Shell sold leaking pipeline

Oil giant Shell has been ordered to pay more than $60m in fines and costs for selling a pipeline in Texas it knew to be faulty.

A Shell subsidiary, Texas-New Mexico Pipeline, was on Tuesday found guilty of fraud for failing to disclose information about the pipeline's environmental impact ahead of its sale to a subsidiary of energy firm Enron.

A Texas jury also found the Shell subsidiary guilty of gross negligence and wilful misconduct over the way it handled leakage from the pipeline, and for its failure to report it the state authorities.

The pipeline had sprung a leak as long ago as 1992, and further leakages are thought to have polluted water supplies in Texas eight years later.

Appeal

The judge ordered Shell to pay a $50m fine plus $5m in legal fees and a further $6m in clean-up costs.

The leaking pipeline became the subject of a court case in 2001 when residents of Midland, Texas, demanded damages after their drinking water was contaminated.

By then, the section of the pipeline had been bought by Houston-based Eott Energy Partners, a former Enron subsidiary which emerged from Chapter 11 bankruptcy protection in March this year.

Eott, which had bought the pipeline in 1999, responded to the $3m claim by settling out of court and taking legal action against Shell.

Eott argued that the damage occurred before it bought the pipeline, and said it had not been warned about any possible pollution problems.

Shell told BBC News Online that it is likely to appeal against the ruling.