Pipeline’s $14 million price tag alarms CUC

Gilbane Federal’s $8.8 million to $8.9 million estimate to build the Commonwealth Utilities Corp.’s “new” pipeline is out the window as the project’s cost is now estimated to surpass $14 million, according to CUC counsel James Sirok.

Sirok also insisted that CUC doesn’t want to act in a way that would prevent Gilbane Federal from completing the pipeline.

Gilbane Federal is a California-based construction company appointed by the U.S. District Court for the NMI to complete some stalled CUC projects, including the pipeline.

In CUC’s reply to the U.S. government’s response to CUC’s request for a status conference, Sirok said $4 million was already spent on the pipeline project prior to Gilbane Federal’s appointment.

The lawyer said that Gilbane Federal estimated $8.8 million to $8.9 million to build the pipeline and at least another $1 million for decommissioning, commissioning, smart pigging, and operational training. Sirok said this brings the project’s total costs to over $14 million.

“There will likely be change orders [that will] increase these costs during the construction and post-construction periods,” he said.

Sirok said it will be CUC and not the United States or the U.S. Environmental Protection Agency that will not be in charge of repairing and maintaining the pipeline after Gilbane Federal leaves.

He said the money being spent to build the pipeline does not come from EPA but from the CNMI, through its insular grants, and from CUC’s ratepayers.

As the eventual owner of the pipeline, CUC has the responsibility to express its concerns about how the pipeline is being constructed, he said.

“This includes a discussion about the increasing costs of the construction as compared to other available alternatives which are substantially less expensive but provide the same result,” he said.

By substantial, Sirok said, CUC means millions of dollars in savings.

Simply put, Sirok said, the U.S. government has taken CUC’s motion “out of context and has twisted its content, and the statements made, in an attempt to embarrass and shame CUC into silence” before the court.

The United States, he noted, even uses the response to criticize CUC for repairing leaks in the existing pipeline when they occur, as if CUC should do nothing once a leak is detected.

Sirok said a “new” pipeline is not needed to eliminate spills. He said the existing pipeline can be repaired now, prior to leakage, by replacing defective sections with new pipe, at a much less cost than building a “new” one at Gilbane Federal’s high cost estimate.

CUC wants the court to set a status conference to discuss Gilbane Federal’s performance on the project. The utilities agency urged the court to consider allowing CUC to just repair and replace the defective sections of the existing pipeline.

In the U.S. government’s recent response to the motion, the U.S. Department of Justice says CUC is just throwing up roadblocks to hinder the construction of the pipeline, blaming CUC’s “ineffective management” for nearly five years that caused the costs of the project to escalate.

The oil pipeline project is an 8-inch aboveground receiving pipeline that delivers diesel fuel from the Mobil oil facility to CUC Power Plants 1 and 2 in Lower Base. EPA had stated that until the pipeline is properly repaired or replaced, it poses a threat to the adjacent ocean.