Bloomberg News

MTBE Rises Fast in New Hampshire Wells, Exxon Jury Told

February 14, 2013

Water wells with no detectable level of a gasoline additive can show high concentrations a few months later, a water treatment specialist told a New Hampshire jury considering whether ExxonMobil Corp. (XON:US) is liable for contaminating some of the state’s supplies.

“If you get a good test today, that’s a snapshot of today, and it’s no guarantee that you won’t have a problem tomorrow,” Stephen Guercia, who was hired by the state to estimate the costs of testing and cleaning wells, said in court in Concord today. “This is an example of the need to test wells repeatedly.”

New Hampshire might be seeking more than $200 million from ExxonMobil, the last of seven defendant oil companies on trial after they were sued in 2003. The number of wells found to be contaminated with the additive is one factor in determining damages if ExxonMobil is found liable.

Guercia said the cost of testing, treating and monitoring the state’s 250,000 private wells over 20 years would be about $450 million. That’s in addition to two estimates from other state witnesses: $195 million to clean up 85 high-risk wells and $173 million to test and monitor 228 sites with levels of the additive methyl tertiary butyl ether, or MTBE, in water of 13 parts per billion. Those estimates total $818 million.

ExxonMobil lawyer David Lender suggested during cross- examination today that Guercia relied on estimates of well contamination by another state witness, Graham Fogg, whose reliability the oil company has questioned in court.

‘Unreliable’ Numbers

“If the jury concludes that Dr. Fogg’s projections are unreliable, then by definition all the numbers we just saw would also be unreliable, right?”

Guercia replied that he was “comfortable with” Fogg’s projections and “the numbers he came up with.”

The state has received $213 million from oil companies for two MTBE cleanup funds since 1989 through a 1.5-cent-per-gallon fee on all gasoline imported into in the state. The funds have $4 million left in them, the state said in court.

ExxonMobil, based in Irving, Texas, has argued in court that it isn’t liable for damage because it added MTBE to gasoline to comply with federal regulations, which pre-empt state law. Oil companies added MTBE to make gasoline burn more thoroughly in order to reduce air pollution, as required under the 1990 Clean Air Act.

Additive Studies

The state was aware of MTBE’s risks when it opted into a federal clean-air program in 1991 because there had been studies of the additive for several years before that, ExxonMobil said in court.

New Hampshire banned the additive as of January 2007.

State witness Gary Lynn, who works for the Department of Environmental Services, testified that MTBE still shows up in wells six years after it was banned.

MTBE is highly soluble in water and can be carried great distances from where it leaked, Jessica Grant, a lawyer for New Hampshire, told the jury during opening statements. It leaked from gas stations, vehicle junkyards, underground storage tanks and pipe fittings, she said.

Besides the number of contaminated wells, the state is seeking monetary damages based on ExxonMobil’s market share of gasoline sales in New Hampshire during the period covered by the lawsuit.

ExxonMobil’s share was about 30 percent, the state said. Based on the estimated cost of $818 million to test for, monitor and clean up the groundwater, New Hampshire could be seeking about $245 million from the company.

Citgo Dismissed

On Jan. 15, New Hampshire Superior Court Judge Peter Fauver agreed to dismiss Citgo Petroleum Corp., the other defendant, from this trial while the company and the state negotiated a settlement. If an accord isn’t reached by Feb. 15 and no extension is approved, Citgo would be reinstated to the trial.

Fernando Garay, a spokesman for Citgo, the Houston-based unit of Petroleos de Venezuela SA, that country’s state-owned oil company, declined to comment on a settlement. Mary Maloney, an assistant attorney general for New Hampshire, also declined to comment.

The state said it expects to rest its case on Feb. 21. ExxonMobil will then present its side.

The case is New Hampshire v. Hess Corp., 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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