{"operation":"document","citation":"CPF 12023018WL","title":"BLACK HILLS ENERGY — Warning Letter","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2023-03-16","effective_on":null,"summary":"CLOSED warning letter citing 192.12(b)(2), 192.12(c).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-12023018wl.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-12023018wl.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-12023018wl","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/12023018WL","body":"Warning Letter involving BLACK HILLS ENERGY. PHMSA's enforcement data identifies the cited regulations as 192.12(b)(2),  192.12(c). The case was opened on 2023-03-16 and is reported as closed as of 2023-03-16. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n12023018WL_Warning Letter_03162023_(22-233742).pdf: https://primis.phmsa.dot.gov/enforcement-documents/12023018WL/12023018WL_Warning%20Letter_03162023_(22-233742).pdf\n\n12023018WL_Warning Letter_03162023_(22-233742)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/12023018WL/12023018WL_Warning%20Letter_03162023_(22-233742)_text.pdf\n\n12023018WL_Warning Letter_03162023_(22-233742)_text.pdf\n\nWARNING LETTER\nOVERNIGHT EXPRESS DELIVERY\nMarch 16, 2023\nMr. Linn Evans\nPresident and Chief Executive Officer\nBlack Hills Energy\n7100 Mt Rushmore Road\nPO BOX 1400\nRapid City, South Dakota 57709\nCPF 1-2023-018-WL\nDear Mr. Evans:\nFrom August 30, 2022, through September 1, 2022, a representative of the Pipeline and Hazardous\nMaterials Safety Administration (PHMSA) pursuant to Chapter 601 of 49 United States Code\n(U.S.C.) inspected Black Hills Energy’s (BHE) Bunker Hill storage, East Mohoney storage, Kirk\nRanch storage and Oil Springs storage fields. The inspection was conducted at the BHE offices in\nCasper, Wyoming and the Bunker Hill and Oil Springs fields located in Carbon County, Wyoming.\nAs a result of the inspection, it is alleged that you have committed probable violation of the\nPipeline Safety Regulations, Title 49, Code of Federal Regulations (CFR). The items inspected\nand the probable violations are:\n1. § 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\n\n\n\nBHE failed to meet the provisions of API RP 1171, Section 8. Specifically, BHE failed to include\nand accurately present potential threats and hazards impacting the reservoir in its risk management\nmodel in accordance with API RP 1171, Section 8.4.2 (Section 8.4.2).\nSection 8.4.2 states in part that “The operator shall evaluate the potential threats and hazards\nimpacting storage wells and reservoirs.”\nDuring the inspection, BHE reported that potential threats and hazards impacting the reservoir had\nnot been incorporated into the risk management model. BHE stated subsurface studies of Bunker\nHill storage would be completed by end of 2022 and subsurface studies of Oil Springs storage\nwere in its early planning stages. They also stated they planned to add threats to the reservoir from\nplugged and abandoned wells within the reservoir boundary to their risk model in the future.\nAdditionally, BHE is working with a new risk management model program. In this program,\ncertain threats and hazards incorporated into the risk management model impacting storage wells,\nhad inaccurate scoring or were not able to be reviewed due to their lack of familiarity with the new\nprogram.\nTherefore, BHE failed to meet the provisions of Section 8.4.2.\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.\nBHE failed to meet the provisions of API RP 1171, Section 9. Specifically, BHE failed to evaluate\neach annular gas occurrence that exceeded operator-defined thresholds levels in accordance with\nAPI RP 1171, Section 9.3.2 (Section 9.3.2).\nSection 9.3.2 states in part that “The operator shall evaluate each annular gas occurrence that\nexceeds operator- or regulatory-defined threshold levels determined from well integrity evaluation\nand from risk assessment.”\nDuring the inspection, BHE was not able to provide records of the evaluation of each annular gas\noccurrence that exceeded operator or regulatory-defined threshold levels at Bunker Hill storage\nand Oil Springs storage.\nTherefore, BHE failed to meet the provisions of Section 9.3.2.\n3. § 192.12 Underground natural gas storage facilities.\n(a) …\n\n\n\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.\nBHE failed to meet the provisions of API RP 1171, Section 8. Specifically, BHE failed to assess\nthreat and hazard interaction in accordance with API RP 1171, Section 8.3.2 (Section 8.3.2).\nSection 8.3.2 states in part:\nThe operator shall use available information such as performance data collected\nthrough the field history, operations and maintenance (O&M) activities, geotechnical\ndata such as well logs, engineering data, and completion reports to determine\nsusceptibility to threat and hazard-related events and to assess threat and hazard\ninteraction.\nDuring the inspection, BHE’s new risk management model program was reviewed. BHE stated\nthat the threat and hazard interactions were not being addressed within this program.