Because of the gaping Bayou Corne sinkhole, Crosstex Energy LP will reroute its 36-inch natural gas pipeline, a project that will cost $20 million to $25 million and take around a year to complete, the Dallas-based company said.
Discovery of the sinkhole Aug. 3 forced the company to close a section of the pipeline and secure alternative natural gas supplies for its customers, Crosstex said. Closing that section of pipeline is costing Crosstex $250,000 to $300,000 a month.
Crosstex Energy is looking into recovering its losses from the “responsible parties and insurance coverage,” the company said.
The Louisiana Department of Natural Resources has said a plugged-and-abandoned salt cavern inside the Napoleonville Salt Dome failed and could be the cause of the sinkhole.
Houston-based Texas Brine Co. LLC owns the cavern. Natural Resources ordered the company to drill a well into the cavern to find out, if possible, whether it caused the sinkhole to form.
Crosstex spokeswoman Jill McMillan said the company would not be providing more details about its plans to recover its added costs.
“We would prefer not to discuss details of pending legal matters,” she said. “We disclosed what we believe we needed to at this time and will share more information as it becomes available.”
Crosstex Energy said it plans to write off its investment in the section of the pipeline affected by the sinkhole, a non-cash charge estimated at less than $500,000.
Meanwhile, Crosstex management said it does not believe the sinkhole has affected its Napoleonville storage facility, two salt-dome storage caverns off La. 70 in the Bayou Corne area.
Crosstex said the state Departments of Natural Resources and Environmental Quality (DEQ) backs that opinion. An Aug. 16 news release by DEQ said both agencies agree with Crosstex’s calculations the cavern poses little-to-no-threat to residents near the sinkhole.
Crosstex is now storing around 900,000 barrels of butane for third parties, companies not directly under contract with Crosstex, in the caverns.
According to DEQ, the storage caverns lie more than half a mile deep in the stable part of the salt dome, while the sinkhole has a depth of around 300 feet.
At the storage depth and pressure, the butane is liquid, according to DEQ. The only way to get the butane to the surface is by pumping salt water, a heavier liquid, into the cavern to force the liquid butane up to the surface.
Given the butane’s location — more than half a mile below ground, under great pressure and with no oxygen available — an explosion is not possible, according to DEQ.
Even if the salt dome fractured, the liquid butane would flow only into the cracks of the salt dome and not come to the surface, DEQ said.