{"operation":"document","citation":"CPF 12023020WL","title":"NATIONAL FUEL GAS SUPPLY CORP — 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).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-12023020wl.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-12023020wl.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-12023020wl","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/12023020WL","body":"Warning Letter involving NATIONAL FUEL GAS SUPPLY CORP. PHMSA's enforcement data identifies the cited regulation as 192.12(b)(2). 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\n12023020WL_Operator Response to Notice_04172023_(22-233089).pdf: https://primis.phmsa.dot.gov/enforcement-documents/12023020WL/12023020WL_Operator%20Response%20to%20Notice_04172023_(22-233089).pdf\n\n12023020WL_Warning Letter_03162023_(22-233089).pdf: https://primis.phmsa.dot.gov/enforcement-documents/12023020WL/12023020WL_Warning%20Letter_03162023_(22-233089).pdf\n\n12023020WL_Warning Letter_03162023_(22-233089)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/12023020WL/12023020WL_Warning%20Letter_03162023_(22-233089)_text.pdf\n\n12023020WL_Warning Letter_03162023_(22-233089)_text.pdf\n\nWARNING LETTER\nOVERNIGHT EXPRESS DELIVERY\nMarch 16, 2023\nMr. Ronald Kraemer\nPresident and Chief Executive Officer\nNational Fuel Gas Supply Corp\n6363 Main Street\nWilliamsville, New York 14221\nCPF 1-2023-020-WL\nDear Mr. Kraemer:\nFrom July 27 through July 29 and August 2 through August 3, 2022, a representative of the\nPipeline and Hazardous Materials Safety Administration (PHMSA) pursuant to Chapter 601 of 49\nUnited States Code (U.S.C.) inspected National Fuel Gas Supply Corp’s (NFG) East Independence\nStorage, West Independence Storage, and Beech Hill Storage fields in Allegany, New York.\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. § 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.\nNFG failed to meet the provisions of API RP 1171, Section 8. Specifically, NFG failed to include\nand adequately evaluate risk related to storage operation using wellhead equipment rated below\n\n\n\nthe maximum allowable operating pressure of pipeline in accordance with API RP 1171, Section\n8.3.2 Data Sources (Section 8.3.2).\nSection 8.3.2 states:\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 field inspection of East Independence, West Independence, and Beech Hill storages,\nthe pressure rating of master gate(s) and/or side gate(s) of certain wells were found to be below\nthe field stated maximum allowable operating pressure of the pipelines, 2300 psi, that serve those\nwells. This was evident for 5 of 11 wells at East Independence, 10 of 24 wells at West\nIndependence, and 6 of 26 wells at Beech Hill. For East Independence, the wells were 564, 434,\n438, 430, 437. For West Independence, the wells were 567, 544, 557, 448, 543, 583, 570, 451,\n571, 552. For Beech Hill, the wells were 576, 558, 541, 542, 569, 578. There is a risk to well\nintegrity if pipeline pressure is set higher than the wellhead equipment pressure rating. Wellhead\nequipment must have operating pressure ratings sufficient to exceed the maximum allowable\noperating pressure of the pipeline that feeds it. Based upon PHMSA’s review of its risk model and\nrisk management plan, it was identified that this threat was not included in NFG’s risk management\nprogram.\nTherefore, NFG failed to meet the provisions of Section 8.3.2.\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.\nNFG failed to meet the provisions of API RP 1171, Section 9. Specifically, NFG failed to perform\nannual master valve function tests of Beech Hill wells EC523 and EC525 in 2020 and 2021 in\naccordance with 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.”\n\n\n\nDuring the inspection, NFG was not able to provide records of annual master valve function tests\nof Beech Hill wells EC523 and EC525 in 2020 and 2021. Therefore, NFG failed to meet the\nprovisions of Section 9.3.2.\n3. § 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.\nNFG failed to meet the provisions of API RP 1171, Section 11. Specifically, at the time of\ninstallation of a new production casing, NFG failed to include in its manuals a procedure for\nlocation and quality of cement bond between the production casing and formation pursuant to API\nRP 1171, Section 11.2.1 (Section 11.2.1).\nSection 11.2.1 states in part that “The operator shall develop and follow procedures for the\nconstruction, operation, and maintenance of natural gas storage wells and reservoirs to establish\nand maintain functional integrity.” API RP 1171 Section 6.4.6 states in part that “The location\nand quality of the cement bond or seal between the production casing, or liner if applicable, and\nformation shall be evaluated to determine whether adequate formation and pipe bonding has been\nachieved to prevent the migration of gas and fluids between zones. Cement placement and bond\nquality shall be evaluated with a cement bond log or other means that can demonstrate the sealing\npotential of the cement.”\nDuring the inspection, PHMSA reviewed procedures and records relative to the new production\ncasing installation of East Independence storage well EC433. A new 4.5\" production casing was\ninstalled and cemented to surface during the 2018-2019 calendar years. NFG was not able to\nprovide records of cement bond log done to determine quality of cement bond between the\nproduction casing and well bore formation. NFG did not have a requirement in its procedures for\ndoing so at the time of the well construction. This requirement was later added to NFG’s\nprocedure, Well Construction and Design Manual (Version: V2022.001), in 2/28/2022 under\nsection 5.1.6 (Cement Evaluation and Location). The evaluation of the cement was needed within\ntheir procedure during well EC433 construction to determine whether adequate formation and pipe\nbonding had been achieved to prevent the migration of gas and fluids between zones.\nTherefore, NFG failed to meet the provisions of Section 11.2.1.\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\nNational Fuel Gas Supply Corp 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 1-2023-020-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":10448}