{"operation":"document","citation":"CPF 12022040WL","title":"HILCORP ALASKA, LLC — Warning Letter","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2022-03-22","effective_on":null,"summary":"CLOSED warning letter citing 191.17(c), 192.12(b)(2), 192.12(c).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-12022040wl.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-12022040wl.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-12022040wl","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/12022040WL","body":"Warning Letter involving HILCORP ALASKA, LLC. PHMSA's enforcement data identifies the cited regulations as 191.17(c),  192.12(b)(2),  192.12(c). The case was opened on 2022-03-22 and is reported as closed as of 2022-03-22. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n12022040WL_Operator Response to Notice_08092022_(21-200333).pdf: https://primis.phmsa.dot.gov/enforcement-documents/12022040WL/12022040WL_Operator%20Response%20to%20Notice_08092022_(21-200333).pdf\n\n12022040WL_Warning Letter_03222022_(21-200333).pdf: https://primis.phmsa.dot.gov/enforcement-documents/12022040WL/12022040WL_Warning%20Letter_03222022_(21-200333).pdf\n\n12022040WL_Warning Letter_03222022_(21-200333)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/12022040WL/12022040WL_Warning%20Letter_03222022_(21-200333)_text.pdf\n\n12022040WL_Warning Letter_03222022_(21-200333)_text.pdf\n\nWARNING LETTER\nOVERNIGHT EXPRESS DELIVERY\nMarch 22, 2022\nMr. Luke Saugier\nSenior Vice President\nHilcorp Alaska, LLC\n3800 Centerpoint Drive, Suite 1400\nAnchorage, Alaska 99503\nCPF 1-2022-040-WL\nDear Mr. Saugier:\nFrom July 13 through July 16 and August 10 through August 11, 2021, representatives of the\nPipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49\nUnited States Code (U.S.C.) inspected Hilcorp Alaska, LLC’s (Hilcorp) Kenai Gas Field Storage,\nSwanson River Gas Storage and Pretty Creek Gas Storage fields in Kenai Peninsula and\nMatanuska Susitna Counties, Alaska.\nAs a result of the inspection, it is alleged that you have committed probable violations of the\nPipeline Safety Regulations, Title 49, Code of Federal Regulations (CFR). The items inspected\nand the probable violations are:\n1. § 191.17 Transmission systems; gathering systems; liquefied natural gas facilities;\nand underground natural gas storage facilities: Annual report.\n(a) …\n(c) Underground natural gas storage facility. Each operator of a\nUNGSF must submit an annual report through DOT Form PHMSA\n7100.4-1. This report must be submitted each year, no later than March\n15, for the preceding calendar year.\nHilcorp failed to include required information on its Underground Natural Gas Storage Facilities\n(UNGSF) annual reports submitted in 2019 and 2021 pursuant to § 191.17(c).\n\n\n\nCPF 1-2022-040-WL\nDuring the inspection, PHMSA reviewed Hilcorp’s submitted UNGSF annual reports and found\nthat the Kenai Gas Field information was omitted from the 2018 annual report submitted on\n3/12/2019. Additionally, one new well drilled at the Swanson River Field was not included in the\n2020 annual report submitted on 3/15/2021.\nTherefore, Hilcorp failed to submit accurate annual reports pursuant to § 191.17(c).\n2. § 192.12 Underground natural gas storage facilities.\n(a) …\n(b) Depleted hydrocarbon and aquifer reservoir UNGSFs.\n(1) …\n(2) Each UNGSF that uses a depleted hydrocarbon reservoir or an\naquifer reservoir for natural gas storage and was constructed on or\nbefore July 18, 2017, must meet the provisions of API RP 1171\n(incorporated by reference, see § 192.7), sections 8, 9, 10, and 11, and\nparagraph (c) of this section, by January 18, 2018, and must meet all\nprovisions of paragraph (d) of this section by March 13, 2021.\nHilcorp failed to meet the provisions of API RP 1171, Section 8. Specifically, Hilcorp failed to\nfully develop, implement, and document a program to manage risk in accordance with API RP\n1171, Section 8.2 (Section 8.2).\nSection 8.2 states in part:\nThe operator shall develop, implement, and document a program to manage risk that\nincludes data collection, identification of potential threats and hazards to the storage\noperation, risk analysis including estimation of the likelihood of occurrence of events\nrelated to each threat, the likelihood of occurrence and potential severity of the\nconsequences of such events, and the preventive, mitigative, and monitoring processes to\nreduce the likelihood of occurrence and/or the likelihood and severity of consequences,\nand a periodic review and reassessment of the processes.\nDuring the inspection, PHMSA reviewed Hilcorp’s Operation, Maintenance & Emergency\nResponse (OMER) manual, and risk model. PHMSA found that a risk management program had\nnot been fully developed, implemented, and documented according to Section 8.2. Hilcorp had not\nidentified the threats and hazards to the storage operation that would be used for risk analysis.