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Houston Business Journal: Desert paper trail leads to Shell Oil

May 30, 2003
by Monica Perin
Houston Business Journal

A buried “treasure” could come back to haunt Houston-based Shell Oil.

A total of 190 boxes full of documents have been dug up in the New Mexico desert near a pipeline formerly owned by a Shell subsidiary, the Texas-New Mexico Pipeline Co.
 
The documents apparently pertain to operation of the pipeline and to environmental damage caused by an oil spill in the early 1990s.

Certain assets of the pipeline company were sold to Enron Corp. in 1999 and are now owned by Houston-based EOTT Energy, formerly an affiliate of Enron.

Some residents of Midland filed suit against EOTT two years ago claiming that their well water was contaminated by oil from the pipeline leak.

EOTT settled with the residents and then countersued Shell to recover costs of the settlements and remediation. EOTT argues it did not own the pipeline at the time of the incident and knew nothing about any potential environmental problems when it acquired the company.

Now, the newly uncovered records could shed a new light on this litigation — and spawn more legal woes for Shell.

New Mexico District Attorney Thomas Rutledge says his office is prepared to take legal action if it appears that the pipeline company buried the documents to hide or destroy evidence of a crime.

“It’s just very unusual to bury records in the middle of the desert and this deep,” says Rutledge. The documents were buried 45 feet underground.

If the pipeline company was trying to deep-six environmental problems or hide significant information from shareholders, the public, or potential buyers, it could be in violation of federal securities laws as well as both federal and state environmental and pipeline regulations.

The documents have been confirmed to be thousands of pages of information that was missing from the Texas-New Mexico Pipeline Co.’s archives. EOTT spokeswoman Gretchen Weis says they include information about pipeline operations, maintenance, environmental data, financial and accounting and personnel records.

Shell spokesman Tim O’Leary says the documents are simply “office refuse” that was disposed of in a pre-existing hole.

The trove of documents was found a week ago near Hobbs, N.M., after an eyewitness disclosed that he had seen boxes of documents being buried in 1999 — just before the company was sold to Enron.

Buried in burlap sacks, the documents, including 100 computer disks, are covered with mold and mildew, Weis says. They have been sent to a Fort Worth company that is trying to clean and restore them.

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