PHILLIPS 66 PIPELINE LLC — Notice of Probable Violation

case documentOfficial PDFcpf_320045013.pdf#

320045013_Final Order_08292005.pdf, page 1Official PDF@ U.S. Deportment of Tronsportotion Pipeline ond Hozordous tftoferiols Sofety Administrotion AUG 29 ru05 Mr. David ysebaert General Manager ConocoPhillips pipelines and Terminals P.Q. Box 2t97 (772s2) 600 North Dairy Ashford Houston, TX 77079 RE: CPF No. 3-2004-5013 Dear Mr. Ysebaert: Enclosed is the Final order issued by the Associate Administrator for pipr line Safety lXlt":,:b"_:l,lffi"T* .ur": ,It makes findings of viotarion, assesses u .iuii ."d;":H:;;J;i penalty of of certain :l'l,TlLg,il1,T"in,:lu"ce procedures. The Final Order urro ,p""ines actions ro comply with the pipeline safety regulations and revision oicertain operating and taken to procedures. The penalty pay-"ttt terms are set forth in the Final order, w ntenance penalty is paid and the terms of the compriance order and amendment of pr the civil completed, as determined by the Director, central Region, 1ffi*frffi;i;: ures are ll:i"^d- Your receipt of the Final order constitutes service of that document undt will be s 190.5. 49 C.F.R. Sincerely, fik Aa* /LL=- t/ f, Vm., Rewolds Pipeline iompliance Registry Office of Pipeline Safety Enclosure fteven G. Cooper, Counsel for Conocophillips !_t..pl"n G. Ellison, Counsel for Conocophillips Keith H. wooten, piperine integriiy Direetor, conocophiiiips Ivan Huntoon, Director, CentraiRegion, OpS#

320045013_Final Order_08292005.pdf, page 2Background 1n2002, Conoco merged with Phillips Petroleum Company to create a new entit ConocoPhillips Pipelines and Terminals. At that time each entity was operating a separate ty Management Program @vIP). An IMP inspection was conducted at Phillips inFebruary 2002 Conoco's IMP was inspected by OPS in September,2002. Although Respondent informed O of its intent to integratethetwo separateIMPs, OPS toldRespondent in2002 thattheycouldmain mtwo separate baseline assessments. The Notice is unrelated to the factthat Respondent had separate IMPs at the time of the inspection. FINDINGS OF VIOLATION Uncontested Respondent did not contest the alleged violation of $ 195.452 in Items 3(B),4(A- B), and 7(A- E), 8(A, C), 9(A-C) and 10(A-B) of the Notice. Accordingly, I find violated 49 C.F.R. Part 195. as more fullv described in the Notice: 49 C.F.R. 5 195.452(exl) - failure to identify or document the primary for each assessed sesment. 49 C.F.R. $ 195.452(f) - failure to include in its written integrity program a process for reviewing and updating assumptions used in the risk 49 C.F.R. $ 195.452(g) and (iX1-4) - failure to analyze all available in about the integrity of the entire pipeline and the consequences of a fi Respondent failed to provide for the timely use of the Assessment Hi Plaruring Document, used to capture data from the information analysis; develop a formal process to assure that the input information is cu running the risk analysis, as the data obtained from prior internal inspec (ILI) was not being used as required for input to the risk model or as val the risk results; and failure to develop a formal process for conducti Matter Experts (SME) evaluations that provides a logical documented st 49 C.F.R. $ 195.452(i)(1) - failure to take sufficient measures to p mitigate the consequences of a pipeline failure that could affect Respondent's Preventive and Mitigative Process needs to be expanded HCA specific risk drivers that exist in each HCA and failure to integra analysis with the preventive and mitigative process for HCA segments. These findings of violation will be considered prior offenses in any subsequent taken against Respondent. , 5(A-C), 6(4.- prior to on tools identify its risk#

