Liability Assessment of Refined Products Pipeline

Liability Assessment of a Refined Products Pipeline

Challenge:     

Antea Group was contracted by the client to quantify environmental liabilities associated with the acquisition of a 760-mile refined products pipeline system.  Assets that were evaluated included nine impacted sites that were either terminal properties, block valves, or historic pipeline release locations.

Solution:    

Antea Group reviewed all environmental documents available in a virtual data room, and publicly available data bases.  Using what was available from the aforementioned information, Antea Group generated a gross forecast of costs associated with each known environmental liability.  As part of the solution development process, state-specific regulations and Antea Group’s working knowledge of each state’s regulatory agency were used to develop the site-specific risk profiles and associated cost scenarios.  Antea Group then utilized a proprietary process to evaluate and develop costs to eliminate known environmental liabilities at the nine sites.  This process included the development of a detailed cost forecast to implement a project closure strategy using a site-specific template that identified low, most likely, and high estimates for each known condition.  A probabilistic cost modeling exercise was performed using Palisade @Risk software to define site and portfolio level probabilities and sensitivity analysis in the forecasts.  Model output was used to evaluate the projected gross spend amount for the portfolio.

Result:   

The client received a credible and defensible estimation of costs associated with this liability to be used during acquisition negotiations, and to support adherence to internal objectives and financial disclosure/accounting requirements.