{"operation":"document","citation":"CPF 12024012WL","title":"COOK INLET NATURAL GAS STORAGE ALASKA — Warning Letter","source_type":"enforcement","agency":"Pipeline and Hazardous Materials Safety Administration","status":"historical","official":true,"published_on":"2024-02-15","effective_on":null,"summary":"CLOSED warning letter citing 192.12(b)(2), 192.12(c), 192.12(d)(4).","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-enforcement-12024012wl.json","markdown":"https://regulus.evalyn.ai/document/phmsa-enforcement-12024012wl.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-enforcement-12024012wl","source_url":"https://primis.phmsa.dot.gov/enforcement-data/case/12024012WL","body":"Warning Letter involving COOK INLET NATURAL GAS STORAGE ALASKA. PHMSA's enforcement data identifies the cited regulations as 192.12(b)(2),  192.12(c),  192.12(d)(4). The case was opened on 2024-02-15 and is reported as closed as of 2024-02-15. Open the official case record for notices, responses, orders, and the latest status.\n\nOfficial case documents:\n\n12024012WL_Warning Letter_02152024_(23-264027).pdf: https://primis.phmsa.dot.gov/enforcement-documents/12024012WL/12024012WL_Warning%20Letter_02152024_(23-264027).pdf\n\n12024012WL_Warning Letter_02152024_(23-264027)_text.pdf: https://primis.phmsa.dot.gov/enforcement-documents/12024012WL/12024012WL_Warning%20Letter_02152024_(23-264027)_text.pdf\n\n12024012WL_Warning Letter_02152024_(23-264027)_text.pdf\n\nWARNING LETTER\nOVERNIGHT EXPRESS DELIVERY\nFebruary 15, 2024\nMr. Stephen Ratcliff\nPresident and Chief Executive Officer\nCook Inlet Natural Gas Storage Alaska\n188 West Northern Lights Blvd, Suite 510\nAnchorage, Alaska 99503\nCPF 1-2024-012-WL\nDear Mr. Ratcliff:\nFrom June 13 to June 15, 2023, representatives of the Pipeline and Hazardous Materials Safety\nAdministration (PHMSA) pursuant to Chapter 601 of 49 United States Code (U.S.C.) inspected Cook\nInlet Natural Gas Storage Alaska’s (CINGSA) procedures and records for the Cook Inlet Natural Gas\nStorage Alaska Facility in Kenai Peninsula, Alaska.\nAs a result of the inspection, it is alleged that you have committed probable violations of the Pipeline\nSafety Regulations, Title 49, Code of Federal Regulations (CFR). The items inspected and the probable\nviolations 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 before\nJuly 18, 2017, must meet the provisions of API RP 1171 (incorporated by\nreference, see § 192. 7), sections 8, 9, 10, and 11, and paragraph (c) of this\nsection, by January 18, 2018, and must meet all provisions of paragraph\n(d) of this section by March 13, 2021.\nCINGSA failed to meet the provisions of API RP 1171, Section 9. Specifically, CINGSA failed to\nperform production casing downhole inspections for the initial mechanical integrity assessment of\nstorage wells in accordance with API RP 1171, Section 9.3.1 (Section 9.3.1).\n\n\n\nSection 9.3.1 states in part, “Active well mechanical integrity evaluations shall include initial and\nsubsequent evaluations as determined using the risk assessment and the information derived from the\ninitial evaluation.”\nCINGSA’s Storage Integrity Management Program (Well and Reservoir), Standard 2847 Well\nIntegrity Inspection, section 5.1 (Well Integrity Evaluation [API RP 1171 9.3.1]) stated in part “Well\nintegrity evaluation methods typically used by the Company include but are not limited to review of\ndesign, completion, and well work records; wellhead and downhole inspection; well pressure\nmonitoring and testing; and gas and liquid sampling.”\nCINGSA’s Storage Integrity Management Program (Well and Reservoir), Standard 2847 Well\nIntegrity Inspection, section 9 (Frequency of Inspection [API RP 1171 6.9.2]) stated in part “If a well\nhas not previously been subjected to any kind of downhole inspection, a baseline inspection of casing\nwill be scheduled and prioritized on a data-informed, risk-driven basis.”\nDuring the inspection, PHMSA requested to review CINGSA’s well integrity evaluations. CINGSA\nindicated that baseline integrity management risk assessments had been completed for all wells.\nHowever, there were no well records of initial production casing downhole inspections and no baseline\ninspection of this casing had been conducted. The inspection results are required to be used along with\nthe well’s risk assessment to determine frequency of subsequent mechanical integrity evaluations of\nthe casing in accordance with § 192.12(d)(3).\nTherefore, CINGSA failed to meet the provisions of Section 9.3.1.\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 before\nJuly 18, 2017, must meet the provisions of API RP 1171 (incorporated by\nreference, see § 192. 7), sections 8, 9, 10, and 11, and paragraph (c) of this\nsection, by January 18, 2018, and must meet all provisions of paragraph\n(d) of this section by March 13, 2021.\nCINGSA failed to meet the provisions of API RP 1171, Section 9. Specifically, CINGSA records did\nnot demonstrate that the operation of the master valve and wellhead pipeline isolation valve indicated\nability to isolate the well in accordance with API RP 1171, 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, PHMSA reviewed CINGSA’s records of wellhead valve testing. These records\ndid not include isolation testing of the storage wells in 2018, 2019, and 2020. CINGSA stated valve\nisolation testing was being done from 2018 to 2020 but was added into records as of 2021.