320045013_Final Order_08292005.pdf, page 3Contested Item 2 of the Notice alleged that Respondent violated 49 C.F.R. $ 195.452 ( including in its written baseline assessment plan(BAP) internal inspection tools detecting deformation anomalies in the pipe that must be repaired as required by $ 195.452(h). At the time of the inspection, Respondent was performing pipeli evaluate only top side dents identified in High Consequences Areas (HCAs). reviewed five out of eight ILI tool runs which revealed that only a gauging plate identify deformations in the piggable segments. OPS determined that these ej identified as prior assessments in the BAP, will require a geometry tool run to assessment. tXiXa) by not (ILI) capable of excavatrons to OPS inspectors assessments, all ualify as a prior Irr its response to ltem2" Respondent asserted that OPS failed to provide an uate regulatory basis for the Notice and that the IMP rules does not require that the internal i Lon tool used in its baseline assessment must be capable of discerning the anomalies listed in 49 C.F R. $ 1e5.4s2(h). Respondent argued that the internal inspection performed in its prior assessments clearly meet the requirements of the IMP rule. Respondent advised that it has made unp rmderstand how OPS interpreted and implemented IMP. Respondent further advi and integration of its two IMPs, Conoco and Phillips, is very complex. Respond thatthemerger t asserted that it was first notified during the inspection that OPS interpreted the IMP regulati assessments to require running geometry inspection tools in a more rigorous on that the rule requires. OPS argued that the process used by Respondent was inadequate to find a Respondent's plan was to run a MFL tool for top side dents with metal loss. The the type of tool that can find the requisite defects and that the plan should have i a deformation tool. OPS further argued that Respondent understands the intent knowledge of the rule. As a result of an IMP inspection in February 2002, Phl enforcement document that directed it to provide more details in the IMP processes the inputs and outputs of these processes. On a second occasion, this matter was di with the IMP team members of both Conoco and Phillips in September 2002, official were present during most of the Conoco IMP inspection. OPS argued that through two IMP inspections and the resulting enforcement action, Respondent the IMP rule requirements. or anomaly, as MFL tool is not luded the use of and has clear ips received an Phillips IMP rhaving gone fully aware of Respondent argued that had OPS advised Respondent earlier of OPS interpretati could have been avoided. Respondent suggested that the violation has been completed the baseline assessment for 50% of its pipe segments that could employing the ILI tools identified by OPS. the violation as it has , bct HCAs by OFS couiitered that, ,Jiiring ihc hearing, Respondent was informed that once its n conducting a correct risk analysis were in place it should complete a new ri segments in the Conoco and Phillips BAPs. OPS also requested the new risk a applied first to those line segments that had not yet been assessed and then applied ttrat naa akeadybeen assessed. OPS concluded that Respondent's post hearing sub to show that Respondent addressed OPS directions and require additional modifi procedures for ranking of all lysis process be those segments issions still fail#

320045013_Final Order_08292005.pdf, page 44 Contrary to Respondent's position, the focus of the Notice are the inadequate p procedures to achieve the optimal results and not the fact that Respondent had or was in the process of integrating the two program .h2002, OPS told Respond maintain two separate baseline assessments. , processes and separate IMPs that they could At the time of the inspection, Conoco was using a geometry tool to assess de along with an ILI tool to find other anomalies. However, Phillips used a gaugr used a geometry tool occasionally. Phillips was only digging top side dents. place but the process was inadequate to find the deformation anomalies, de grooves. The plan should have included the use of a deformationtool. The MFL of tool that can identify the requisite defects. There are two pieces of implementation and the plan and process. There was a lack of consideration in Respondent may have changed its plan as suggested on page 8 of its brief dated and intends to meet the baseline assessment, at the time of the inspection performing pipeline excavations to evaluate only top side dents identified in HC post hearing submissions fail to show that this issue has been satisfactorily I find that Respondent violated 49 C.F.R. g 195.452 (cXlXiXa) by not includi baseline assessment plan ILI tools capable of detecting deformation anomalies in t be repaired as required by 49 C.F.R. $ 195.452(h). ns in the pipe plate and only process was in I is not the type involved. the ugust I1,2004, Respondent's , Accordingly, g in its written pipe that must Item 3A of the Notice alleged that Respondent violated 49 C.F.R. $ 195.4 establishing an integrity assessment schedule that prioritizes pipeline segments for Notice further alleged Respondent did not base the assessment schedule on all reflect the risk conditions on the pipeline segment. The factors an operator must but are not limited to 49 C.F.R. $ 195.452 (e)(1)(! through (eXlXix). At the time Respondent was using two different risk models to risk rank the pipelines and was notprovided adequate informationto determinewhetherthehighestriskpipeh being assessed as required by the IMP rule. 2 (e)(1) by not risk factors that ider include. f the inspection, inspection team segments were In its response to Item 34, Respondent asserted that prior to the merger each oper completed baseline assessments of 50% of its riskiest pipeline segments that cou within the required time frame and that each developed a written integrity mana successfully affect an HCA t plan that addressed the risks of each segment, with the baseline assessment to be developed from prioritizingthe risk factors on each segment. Respondent explained that efforts have been made to meet the requirements of each of the integrity manag nce the merger, ent plans of the two legacy companies by performing the planned baseline assessments. Resp that it has been working to create a third integrated integrity management plan adopts the best practices of each of the two legacy plans that one day will fully replace the two pl Respondent posed that OPS is aware of these efforts and support them. Respondent further ar1 that the IMP rule recognizes lhat the livfP is a continually- changing program that will sr'zslr'r frorn the initial program and that a provision of the rule requires Respondent to document char to its baseline ptutt. fnt -le specifically contemplates at least one such change-when a new HC is identified and ihat newly identified HCA must be added to the baseline plan within one year d assessed in 5 years.#

