CUC protests escalating cost of pipeline project

CUC counsel Sirok says $4.6M is funding ceiling, but $8.8M is estimated to be spent

The Commonwealth Utilities Corp. has asked the federal court to intervene in the $4.6-million fuel pipeline project as it estimates that more than $8.8 million will be spent for the construction of the new pipeline under the management of Gilbane Federal before it is finally completed.

CUC legal counsel James S. Sirok noted that, although Gilbane Federal continues to mobilize construction of the pipeline at a total cost factor of at least $8.8 million, there has been no change to the $4.6 million funding ceiling of the project.

Gilbane Federal is a California-based full service construction company that was appointed by federal court to manage and expeditiously complete some of CUC’s stalled projects.

According to Sirok, Gilbane Federal has already spent close to $1 million on travels, meetings, and preparing plans alone.

Sirok brought up the escalating costs of the pipeline project in CUC’s request for the U.S. District Court for the NMI to set a status conference to discuss Gilbane Federal’s performance.

The lawyer pointed out that the scope of work currently calls for the construction of the pipeline using a trenching method for all but 700 feet of the pipeline’s length, based on the design created by engineer David Vanderpool.

Sirok said that Gilbane Federal has informed CUC that it could possibly use a horizontal drilling methodology for up to 4,900 feet of the pipeline’s length using Vanderpool’s trenching design without making any changes to it.

Furthermore, Sirok said, Gilbane Federal will not inform CUC of the estimated depth at which the pipeline will be built using this method, except for the depth of the originally planned 700 feet going under the creek bed.

Sirok said CUC objects to the use of horizontal drilling method for any length of the pipeline other than the 700 feet going under the creek bed.

He said the statement of work remains unchanged and calls for the construction of the pipeline using a trenching method.

Sirok said the construction and costs for the project have escalated to over $8.8 million, although the funding ceiling remains unchanged at $4.6 million.

The lawyer said there are also foreseeable issues for CUC related to post-construction repair and maintenance if the horizontal drilling method is used.

Sirok urged the court to instead allow CUC to repair and replace defective sections of the existing pipeline at a much lower cost.

Sirok questioned the need for the construction of the new pipeline at such a high cost when its future length of use is in danger of being shortened because of the construction of a new power plant in a different location on Saipan.

Last Feb. 5, the U.S. Department of the Interior approved an additional funding of $2.6 million to complete the construction of the pipeline project. DOI’s total funding for the pipeline project now balloons to $8.1 million since the project was initiated in 2010.

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

Ferdie De La Torre | Reporter
Ferdie Ponce de la Torre is a senior reporter of Saipan Tribune. He has a bachelor’s degree in journalism and has covered all news beats in the CNMI. He is a recipient of the CNMI Supreme Court Justice Award. Contact him at

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