FOR IMMEDIATE RELEASE ENRD

THURSDAY, JULY 26, 2007 (202) 514-2007

WWW.USDOJ.GOV TDD (202) 514-1888

El Paso Natural Gas to Pay $15.5

Million Penalty and Perform
Comprehensive Reforms to Pipeline
System
WASHINGTON – The Justice Department and the U.S. Department of
Transportation’s (DOT) Pipeline and Hazardous Materials Safety Administration
(PHMSA) announced today a settlement requiring comprehensive reform on El Paso
Natural Gas Company’s (EPNG) entire 10,000 mile pipeline system. The action
results from a tragic explosion of an EPNG pipeline which killed twelve people in
Carlsbad, New Mexico in August 2000.

In the first judicial settlement brought under the Pipeline Safety Act, EPNG will
spend at least $86 million to implement widespread and comprehensive
modifications of its Natural Gas Pipeline System, and pay a $15.5 million civil
penalty to resolve the alleged violations. The complaint filed concurrently with the
settlement agreement today alleges that EPNG failed to employ personnel qualified
in corrosion control methods; failed to investigate and mitigate internal corrosion in
two of its pipelines transporting corrosive gas; and failed to suitably monitor those
pipelines to determine the effectiveness of steps taken to minimize internal
corrosion. “The comprehensive pipeline modifications EPNG will complete as part
of today’s settlement will help to ensure that the severe internal corrosion that
resulted in such a tragic accident will not be repeated,” said Ronald J. Tenpas,
Acting Assistant Attorney General for the Justice Department’s Environment and
Natural Resources Division. “Today’s settlement shows how the use of judicial
enforcement by the Departments of Justice and Transportation can result in
meaningful reform that will improve public safety and help to bring the industry into
compliance.”

“We have been working for several years to provide enhancements to El Paso’s
pipeline integrity management, especially in areas of assessment and corrosion
control,” said Stacey Gerard, PHMSA Assistant Administrator and Chief Safety
Officer. “PHMSA remains committed to overseeing a pipeline system capable of
servicing America’s vital energy needs as safely and reliably as possible.”
The cause of the 2000 explosion was determined to be a significant reduction in the
pipe wall thickness due to severe internal corrosion. The settlement agreement
requires EPNG to fully implement comprehensive reform focusing on internal
corrosion on its entire interstate natural gas pipeline system extending from the San
Juan, Permian, and Anadarko Basins to markets in California, Arizona, New
Mexico, Oklahoma, Texas, and northern Mexico. EPNG will be required to
undertake the following actions:

-Modify its Natural Gas Pipeline System to enable certain segments to be inspected
by in-line inspection tools to determine the wall thickness of the steel pipes;

-Remove pipeline drips that are not as effective as utilizing cleaning pigs on its
system;

-Collect and analyze liquid samples for corrosive properties whenever a pipeline,
vessel, pig trap, meter tube or tank is opened on its system;

-Comply with Gas Quality Guidelines that require the monitoring of potentially
corrosive gas quality constituents in the gas stream, and report semi-annually that it
complied with operating procedures for enforcement;

-Conduct annual reviews of EPNG’s Site Specific Plans and review all of its non-
destructive examination (NDE) records and high resolution magnetic flux leakage
data to determine if any facility needs to be inspected, reinspected or monitored to
determine if wall loss is occurring;

-Develop a training program for EPNG’s corrosion control specialists and

engineers.

The consent decree, lodged today in the U.S. District Court in New Mexico, is
subject to a 30-day public comment period and approval by the federal court. A
copy of the consent decree is available on the Justice Department Web site at
http://www.usdoj.gov/enrd/Consent_Decrees.html.

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