320045013_Final Order_08292005.pdf, page 5OPS clarified that there can be a Conoco baseline assessment plan (BAP) and teHeritageBAP or the Respondent can have a single BAP. It is the Respondent's choice. The is not whether there are separate BAPs or a single BAP. OPS argued that its findings stemmed Respondent's failure to provide sufficient information during the inspection to support the ion that the two lists were risk ranked as required by 49 C.F.R. 5 I95.452. There is a lack of il to explain the process or to show how Respondent created the list of the highest risk pipeli segments. Both IMPs lacked the attributes to demonstrate risk ranking, as OPS could not ine from the information provided how Respondent arrived at its results. Contraryto Respondent:s position, the focus of Item 3 is an inadequate desc of the processes used to achieve the identified results, not whether it had BAP. Respondent submitted additional information during the pre-hearing and Much of the information submitted addressed Respondent's future plans to comp While there is no requirement that Respondent have a single BAP, adequate details to explain the process used to determine the prioritization of assessed. Nevertheless, Respondent provided no information to support the pri used to develop the two lists that risk ranked the pipelines. The process for priority of assessment action must be carefully explained. Respondent has fai document the risk analysis process. Accordingly, I find that Respondent vi 519s,4s2 (eX1). or explanation BAPs or a single -hearing stages. e a single BAP. must provide me segments ftrzatron process ining the relative to adequately Iated 49 C.F.R. ASSESSMENT OF PENALTY Under 49 U.S.C. ' 60122, Respondent is subject to a civil penalty not to exc ' violation for each day of the violation up to a maximum of $1,000,000 for an violations. The Notice proposed a $35,000 civil penalty for violations of 49 C.F $100,000 per related series of Part 195. 49 U.S.C. 5 60122 and 49 C.F.R. S 190.225 require that, in determining the penalty, I consider the following criteria: nature, circumstances, and gravity of the of Respondent's culpability, history of Respondent's prior offenses, Respondent's penalty, good faithbyRespondent in attempting to achieve compliance, the ability to continue in business, and such other matters as justice may require. of the civil iolation, degree ility to pay the n Respondent's Item 2 of the Notice proposed a civil penalty of $20,000 for violati of 49 C.F.R. $195.452(cX1)(a), as Respondent failed to include in its written baseline capable of detecting deformation anomalies in the pipe that must be repaired as 49 C.F.R. $ 195.452(h). In response to Item 2,ilte Respondent argued that t penalty should not be levied for any real or perceived missteps it may have m process because the IMP rule was meant to be a broad and flexible, performance lew <ietaiied requirements. Respc,iideni explained that Conoco and Phillips companies and that both met the first two IMP deadlines, to identify all pipeline se affect HCAs and develop a written IMP. Respondent further explained that OPS t the inspection the challenges ConocoPhillips faced in its efforts to create an inte plan a ILI uired by proposed civil in the learning system with frrrn rii cfinnl that could ognized during IMP shortlyafter a merger.#

