX I                                                APPENDIX I
            tip, in July 1989, Shell tested the crude oil before and
            after the crude oil injection  point on the pipeline shared
            by the companies and discovered that the crude contained
            chlorides.  Fraud charges have been filed against the two
            companies.




                                   33
APPENDIX II                                                      APPENDIX II
                       ZARDOUSWASTECHARACTERISTICS


     Ignitable   wastes can create fires under certain conditions.
Examples of ignitable      wastes include waste oils and used solvents
that readily   catch fire,    and friction-sensitive substances.
CORROSIVITY
       Corrosive wastes with high or low pH1 can react dangerously
with other wastes or cause toxic contaminants to migrate from
certain wastes.       Corrosive wastes include those that are acidic and
those that are capable of corroding metal       (such as tanks,
containers,     drums, and barrels).
REACTIVITY
      Reactive wastes are unstable under normal conditions   and can
pose a problem at any stage of the waste management cycle.     These
wastes can create explosions and/or toxic fumes, gases, and vapors
when mixed with water.    Examples of reactive wastes include water
from TNT operations  and used cyanide solvents.
TOXICITY
       Extraction    procedure (EP) toxicity    refers to a characteristic
of a waste, and also to a test.          The EP test is designed to
identify    wastes likely    to leach hazardous concentrations    of
particular     toxic constituents    into the groundwater as a result of
improper management. During the test, constituents           are extracted
and analyzed to determine if they exceed toxic constituent           levels
set by EPA. Toxic wastes are harmful or fatal when ingested or
absorbed.




'A measure of acidity and alkalinity     ranging in scale     from zero to
14. Numbers below 7 reflect   increasing    acidity.
        ”
                                    34
  .   :
APPFNDIX III                                                   APPENDIX III
                          OR CONTRIBUTORS
                                        TO ,THIS, REPORT

RESCURCES.COMMUNITY.AND ECONOMICDEVELOPMENT
                                          DIVISION.
WASHINGTON.D.C.
Jud A. England-Joseph, Associate Director,          Energy Issues
Ric Kard A. Hale, Assistant    Director
Jos ph A. Maranto, Assignment Manager
Mar anne E. Schmenk, Evaluator
Ear E P. Williams Jr., W riter/Editor


           Green, Evaluator-in-Charge
           T. Joshua, Site Senior
          P. Glasscock Jr., Evaluator
91%              N                      NGTO   .C
Susian W . Irwin,    Attorney




(308610)

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