\nAlso, Hilcorp had not estimated the likelihood of occurrence of events related to threats nor the\nlikelihood of potential severity of the consequences of such events in the form of a developed risk\nmodel.\nTherefore, Hilcorp failed to meet the provisions of Section 8.2.\n3. § 192.12 Underground natural gas storage facilities.\n(a) …\n(1) …\n(b) Depleted hydrocarbon and aquifer reservoir UNGSFs.\n12022040WL_Warning Letter_03222022_(21-200333)_text Page 2 of 6\n\n\n\nCPF 1-2022-040-WL\n(2) Each UNGSF that uses a depleted hydrocarbon reservoir or an\naquifer reservoir for natural gas storage and was constructed on or\nbefore July 18, 2017, must meet the provisions of API RP 1171\n(incorporated by reference, see § 192.7), sections 8, 9, 10, and 11, and\nparagraph (c) of this section, by January 18, 2018, and must meet all\nprovisions of paragraph (d) of this section by March 13, 2021.\nHilcorp failed to meet the provisions of API RP 1171, Section 9. Specifically, Hilcorp failed to\nperform annual visual inspection of each wellhead assembly for leaks during 2018 and 2019 in\naccordance with API RP 1171, Section 9.3.2 (Section 9.3.2).\nSection 9.3.2 states in part, “The operator will visually inspect each wellhead assembly at least\nannually for leaks.”\nDuring the inspection, Hilcorp was not able to provide records of visual inspection of each\nwellhead assembly for leaks for 2018 and 2019.\nTherefore, Hilcorp failed to meet the provisions of Section 9.3.2.\n4. § 192.12 Underground natural gas storage facilities.\n(a) …\n(b) Depleted hydrocarbon and aquifer reservoir UNGSFs.\n(1) …\n(2) Each UNGSF that uses a depleted hydrocarbon reservoir or an\naquifer reservoir for natural gas storage and was constructed on or\nbefore July 18, 2017, must meet the provisions of API RP 1171\n(incorporated by reference, see § 192.7), sections 8, 9, 10, and 11, and\nparagraph (c) of this section, by January 18, 2018, and must meet all\nprovisions of paragraph (d) of this section by March 13, 2021.\nHilcorp failed to meet the provisions of API RP 1171, Section 9. Specifically, Hilcorp failed to\ntest the operation of the master valve and wellhead pipeline isolation valve at least annually for\nproper function and ability to isolate the well during 2018 and 2019 in accordance with API RP\n1171, Section 9.3.2 (Section 9.3.2).\nSection 9.3.2 states in part, “The operator shall test the operation of the master valve and wellhead\npipeline isolation valve at least annually for proper function and ability to isolate the well.”\nDuring the inspection, Hilcorp was not able to provide records of master valve and wellhead\npipeline isolation valve tests for 2018 and 2019.\nTherefore, Hilcorp failed to meet the provisions of Section 9.3.2.\n5. § 192.12 Underground natural gas storage facilities.\n(a) …\n(b) Depleted hydrocarbon and aquifer reservoir UNGSFs.\n12022040WL_Warning Letter_03222022_(21-200333)_text Page 3 of 6\n\n\n\nCPF 1-2022-040-WL\n(1) …\n(2) Each UNGSF that uses a depleted hydrocarbon reservoir or an\naquifer reservoir for natural gas storage and was constructed on or\nbefore July 18, 2017, must meet the provisions of API RP 1171\n(incorporated by reference, see § 192.7), sections 8, 9, 10, and 11, and\nparagraph (c) of this section, by January 18, 2018, and must meet all\nprovisions of paragraph (d) of this section by March 13, 2021.\nHilcorp failed to meet the provisions of API RP 1171, Section 8. Specifically, Hilcorp did not\nreview the results of the risk assessment to determine whether the risk assessment, resulting\nprioritization, or ranking represents its facilities and characterizes the risks in accordance with API\nRP 1171, Section 8.5.2 (Section 8.5.2).\nSection 8.5.2 states in part, “The operator shall review the results of the risk assessment to\ndetermine whether the risk assessment, resulting prioritization, or ranking represents its facilities\nand characterizes the risks.”\nDuring the inspection, Hilcorp did not provide any records of the reviews of its risk assessment\nresults for 2019 and 2020.\nTherefore, Hilcorp failed to meet the provisions of Section 8.5.2.\n6. § 192.12 Underground natural gas storage facilities.\n(a) …\n(c) Procedural manuals. Each operator of a UNGSF must prepare\nand follow for each facility one or more manuals of written procedures\nfor conducting operations, maintenance, and emergency preparedness\nand response activities under paragraphs (a) and (b) of this section.\nEach operator must keep records necessary to administer such\nprocedures and review and update these manuals at intervals not\nexceeding 15 months, but at least once each calendar year. Each\noperator must keep the appropriate parts of these manuals accessible\nat locations where UNGSF work is being performed. Each operator\nmust have written procedures in place before commencing operations\nor beginning an activity not yet implemented.