320045013_Final Order_08292005.pdf, page 6The focus of the Notice and this Order are the inadequate plan, processes and p ures to achieve the optimal results. The Notice is unrelated to the fact that Respondent had two e IMPs at the time of the inspection. The primary objective of the Federal pipeline safety is public safety. Failure to find the deformation anomalies, defects, gouges and grooves in subject areas could result in a release and adversely affect public safety and the environment. R pondent has not shown any circumstance that would have prevented or justified it not includi in its written baseline assessment plan an ILI capable of detecting deformation anomalies in t pipe that must be repaired as required by 49 C.F.R. $ 195.452(h). Accordingly, having review the record and considered the assessment criteria, I assess Respondent a civil penalty of $20, for violation of 49 C.F.R. 5 r9s.4s2. Item 3A of the Notice proposed a civil penalty of $10,000 for violation of 49 F.R.$ r9s.4s2 (eX1), as Respondent failed to provide sufficient details of the process used for pri to prioritize the highest risk pipeline segments, and failed to adequately documen ty assessment, the risk analysis process. Respondent argued that OPS proposed a civil penaltybecause Respondent was ble to state with absolute certainty that the baseline assessments performed on the two legacy IMP will capture 50Yo of all the highest risk pipeline segments. While there is no requirement for a statement of absolute certainty, Respondent ust establish an integrity assessment schedule that shows it prioritized the highest risk pipeli segments and describe in sufficient details the process and procedures used to achieve its resul . Respondent is required to base the assessment schedule on all relevant categories ofrisk factors t reflect the risk conditions on its pipeline, in accordance with 49 C.F.R. 5 195.452 (e)(1)(i) throu h (e)(l)(ix). An operator's failure to sufficiently document its risk analysis process and analyze potential effects ofpipeline failures on high consequence areas at specific locations along the pi ine will leave it ill-prepared to address the severity and extent of the consequences that ensue fol rwing a failure. A release or failure under such circumstances increases the risk of harm to public and the environment. Respondent has not shown any circumstance that would have prev nted or justified it not including sufficient details about the processes and procedures used to ri rank its HCA segments and the segments listed in Respondent's BAP. Accordingly, having rev ed the record and considered the assessment criteria, I assess Respondent a civil penalty of $10, for violation , of 49 C.F.R. g I9s. sZ(eXl). Item 4C of the Notice proposed a civil penalty of $5,000 for violation of 49 C.F. $ 1e5.452(0, as Respondent's factors for risk ranking facilities do not include the fundamental reason for applying risk analysis techniques to integrity manage obtain an integrated understanding of threats to segment integrity and potential losses of integrity. Therefore, it is essential that an operator's risk assessment identifies the iirajor tl^r-r-eats to HCAs for a given pipeline segment or facility, id threats rank in relation to each other, and how the segments and facilities com based on the risk to HCAs. Respondent did not contest the allegation. reviewed the record and considered the assessment crtterTa,I assess Respondent of HCAs. A programs is to es from h clearly tifv ho'*r those to each other ingly, having civil penalty of$5,000, for violation of 49 C.F.R. $ 195.452(t.#

