Massachusetts Gas Blasts Linked to NiSource Unit’s Work Orders

A series of explosions that rocked several towns north of Boston, Mass., last month has been linked to work orders given to a crew replacing aging natural gas pipes, according to federal safety investigators.

Crews contracted by NiSource Inc.’s Columbia Gas of Massachusetts unit, including an inspector from the company, were removing a cast-iron distribution main and installing a plastic main, according to a preliminary report by the National Transportation Safety Board. The report, released Thursday, didn’t reach a conclusion on the cause of the blasts that are still under investigation.

Workers removed a section of pipe containing sensors needed to regulate pressure in the system. The system then mistakenly registered a drop in system pressure and compensated with a surge of gas into the pipes beyond maximum levels, the report said.

The work package developed by Columbia Gas “did not account for the location of the sensing lines or require their relocation to ensure the regulators were sensing actual system pressure,” according to the NTSB.

The spike in pressure triggered dozens of explosions in homes and businesses across three Massachusetts towns on Sept. 13 and killed one person struck by a falling chimney. The leaks occurred in a pipe network that served about 8,600 customers. It snaked through the towns of Lawrence, North Andover and Andover, located about 20 miles north of Boston.

NiSource President Joe Hamrock said in a statement that the company is limited in what is can say about the incident while the investigation is underway. “However, we can say that, because safety is our top priority, in the hours immediately after the incident we suspended similar work and enhanced procedures related to our low pressure systems,” Hamrock said.

“I’m very proud of the strong, dedicated team driving the restoration effort in the streets and homes,” Hamrock said. “We continue to expect completion by November 19th.”

NiSource fell 1.7 percent to $24.65 in New York. The decline was roughly in line with its peer group.

“The traders that are watching like hawks probably went through that just like you did and didn’t see anything that came out that we didn’t already know,” Charles Fishman, an analyst for Morningstar Inc., said in an interview.

Fishman expects costs of $100 million from lawsuits and fines stemming from the accident. NiSource is likely to ask regulators for permission to speed up efforts to replace old pipe, a move that could boost earnings, he said. Fishman has a hold rating on the stock with a $26 price target.

“They’ll fine them something, and they’ll accelerate the capital expenditure,” Fishman said. “They’ll give them return on that capex and since it’s accelerated, that increases earnings. It pretty much washes out in my mind over time.”

The NTSB report “raises more questions than answers,” Massachusetts Senator Edward Markey said in a statement, including whether the utility was prepared to respond to the scale of the disaster.

“We need to turn over every stone and shine a light on the workings of this company and the entire industry, so that people can both trust that their gas system is safe and verify that nothing like this will ever happen again,” said Markey.