HOUSTON (Dow Jones)

The U.S. Department of Transportation on Friday approved Exxon Mobil Corp.'s (XOM) plan to restart its Silvertip oil pipeline, which had ruptured and leaked about 1,000 barrels of oil into Montana's Yellowstone River in July.

The leak caused Exxon to organize a multimillion-dollar cleanup effort and find alternative supply sources for its 60,000 barrel-a-day refinery in Billings, Mont.

The Pipeline and Hazardous Materials Safety Administration, the Department of Transportation agency that oversees pipelines, said it will closely monitor the pipeline's restart and have an inspector on site.

"PHMSA has performed an extensive review of information and monitored the repairs made by Exxon Mobil to ensure the full line's ability to resume service in a safe and environmentally sound manner," the agency said via email.

As part of the restart plan, Exxon agreed to replace two existing pipeline crossings before March, company spokeswoman Rachael Moore said. The company is now making last-minute preparations before resuming flow along the 40,000 barrel-a-day pipeline.

"We are currently working with shippers and other connected pipelines to commence operation once all operational integrity checks have been completed," Moore said.

Exxon has estimated the spill cleanup cost at $42.6 million, $40 million of which was expected to be spent because of emergency response activities. Exxon expects to pay $2.5 million to reimburse residents for property damage, and estimates that $100,000 worth of oil was lost in the spill, according to a filing the company made with the Department of Transportation.

The Silvertip runs from Silver Tip, Mont., to Billings, and supplies Exxon's Billings refinery, which had been running at reduced rates because of lack of raw materials.

Copyright (c) 2011 Dow Jones & Company, Inc.