320045013_Final Order_08292005.pdf, page 7Accordingly, having reviewed the record and considered the assessment criteria, I a total civil penalty of $35,000. A determination has been made that Respo pay this penalty without adversely affecting its ability to continue business. Respondent has the abilitv to Payment of the civil penalty must be made within 20 days of service. Federal (49 C.F.R. $ 89.21(b)(3)) require this payment be made by wire transfer, t Reserve Communications System (Fedwire), to the account of the U.S. Tr instructions are contained in the enclosure. After completing the wire trans the electronic funds transfer receipt to the Office of the Chief Counsel ( Hazardous Materials Administration, Room 8417, U.S. Department ofTransporta Street, SW, Washington, DC 20590-0001. gh the Federal . Detailed , send a copy of 1), Pipeline and on,400 Seventh Questions conceming wire transfers should be directed to: 120), Federal Aviation Administration, Mike Monroney Oklahoma City, OK 73125; (405) 954-8893. Financial Operations vision (ANIZ- Aeronautical Center. .O. Box 25082. Failure to pay the $35,000 civil penalty will result in accrual of interest at the c accordancewith3l U.S.C. $3717,31 C.F.R. $ 901.9 and49 C.F.R. $ 89.23. P authorities, alate penalty charge of six percent (6%)per anntlm will be charged payment ls not made within 110 days of service. Furthermore, failure to paythe civil penalty of the matter to the Attorney General for appropriate action in an United States annual rate in to those same result in referral strict Court. COMPLIAIICE ORDER The Notice proposed a Compliance Order with regards to Item 3(A-B), 4(A), 5( ), and 7(A,C), violation of 49 C.F.R .' 19 5 .452(eX 1 ), 19 5.452(D, 19 5 .a52G)0 X 1 -4), and 19 5 .4 ix1) Under 49 U.S.C. $ 601 18(a), each person who engages in the transportation of liquids or who owns or operates a pipeline facility is required to comply with the applicable safety standards established under chapter 601. Pursuant to the authority of 49 U.S.C. $ 601 18(b) and 49 C.F.R S I90.2I7, Respondent is hereby ordered to take the following actions to ensure liance with the pipeline safety regulations applicable to Respondent's operations: 1. Within 30 daysprovide aproposed schedule for establishing and implemen amendments: thefollowing I. With regard to Item 3(a), develop a risk ranked Baseline jointly or separately, with sufficient information to show that pipeline segments are being assessed in a prioritized manner and processes and procedures on how conducting the risk ranking of affect segments and the risk ranking of the segrnents listed in the B with 49 C.F.R. $ 19s.as2 (e)(1). Plan, either highest risk lude detailed he HCAs could in aeeordarrce , IL With regard to Item 3(b), establish the primary risk threats for each in accordance with 49 C.F.R. 5195.452 (eXl). segment#

320045013_Final Order_08292005.pdf, page 88 ng assumptions .F.R.$ r95.452 m. With regard to Item 4(a), establish a process for reviewing and upd that were used in the risk analysis process, in accordancewith 49 (f) ry. With regard to Item 5(a), revise your Assessment Plan Hi Document to provide sufficient details of the results of your Infi in accordance with 49 C.F.R. $ 195.a52 (g). V. With regard to Item 5(b), develop a process to review and information is the most up to date information available analysis, in accordance with 49 C.F.R. $ 195.a52 (g). VL With regard to Item 5(c), develop a formal process for conducting that provides a logical documented structure, if SME evaluations apart of the IMP, in accordance with49 C.F.R. $ 195.a52 G). vII. With regard to Item 7(a), develop a process to identify risk specific for each HCA and review the existing preventive and mitiga determine whether additional measures are required, in 5 res.4s2(i)(1) and (D(4). Vm. With regard to ItemT(c), develop a process that integrates the analysis of each HCA that could affect segment with the preventi process for that same segrnent in accordance with 49 C.F.R. $1 (rx4). x. With regard to Item 1 (I-V[I), submit written procedu implementation of the procedures satisfying the requirements of P days of receipt of this Order, to Mr. Ivan Huntoon, Director, O Safety, Central Region, 901 Locust, Room 452.,Kansas City, MO The Regional Director may extend the period for complying with the req Respondent requests an extension and adequately justifies the reasons for the ex AMENDMENT OF PROCEDURES and Planning tion Analysis, evaluations ve measures to with 49 C.F.R. Its of the risk and mitigative .a52$)(r) and and proof of l95,within 180 e of Pipeline 106-264r. items if the Items 2, 4(B-C), 6(,4.-8), 7(8, D, E), 8(A, C), 9(A-C) and 10(A-B) of Notice alleeed inadequacies in Respondent's integfity management program and proposed to ire amendment of Respondent's procedures to comply with the requirements of 49 C.F.R. $$ s.as2(c)(1)(a), r9s.4s2(t), r9s.4s2 (h)(2-4),19s.4s2(l)(r), r95.4s26)(1X2), r9s-452(k), r9s.4s D(1XiXiD. Respondent did not contest the proposed Notice of Amendment but reques schedule to implement the provisions. Accordingly, I find that Respondent's inte procedures are inadequate to ensure safe operation of its pipeline system' Pursu g 6010S(a) and 49 C.F.R. 5 190.237, Respondent is ordered to make the followi integrity management program and procedures. Respondent must: an altemative tymanagement tto 49 U.S.C. revisions to its#

