Matthew Brown,File, Associated Press
FILE - In this July 2,2011 file photo oil from a ruptured ExxonMobil pipeline is seen in the Yellowstone River and along its banks near Laurel, Mont. State officials are expected to reach a settlement Thursday Jan. 19,2012, with ExxonMobil over a pipeline spill last summer, with the company agreeing to pay a record $1.6 million penalty for violations of water quality laws.

BILLINGS, Mont. — A state official says Exxon Mobil has agreed to $1.6 million in penalties to settle water pollution violations from a major oil pipeline break that fouled dozens of miles of shoreline along Montana's scenic Yellowstone River.

Montana Department of Environmental Quality director Richard Opper told The Associated Press Thursday that the penalty marks the largest in the agency's history.

Opper says the Texas oil company will pay $300,000 in cash and spend $1.3 million on future environmental projects. Exxon will reimburse more than $760,000 in emergency response costs racked up by state agencies.

Exxon is also increasing its estimate on how much crude spilled in the July 1 accident to 1,509 barrels or about 63,400 gallons. That's a 50 percent increase over earlier estimates.