Assumption Parish salt-dome cavern BY DAVID J. MITCHELL dmitchell@theadvocate November 06, 2013 2 COMMENTS “For many months, we have been working closely with our insurers to resolve issues between us, and it is unfortunate that Liberty filed this suit at this time, particularly since information provided to Liberty in confidence was inappropriately used in making these claims.” Texas brine statement Texas Brine ignored warnings from its own people and others for nearly 15 years that disaster loomed if the company continued mining a troubled Assumption Parish salt-dome cavern, which created a massive sinkhole after collapsing in 2012, according to one of its insurers. In a federal lawsuit, Liberty Insurance Underwriters Inc. cites internal Texas Brine reports, memos and an email suggesting Texas Brine officials were warned with increasing specificity since the mid-1970s — before the cavern was even permitted and mined — that the area where the cavern was planned was close to the salt dome’s outer face. This proximity could mean the cavern would be a “risky” venture if mined too deeply, the suit claims. Texas Brine went ahead even as internal warnings continued in the late 1990s and 2000s. Liberty’s lawsuit also quotes internal documents portraying Texas Brine as pushing back against suggestions from the one-time well owner, Vulcan Materials Co., to mine the cavern at a shallower depth than had been planned to avoid the deeper trouble areas. By 1998, the suit claims, Texas Brine was evaluating which way to proceed: continue mining at 5,700 feet deep despite concerns about being too close to the edge of the salt dome or mine at far shallower depths and raise the widely known risk of a cavern roof cave-in that could cause disastrous damage to nearby caverns. “Texas Brine knew in 1998 that the western wall of Oxy Geismar #3 was already ‘precariously’ close to the edge of the salt dome, and that to continue increasing the level of salt reserves mined could ‘cause a disaster,’” the Liberty lawsuit concludes. The Liberty suit was filed Oct. 22 in U.S. District Court in Houston and also names Occidental Chemical Corp., the owner of the well, as a defendant. A status conference has been set for 10 a.m. Jan. 13 before U.S. District Judge Lynn N. Hughes. Liberty, which faces $50 million in exposure as Texas Brine’s third insurer in line, is asking Hughes to declare the company does not owe Texas Brine or Occidental under the policy because of their prior knowledge. In early October, the Louisiana Department of Natural Resources had to borrow $8 million from the state treasury to keep up with the sinkhole expenses as state expenses overall approached $10 million. Texas Brine’s primary insurer, Zurich American Insurance Co., said in a recent filing in a state court suit over the sinkhole that the limits of its liability “are exhausted.” According to the Liberty lawsuit, American Guarantee and Liability Insurance Co. is next in line. Liberty starts paying after the first $75 million in excess coverage. In a statement Tuesday, Texas Brine denied “many of the specific allegations made in the suit,” including Liberty’s claims that there is no coverage under its policy. “For many months, we have been working closely with our insurers to resolve issues between us, and it is unfortunate that Liberty filed this suit at this time, particularly since information provided to Liberty in confidence was inappropriately used in making these claims,” the Texas Brine statement says. “We will deal with this issue in the litigation.” DNR officials said in a statement that the agency is “still holding the company accountable for the damage caused by their failed cavern and we’ll continue to do so until the situation is made right.” “Buyout actions are currently being processed and cleanup response by the company is ongoing,” the statement said. DNR officials said they could not speculate about whether the new disclosures would lead to regulatory actions against Texas Brine because the lawsuit only provides excerpts. “The Office of Conservation has never been provided with the documents referenced, nor made aware of their existence prior to the filing of the Liberty lawsuit,” DNR maintains. Liberty did not file the full documents that the suit quotes. Brian Martin and two other Houston attorneys for Liberty have not returned several messages for comment, including on Tuesday. Scientists working on the sinkhole believe the massive subterranean cavern in question, known as Oxy Geismar No. 3, was mined too closely to the outer face of the Napoleonville Dome. The cavern’s supporting salt sidewall collapsed below 5,000 feet underground and rock flooded into the cavern. This shift in rock created further underground movement that led the Bayou Corne-area sinkhole to surface on Aug. 3, 2012, scientists believe. The hole is now 26 acres, has led to a 15-month-long evacuation of about 150 homes in the Bayou Corne and Grand Bayou communities, home buyouts, the emptying of surrounding storage caverns and a barrage of lawsuits against Texas Brine and Occidental. Texas Brine mines the caverns from deep, solid columns of salt known as salt domes with wells drilled and pumped with fresh water. The water dissolves the salt and leaves behind a cavity. The watery brine byproduct is shipped by pipeline to petrochemical plants along the Mississippi River while the salt left remaining around the newly hollowed-out cavity provides structural support. Texas Brine is relying on insurers to cover mounting costs to state and local governments on the sinkhole response and the company’s own response. What Texas Brine and DNR knew about the cavern’s well-being before Aug. 3, 2012, has swirled since the sinkhole emerged and become fodder for lawsuits already. Many suits cite a January 2011 letter to DNR where Texas Brine official Mark Cartwright warns about the cavern’s “proximity to the edge of salt” and that “a breach of the salt dome appears possible.” DNR and Texas Brine officials have since said that, at the time, no one could have envisioned that a salt wall collapse could lead to an unprecedented sinkhole. In contrast, cave-ins at the cavern roof, or top, are well-known causes of sinkholes and are guarded against. Texas Brine also has said that the letter’s reference to the “cavern” really was industry parlance for an access well to the cavern. In late 2010, Texas Brine prospected for new salt mining above the cavern by boring through the access well’s metal casing. The well and cavern later failed a pressure test and were plugged in June 2011. Texas Brine officials have said they believed the problems were limited to the well only. Vulcan, which sold the Oxy 3 well and the rest of its chemicals business to Occidental in 2005, has been sued separately by Texas Brine over the sinkhole. Vulcan officials said Tuesday that they are still gathering information about that suit.
Posted on: Wed, 06 Nov 2013 15:05:35 +0000