320045013_Final Order_08292005.pdf, page 91. 2. a J . 4. 5. 6. ,7 8. 9. 10. l 1 I t . 9 Amend your procedures to include a process that requires the use detecting deformation anomalies when intemal tool surveys assessment method. in accordance with those listed in 49 C.F.R. tools capable of chosen as the res.452(h). Amend your procedures to include a process that documents the verall results of integrated data analysis and conclusions regarding the integrity of he segment. The process must provide details on how to perform a detailed review f the assessment results, generate a repair schedule, and perform anintegrated eva uation of overall pipeline integrity. Amend your procedures to include a process for risk ranking facil factors for the presence of HCAs. es that includes Amend your procedures to provide sufficient details that c procedure for discovery and repair of anomalies. y describe your Amend yourprocedures to revise your existing process for in Appendix K of part 3 of your IMP. The revised process must the requirements of paragraph 451.7 of ANSI837.4 regarding t of a required pressure reduction. reduction found consistent with implementation Amend your procedures to include a process for evaluating preventi measures, including the impact on risk of implementing a preven project. andmitigative ve or mitieative Amend your procedures to revise your existing process for detection capability for HCAs that are in close proximity to the the evaluation of the potential risk reduction on these HCA could luating the leak ine, including t segments. Amend your procedures to expand guidance for the utilization of the mitigative measures. your process for EFRD eval flow chart for evaluation ation to include preventive and Amend your procedures to expand your procedure for sel assessment method and selection of the appropriate ILI tool(s), the appropriate licable. Amend your procedures to expand your procedures for conducti assessment of a HCA that could affect the segment, as the revised procedures submitted on August ll,2004, requires additional a hydrostatic hydrostatic test ification. A - - - J r u I l w l l u \ r n r r r h r n ^ a A t t . o o J v u r l / r v v v u s r v o your IMP, as the August tc expand your progess for e'raluating th effectiveness of 11, 2004, submission requires additional ification.#

320045013_Final Order_08292005.pdf, page 1012. Amend your procedures to expand your process for commun company the performance evaluation results on the effectiveness any follow-up that may be required as the August II,2004, su additional modifi cation. 13. Amend your procedures to expand your Management of Change a revision control process to specifically address revision control t4. Amend your procedures to revise your corporate document include the documents required by your IMP. 15. Submit the amended procedures within 30 days following recer Director, Office of Pipeline Safety Central Region, 901 Locust, City, MO 64106-2641. The Regional Director may extend the period for complying with the requ Respondent requests an extension and adequately justifies the reasons for the ex WARNING ITEM The Notice did not propose a civil penalty or corrective action for Item 1, 4(D) and Respondent that it should take appropriate corrective action to correct the i presented information in its response showing that it has addressed the cited ite again warned that if OPS finds a violation in a subsequent inspection, en taken. Failure to comply with this Final Order may result in the assessment of civil $100,000 per violationper day, or in the referral of the case for judicial enforcem Under 49 C.F.R. $ 190.215, Respondent has a right to submit a Petition for R Final Order. The petition must be received within 20 days of Respondent's Order and must contain a brief statement of the issue(s). The filing of the peti stays the payment of any civil penalty assessed. A11 other terms of the order, incl corrective action and amendment of procedures, remain in full effect Administrator, upon request, gfants a stay. The terms and conditions of this effective upon receipt. IMP, including ission requires ion schedule to of this Order to 452, Kansas items if the (E) but warned Respondent Respondent is action will be Ities of up to on of this ipt of this Final automatically ng anyrequired the Associate inal Order are C. \ cj"i I-$ ,/ \ ( \ for Pipeline Safety#