\nTherefore, BHE failed to meet the provisions of Section 8.3.2.\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.\nBHE failed to meet the provisions of API RP 1171, Section 9. Specifically, BHE failed to perform\nannual wellhead pipeline isolation valve testing of its wells, and failed to perform annual master\nvalve function testing of Bunker Hill 3 well in 2018, 2019, 2020 and 2021 in accordance with API\nRP 1171 Section 9.3.2 (Section 9.3.2).\nSection 9.3.2 states in part that “The operator shall test the operation of the master valve and\nwellhead pipeline isolation valve at least annually for proper function and ability to isolate the\nwell.”\nDuring the inspection, PHMSA reviewed BHE’s records of wellhead valve operation. These\nrecords did not have isolation testing of the wells at the 4 storages in 2018, 2019, 2020 and 2021.\n\n\n\nAdditionally, BHE was not able to provide records of annual master valve function tests of Bunker\nHill 3 well in 2018, 2019, 2020 and 2021.\nTherefore, BHE 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.\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.\nBHE records were insufficient to demonstrate compliance with the provisions of API RP 1171,\nSection 9. Specifically, BHE records do not demonstrate that it function-tested surface safety\nvalves at least annually in accordance with PAI RP 1171, Section 9.3.2.\nSection 9.3.2, Well Integrity Monitoring, States in part that “Surface and subsurface safety valve\nsystems, where installed, shall be function-tested at least annually.”\nDuring the inspection, PHMSA reviewed BHE’s records of annual surface safety valve function\ntests. In 2018, there were 4 wells at Oil Springs storage with subsurface safety valves. These valves\nwere removed in 2019. The 4 wells were Baker 3, Baker 5, Cunningham 1 and Oil Springs 4-3.\nThe function test records from 5/3/2018, 11/9/2018, and 5/10/2019 were reviewed. However, these\nrecords did not specify which well's safety valve was function tested.\nTherefore, BHE’s documentation was insufficient to demonstrate compliance with the provisions\nof Section 9.3.2.\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.\n\n\n\nBHE failed to follow its manual of written procedures for conducting activities under § 192.12(b).\nSpecifically, BHE failed to follow its Storage Integrity Management Plan (SIMP), Section\n133.6.13.2, during the Plug and Abandon of Well East Mohoney Dome 29-1 which was done\n12/2021 – 1/2022.\nSection 133.6.13.2 stated in part:\nThe Company shall retain records relating to permitting, procedures, personnel, and\nequipment for the period required by regulation, or, where no regulatory requirements exist,\nfor the life of the well plus 5 years. These records shall include, as applicable and available,\nthe following: Environmental, Health, and Safety- On-site safety meeting records.\nDuring the inspection, BHE was not able to provide on-site safety meeting records of safeguards\nused for environment, health, and safety of workers during the Plug and Abandon of Well East\nMohoney Dome 29-1.\nTherefore, BHE failed to follow its SIMP, Section 133.6.13.2.\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.\nBHE failed to follow its manual of written procedures for conducting activities under § 192.12(b).\nSpecifically, BHE failed to follow its Storage Integrity Management Plan (SIMP), Section\n133.6.2.5 regarding conducting annual review of blowout contingency plans in 2020 and 2021.\nSection 133.6.2.5 stated in part that “The state specific Blowout Plans will be reviewed annually\nwith the ERP.” During the inspection, BHE was not able to provide records of blowout\ncontingency plan annual review during the year of 2020 and 2021.\nTherefore, BHE failed to follow its SIMP, Section 133.6.2.5.\nUnder 49 U.S.C. § 60122 and 49 CFR § 190.223, you are subject to a civil penalty not to exceed\n$257,664 per violation per day the violation persists, up to a maximum of $2,576,627 for a related\nseries of violations. For violation occurring on or after March 21, 2022, and before January 6,\n2023, the maximum penalty may not exceed $239,142 per violation per day the violation persists,\nup to a maximum of $2,391,142 for a related series of violations. For violation occurring on or\n\n\n\nafter May 3, 2021, and before March 21, 2022, the maximum penalty may not exceed $225,134\nper violation per day the violation persists, up to a maximum of $2,251,334 for a related series of\nviolations. For violation occurring on or after January 11, 2021, and before May 3, 2021, the\nmaximum penalty may not exceed $222,504 per violation per day the violation persists, up to a\nmaximum of $2,225,034 for a related series of violations. For violation occurring on or after July\n31, 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\nBlack Hills Energy being subject to additional enforcement action.\nNo reply to this letter is required. If you choose to reply, in your correspondence please refer to\nCPF 1-2023-018-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","truncated":false,"body_characters":14733}