\nHilcorp failed to follow its manual of written procedures for conducting operations, maintenance\nand emergency preparedness and response activities. Specifically, Hilcorp failed to follow its\nOMER, Section 7.3 regarding documenting the well annulus pressure each day for all storage\nwells.\nDuring the inspection, Hilcorp’s OMER was reviewed. The OMER, Section 7.3 stated in part,\n“To confirm continued mechanical integrity, Hilcorp shall record the pressure in the well and\nannulus during storage operations each day for all storage wells.”\nWhen requested, Hilcorp presented annulus pressure records that showed that annulus pressures\n12022040WL_Warning Letter_03222022_(21-200333)_text Page 4 of 6\n\n\n\nCPF 1-2022-040-WL\nwere not recorded daily in the Kenai Storage Field for the following wells: Well 005L (March to\nOctober in 2020), Well 44030 (2018), Well 43-006RD (2018 to 2020).\nTherefore, Hilcorp failed to follow its OMER, Section 7.3.\n7. § 192.12 Underground natural gas storage facilities.\n(a) …\n(c) Procedural manuals. Each operator of a UNGSF must prepare\nand follow for each facility one or more manuals of written procedures\nfor conducting operations, maintenance, and emergency preparedness\nand response activities under paragraphs (a) and (b) of this section.\nEach operator must keep records necessary to administer such\nprocedures and review and update these manuals at intervals not\nexceeding 15 months, but at least once each calendar year. Each\noperator must keep the appropriate parts of these manuals accessible\nat locations where UNGSF work is being performed. Each operator\nmust have written procedures in place before commencing operations\nor beginning an activity not yet implemented.\nHilcorp failed to review and update its Emergency Action Plan (EAP) manual at intervals not to\nexceed 15 months, but at least once each calendar year.\nDuring the inspection, PHMSA requested Hilcorp’s EAP documentation and the reviews for\nSwanson River and Pretty Creek emergency plans. Records of a review of the EAP were not\navailable for 2020.\nTherefore, Hilcorp failed to review its EAP manual at least once each calendar year.\nUnder 49 U.S.C. § 60122 and 49 CFR § 190.223, you are subject to a civil penalty not to exceed\n$225,134 per violation per day the violation persists, up to a maximum of $2,251,334 for a related\nseries of violations. For violation occurring on or after January 11, 2021 and before May 3, 2021,\nthe maximum penalty may not exceed $222,504 per violation per day the violation persists, up to\na maximum of $2,225,034 for a related series of violations. For violation occurring on or after\nJuly 31, 2019 and before January 11, 2021, the maximum penalty may not exceed $218,647 per\nviolation per day the violation persists, up to a maximum of $2,186,465 for a related series of\nviolations. For violation occurring on or after November 27, 2018 and before July 31, 2019, the\nmaximum penalty may not exceed $213,268 per violation per day, with a maximum penalty not to\nexceed $2,132,679. For violation occurring on or after November 2, 2015 and before November\n27, 2018, the maximum penalty may not exceed $209,002 per violation per day, with a maximum\npenalty not to exceed $2,090,022.\nWe have reviewed the circumstances and supporting documents involved in this case and have\ndecided not to conduct additional enforcement action or penalty assessment proceedings at this\ntime. We advise you to correct the items identified in this letter. Failure to do so will result in\nHilcorp Alaska, LLC being subject to additional enforcement action.\n12022040WL_Warning Letter_03222022_(21-200333)_text Page 5 of 6\n\n\n\nCPF 1-2022-040-WL\nNo reply to this letter is required. If you choose to reply, in your correspondence please refer to\nCPF 1-2022-040-WL. Be advised that all material you submit in response to this enforcement\naction is subject to being made publicly available. If you believe that any portion of your\nresponsive material qualifies for confidential treatment under 5 U.S.C. 552(b), along with the\ncomplete original document you must provide a second copy of the document with the portions\nyou believe qualify for confidential treatment redacted and an explanation of why you believe the\nredacted information qualifies for confidential treatment under 5 U.S.C. 552(b).\nSincerely,\nRobert Burrough\nDirector, Eastern Region, Office of Pipeline Safety\nPipeline and Hazardous Materials Safety Administration\n12022040WL_Warning Letter_03222022_(21-200333)_text Page 6 of 6","truncated":false,"body_characters":13807}