Business Context and Reporting Period
This Form 8-K is filed by Plains GP Holdings, L.P. on June 10, 2015, regarding a crude oil release from the Las Flores to Gaviota Pipeline (Line 901) in Santa Barbara County, California, which occurred on May 19, 2015. The pipeline is owned by Plains All American Pipeline, L.P. ("Plains").
Key Financial Metrics and Costs
- Incurred Costs: Estimated spill response and cleanup costs incurred through June 9, 2015, totaled approximately $65 million.
- Daily Average: Based on the 21-day period following the release, costs averaged approximately $3 million per day.
- Total Liability: The total costs to be incurred and the extent of potential civil, regulatory, or criminal proceedings are not reasonably capable of estimation at this time.
- Insurance: Plains expects its insurance coverage to apply, subject to coverage terms and deductibles.
Material Changes and Operational Status
Cleanup progress indicates that approximately 75% to 80% of the affected shoreline has achieved end-point cleanup goals. Operational resource deployment has fluctuated based on Unified Command assessments:
- Personnel: Increased from approximately 250 to 1,000 in the first seven days, then ranged between 1,100 and 1,400 for the subsequent thirteen days.
- Vessels: Generally ranged between 15 and 25 vessels for the first 18 days, dropping to eight vessels on June 7 and three vessels on June 8 due to improving conditions and no oil found in the on-water recovery area since June 3.
Outlook, Risks, and Contingencies
Future resource needs and associated costs are difficult to estimate but are expected to trend down as more shoreline segments achieve cleanup goals and water conditions improve. The filing highlights significant uncertainty regarding the final financial impact of the incident and potential legal proceedings. Management directs interested parties to specific websites for ongoing updates regarding the response and investigation.
Investor Verification Checklist
- Verify the specific terms and deductibles of Plains' insurance coverage applicable to this incident.
- Monitor the Unified Command's daily assessments for changes in cleanup scope and resource deployment.
- Track any announcements regarding civil, regulatory, or criminal proceedings that may arise from the Line 901 release.
- Review future filings for updates on the total estimated cost of the spill response and cleanup.