\nTherefore, CINGSA failed to meet the provisions of Section 9.3.2.\n\n\n\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 before\nJuly 18, 2017, must meet the provisions of API RP 1171 (incorporated by\nreference, see § 192. 7), sections 8, 9, 10, and 11, and paragraph (c) of this\nsection, by January 18, 2018, and must meet all provisions of paragraph\n(d) of this section by March 13, 2021.\nCINGSA failed to meet the provisions of § 192.12(c) by January 18, 2018. Specifically, several of\nCINGSA’s operations and maintenance manuals within its Storage Integrity Management Plan were\nnot created until 2021, past the January 18, 2018, deadline required by § 192.12(b)(2).\nSection 192.12(c) requires in part that “each operator of a UNGSF must prepare and follow for each\nfacility one or more manuals of written procedures for conducting operations, maintenance, and\nemergency preparedness and response activities under paragraphs (a) and (b) of this section.”\nDuring the inspection, CINGSA’s O&M Manuals were reviewed such as CINGSA Inventory\nVerification SOP 2837 and CINGSA Well Integrity Inspection SOP 2847. PHMSA determined that\nthese manuals had not been reviewed in 2019 and 2020 due to the fact they were not created until 2021.\nIn addition, CINGSA was unable to provide review and update record of CINGSA Well Pad Integrity\nInspections SOP 2805 during 2021.\nTherefore, CINGSA failed to meet the requirements of § 192.12(c) by January 18, 2018, as required\nby § 192.12(b)(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 before\nJuly 18, 2017, must meet the provisions of API RP 1171 (incorporated by\nreference, see § 192. 7), sections 8, 9, 10, and 11, and paragraph (c) of this\nsection, by January 18, 2018, and must meet all provisions of paragraph\n(d) of this section by March 13, 2021.\nCINGSA failed to meet the provisions of API RP 1171, Section 8. Specifically, CINGSA failed to\nassess threat 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 through\nthe field history, operations and maintenance (O&M) activities, geotechnical data such\nas well logs, engineering data, and completion reports to determine susceptibility to\nthreat and hazard-related events and to assess threat and hazard interaction.\n\n\n\nDuring the inspection, CINGSA’s risk management model was reviewed. CINGSA’s Risk Model V8,\nMarch 2023 had no categories considering threat and hazard interactions within it.\nTherefore, CINGSA failed to meet the provisions of Section 8.3.2.\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 before\nJuly 18, 2017, must meet the provisions of API RP 1171 (incorporated by\nreference, see § 192. 7), sections 8, 9, 10, and 11, and paragraph (c) of this\nsection, by January 18, 2018, and must meet all provisions of paragraph\n(d) of this section by March 13, 2021.\nCINGSA failed to meet the provisions of API RP 1171, Section 8. Specifically, CINGSA failed to\nassess the effectiveness of risk monitoring and risk management programs in accordance with API RP\n1171, Section 8.7.1 (Section 8.7.1).\nSection 8.7.1 states in part, “The operator shall assess the effectiveness of risk monitoring and risk\nmanagement programs and maintain a continual review and improvement cycle in risk management\nactivities to provide functional integrity of the storage operation.”\nDuring the inspection, CINGSA failed to provide any records demonstrating that a risk management\neffectiveness review and improvement cycles had been performed from 2019 to 2022.\nTherefore, CINGSA failed to meet the provisions of Section 8.7.1.\n6. § 192.12 Underground natural gas storage facilities.\n(a) ...\n(c) Procedural manuals. Each operator of a UNGSF must prepare and\nfollow for each facility one or more manuals of written procedures for\nconducting operations, maintenance, and emergency preparedness and\nresponse activities under paragraphs (a) and (b) of this section. Each\noperator must keep records necessary to administer such procedures and\nreview and update these manuals at intervals not exceeding 15 months, but\nat least once each calendar year. Each operator must keep the appropriate\nparts of these manuals accessible at locations where UNGSF work is being\nperformed. Each operator must have written procedures in place before\ncommencing operations or beginning an activity not yet implemented.\nCINGSA failed to follow its manual of written procedures for conducting activities under\n§ 192.12(b)(2). Specifically, CINGSA failed to follow its Standard Operating Procedures Manual,\nENSTAR Emergency Operating Plan, SOP #1105 (SOP 1105) regarding performing annual training.\nAPI RP 1171, Section 10.6.2 states in part, “Storage operations and applicable staff shall receive\ntraining in the use of the emergency preparedness/response plan.” CINGSA’s SOP 1105 stated in part\n\n\n\nunder policy “All ENSTAR personnel will be trained annually, and their knowledge evaluated on this\nplan.”