Bloomberg News

ExxonMobil Says State’s Expert Foresees Natural MTBE Drop

January 22, 2013

ExxonMobil Corp. (XOM:US) said in a trial over claims it polluted New Hampshire’s groundwater with a gasoline additive that the state’s own research indicates the chemical’s level will decrease over time without having to be cleaned up.

The oil company today concluded its cross-examination of the state’s chief witness, Graham Fogg, a professor of hydrology, in the state court trial in Concord. Fogg responded by saying ExxonMobil’s lawyer was selecting isolated pieces of information and taking them out of context in his questioning. The trial began Jan. 14.

ExxonMobil is a defendant in the state’s $816 million lawsuit on claims the oil companies knew that the chemical MTBE, or methyl tertiary butyl ether, would contaminate groundwater.

New Hampshire’s suit is one of scores over MTBE against refiners, fuel distributors and chemical makers. New Hampshire Superior Court Judge Peter Fauver agreed last week to excuse another defendant in this case, Citgo Petroleum Corp., while the company and the state work to complete a settlement.

The oil company’s lawyer was trying to show the jury that Fogg’s own research indicated that the amount of MTBE in the groundwater would naturally decline to levels that aren’t hazardous. Fogg replied that while that was true of some wells, others would have a higher concentration of the additive.

Fogg testified last week that about 2 percent of the state’s private wells are polluted with hazardous levels of MTBE, determined by the state to be 13 million parts per billion.

Falling Levels

“In six years you were projecting that 40 percent of the private wells that you estimate were above 13 million parts per billion would already be down to 2 million parts per billion, correct?,” David Lender, a lawyer for ExxonMobil, said during cross-examination of Fogg today.

Fogg said that would be “true for some wells.”

“I made calculations that did not assume that it’s going to keep growing forever and ever,” he said. “I also projected there would be other wells that would see an increase in concentration.”

A professor at the University of California, Davis, Fogg estimated that about 40,000 wells are contaminated with MTBE in the state, and that about 5,590 are contaminated at levels determined to be unfit for drinking.

The number of contaminated wells is one element in the determination of monetary damages if ExxonMobil is found liable.

The state is also seeking damages based on the companies’ market share of gasoline sales in New Hampshire during the period covered by the lawsuit.

Market Share

ExxonMobil’s share was about 30 percent, the state said. Based on the state’s estimated cost of $816 million to test for, monitor and clean up the contamination, New Hampshire could be seeking about $245 million from the company.

Citgo’s market share during that time ranged from 3.1 percent to 8.7 percent, the state said. Based on those figures, New Hampshire could be seeking $25 million to $71 million from Citgo in a settlement.

The two sides have until Feb. 15 to agree. If they don’t, Citgo will be reinstated to the case, barring an extension. The New Hampshire attorney general’s office declined to comment on terms of any proposed settlement. Fernando Garay, a spokesman for Citgo, declined to comment on the matter.

In 2003, New Hampshire sued ExxonMobil, Citgo, Shell Oil Co., Sunoco Inc., ConocoPhillips (COP:US), Irving Oil Ltd., Vitol SA and Hess Corp. All settled before the trial except Irving, Texas- based ExxonMobil and Citgo, the Houston-based unit of Petroleos de Venezuela SA, the country’s state-owned oil company.

Earlier Accord

Shell and Sunoco agreed to pay New Hampshire $35 million in a settlement announced in November.

New Hampshire has collected more than $100 million so far from the defendants, according to court papers.

The state contends that the oil companies knew MTBE presented a risk of groundwater contamination when they decided to use it.

ExxonMobil and Citgo argued that they were complying with federal regulations that pre-empt state law. They said MTBE was added to gasoline to make it burn more thoroughly and thus comply with a federal mandate to reduce air pollution. They also said MTBE never caused any New Hampshire resident to become ill.

MTBE lawsuits have also been consolidated in federal court in New York for pretrial evidence-gathering and motions.

In 2009, a federal jury ordered ExxonMobil to pay New York City $104.7 million after finding it liable for polluting wells in the city. ExxonMobil has appealed.

In today’s cross-examination, Lender questioned Fogg about the money his firm has received for work on the case.

“It’s been a significant amount of money,” Fogg said.

“Could it be more than a million dollars?” Lender asked.

“If you want to suggest I’m getting rich off this, I think you’d be sadly disappointed,” Fogg replied.

The case is State of New Hampshire v. Hess Corp. (HES:US), 03-C- 0550, New Hampshire Superior Court, Merrimack County (Concord).

To contact the reporters on this story: Sarah Earle in Concord, New Hampshire, at sarah_earle@comcast.net; Don Jeffrey in New York at djeffrey1@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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Companies Mentioned

  • XOM
    (Exxon Mobil Corp)
    • $104.25 USD
    • 0.71
    • 0.68%
  • COP
    (ConocoPhillips)
    • $86.76 USD
    • 0.74
    • 0.85%
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