\nDuring the inspection, CINGSA was not able to provide emergency operating plan training records of\nstaff personnel conducted annually in 2018. Additionally, although this training was conducted\nannually in 2022, the records indicated that 1 person was missing from the training.\nTherefore, CNGSA failed to follow its manual of written procedures as required by § 192.12(c).\n7. § 192.12 Underground natural gas storage facilities.\n(a) …\n(d) Integrity management program—\n(1) …\n(4) Integrity management procedures and recordkeeping. Each UNGSF\noperator must establish and follow written procedures to carry out its\nintegrity management program under API RP 1171 (incorporated by\nreference, see § 192.7), section 8 (\"Risk Management for Gas Storage\nOperations\"), and this paragraph (d). The operator must also maintain,\nfor the useful life of the UNGSF, records that demonstrate compliance\nwith the requirements of this paragraph (d). This includes records\ndeveloped and used in support of any identification, calculation,\namendment, modification, justification, deviation, and determination\nmade, and any action taken to implement and evaluate any integrity\nmanagement program element.\nCINGSA failed to maintain records demonstrating compliance with the requirements of § 192.12(d).\nSpecifically, CINGSA risk management records did not demonstrate that potential threats and hazards\nimpacting storage wells were adequately evaluated in accordance with API RP 1171, Section 8.4.2\n(Section 8.4.2).\nSection 8.4.2 states in part, “The operator shall evaluate the potential threats and hazards impacting\nstorage wells and reservoirs.”\nDuring the inspection, PHMSA reviewed CINGSA’s risk model. CINGSA Risk Model V8 March\n2023 broke down risk into 3 categories: Well risk, Reservoir risk and Surface risk. Each category had\nseveral threats/hazards and consequences that were not able to be reviewed to determine if adequate\nevaluation of them was done, such as the factors or data leading to their scoring. CINGSA Risk\nManagement Plan stated subject matter experts (SME) were used for qualitative scoring for these but\ndid not have details on how components within each threat/hazard or consequence were evaluated and\nwhat scores were obtained for them. There were no records of SME meeting minutes pertaining to\nthese discussions of threat/hazard and consequence evaluation. Some examples of components within\nthreats/hazards for which scoring was not able to be reviewed were: Well Threats- Corrosion, Well\nComponents, Natural Forces; Reservoir Threats- Third Party Damage, Natural forces; Surface risk\nThreats- Natural forces such as earthquake; Reservoir Third Party Damage- third party drilling, third\nparty production and third-party injection.\nTherefore, CINGSA failed to maintain records demonstrating compliance with the requirements of\n§ 192.12(d).\n\n\n\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, 2023,\nthe maximum penalty may not exceed $239,142 per violation per day the violation persists, up to a\nmaximum of $2,391,142 for a related series of violations. For violation occurring on or after May 3,\n2021 and before March 21, 2022, the maximum penalty may not exceed $225,134 per violation per\nday the violation persists, up to a maximum of $2,251,334 for a related series of violations. For\nviolation occurring on or after January 11, 2021 and before May 3, 2021, the maximum penalty may\nnot exceed $222,504 per violation per day the violation persists, up to a maximum of $2,225,034 for a\nrelated series of violations. For violation occurring on or after July 31, 2019 and before January 11,\n2021, the maximum penalty may not exceed $218,647 per violation per day the violation persists, up\nto a maximum of $2,186,465 for a related series of violations. For violation occurring on or after\nNovember 27, 2018 and before July 31, 2019, the maximum penalty may not exceed $213,268 per\nafter November 2, 2015 and before November 27, 2018, the maximum penalty may not exceed\nviolation per day, with a maximum penalty not to exceed $2,132,679. For violation occurring on or\n$209,002 per violation per day, with a maximum penalty not to exceed $2,090,022.\nWe have reviewed the circumstances and supporting documents involved in this case, and have decided\nnot to conduct additional enforcement action or penalty assessment proceedings at this time. We advise\nyou to correct the items identified in this letter. Failure to do so will result in Cook Inlet Natural Gas\nStorage Alaska being subject to additional enforcement action.\nNo reply to this letter is required. If you choose to reply, in your correspondence please refer to CPF\n1-2024-012-WL. Be advised that all material you submit in response to this enforcement action is\nsubject to being made publicly available. If you believe that any portion of your responsive material\nqualifies for confidential treatment under 5 U.S.C. § 552(b), along with the complete original document\nyou must provide a second copy of the document with the portions you believe qualify for confidential\ntreatment redacted and an explanation of why you believe the redacted information qualifies for\nconfidential 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":16523}